 Hi everybody. Thanks for coming. My name is Taylor Ricketts, professor here and the director of the Gund Institute for Environment here at UMEM, and it's a great pleasure to stand up and introduce and welcome Steve Bielasky here for his fifth visit in five to six years as a Marsh professor. So the sort of standard basics first, Steve's the Tesla Lambert chair and a regents professor at the University of Minnesota. He has an amazing job title, an ecological slash environmental economist, so for economics, so for economists that are aware of that divide. He is literally bridging it in his job title. He's also appointed in both the ecology and the applied economics of economics at Minnesota. So that tells you right away the sort of interdisciplinary bridging nature of his work and it's the way that he approaches science. He's, you know, a fellow of everything. He's a member of the National Academy. He's a crazy productive guy. And he is one of the leaders in ecosystem services and trying to really, really understand how we're delivered biophysically, what they're worth economically in dollar and then the other kinds of terms. He's also, especially for an economist, very practical guy. He really tries to solve problems instead of, well, lots of other things that tend to occupy lots of other kinds. So he's a joy for me and lots of other people from the ecological side to work with. So Steve's been really committed to this Marshall Pressorship too and I just want to give a shout out for that. Like I said, he's been here five years out of six. Spends a week each time each fall. There's a lot to classes. Has lunch with students all the time. Gives these talks. We also figure out a research project to do every year and try to kind of sketch it out from front to back in the course of a week and then clean it up over the next year or two. So out of his previous four visits, all four have become sort of completed research projects to have been published already, two of them about to be sold. That part has been actually quite productive. He's also been willing to go for hikes all over the place. He's stayed in people's houses and in addition to hotels, he's dressed up in my daughter's Halloween costumes. He's given a talk in her Wonder Woman costume. He's one of his talks about Halloween itself. So he's just kind of being for everything. Being here and kind of dining in the tables every week. He's a great pleasure to collaborate with. Really, really nice guy. A good role model for me to have to be a productive, influential scientist and still be really nice and generous and calm about life. So it's great to have him here repeatedly and I hope even though his marsh term is inspiring, we'll get it back in a minute or two. So this time he's going to talk about Diary of the Reserve of Natural Capital in China and the U.S. Both places he spent a lot of time doing research and advising governments on how to do this stuff. So this is Steve Falesi. Great. Thanks, Doug. So thanks. It's always a great pleasure to come. And although I have to say, you know, the hiking bit. So I think it was two years ago or three years ago. My wife was here and we decided to go hiking and we went, it was camelback. And it's a nice, gentle trail going up one side and it was a beautiful day. We got close to the top and we saw this like winter weather cut off. I was like, huh, I wonder why you need that. And then the clouds came in and it started icing and then we went down the other side, which is sheer rock. So anyway, I'm still here but I wish the Wonder Woman would have come in useful then. Anyway, okay, it is a great pleasure to come to Vermont and to work with Taylor and others at the Gund Institute. I feel like I'm among friends when I come. And so anyway, today I want to talk about examples of thinking about conserving natural capital. So valuing and conserving natural capital and ecosystem services in both China and U.S. So I've been going to China since 2011. And going there two or three times a year working with a very wonderful set of colleagues at the Chinese Academy of Sciences. So I'll talk more about that as I go. And let me just plunge in. So a lot of this work, like how I got to China in the first place, is through the natural capital project, which Taylor is one of the co-founders along with myself and Gretchen Daly and Peter Cariva. So initially the four partners of the natural capital project were the Nature Conservancy, the Wildlife Fund, Stanford, and Minnesota. And when we worked basically, we wanted to be global. So it wasn't just a U.S. centered project. But we have done a lot of work in the U.S. And I'm going to talk about some of that in the lessons we've learned. So we've worked, I lived in Oregon before moving to Minnesota. So there's a lot of early work in the project was kind of based in the Willamette Valley in Oregon. We did work in Minnesota. We've done work, especially with Gretchen and her crew in Hawaii. So I'll talk a bit about some of the work and some of the lessons we've had in the U.S. In the last year, we have invited the Chinese Academy of Sciences to be a full partner in the natural capital project. And this is really a recognition of the great work that we have been doing in partnership with them for a number of years. And so I'll talk also about some of the work on ecosystem services in natural capital in China. It's been fascinating personally and I think really rewarding also professionally. So I want to start off. I think most people in this room actually are fairly convinced of the importance of what nature does for us humanity. But thinking about the importance of natural capital and ecosystem services. And is it clear when I say natural capital, I basically mean the stocks of things. Things like the stock of fish or forests or land, the things that endure through time. And ecosystem services are the flows of values that come from this. So if we harvest the fish or if we sequester carbon in grasslands or forests. So there's a close relationship obviously between natural capital and ecosystem services. Natural capital are the kind of assets of nature that produce the flow of ecosystem services. And there is a wide array of, quote, goods and services speaking in economic terms. Basically things of value that nature provides for us. And that's what we call these ecosystem services. Another problem of course is that people are changing the world rapidly, often in unintended ways. And that's affecting ecosystems and these natural capital assets in ways that are detrimental many times to the provision of ecosystem services. So I'm going to provide you two very quick examples. One actually came, I was reading the New York Times online yesterday. And this example kind of jumped out at me. I don't know if any of you saw this from yesterday's, literally yesterday's paper. So along the Northern California coast there are kelp forests. With climate change there's been a warming of the water and particularly they call it a blob of warm water suppressed upwelling off the coast. The warm water has triggered a decline in starfish in the middle there. Starfish and sea otters are predators on sea urchins. And on the left there's a larger one which is a red urchin which is actually a prized catch for sushi. But then there's the smaller purple urchins and the purple urchin population has just exploded off the coast. And it's basically like what would happen. So in our part of the world if we had an explosion of deer because no longer any predators they basically eat their way through the vegetation. So the picture on the right is what used to be kelp forest and other marine vegetation down there that has been eaten through basically by the purple urchins. So this is a picture that was in yesterday's paper. So back a few years ago you see the extent of the kelp forests in green off the coast. And on the right is the current extent of the kelp forests. Just a dramatic change in a very short amount of time. Okay that's obviously important if you're thinking about ecology and marine ecology but it also has consequences for the people living there. First of all there is a commercial red urchin fishery and as you see it's basically collapsing over this time period. They don't have the 2018 figures but I think they're even less since this is making the New York Times now. And this year they closed the recreational fishery for abalone and this is an area where abalone fishery had been quite well established and brought in quite a number of people on revenue for the local community. This is a case where a rapid ecological change is causing not only upset in the ecosystem but in the human systems that depend upon those ecosystems. Okay so the second example is a little bit more facetious but has an important point. So if you could choose any planet in the solar system which one would you choose? Well many people choose this insignificant third one out from the sun called Earth so I thought we might think about the advantages of Earth relative to let's say Mars. And you know if any of you have seen the Martian you know it's a pretty tough place to live and he only really survives because of the things that he brought with him from Earth including potatoes. I really don't like to think about eating potatoes constantly for an hour long hand to do but so anyway let's just go through the checklist. You know habitable temperature, breathable atmosphere, available water, available food supply, good restaurants and bars. Okay you know all of these tend to see that we should be living on Earth and not on Mars. No this is facetious. There really is a point here right? I mean it is the biosphere which supports and makes our life possible. And we're doing things now to this biosphere that threaten that not only kind of the you know abalone fishery but really our basic life support system. And you know most of you all know about the rapid rise in population. We're currently 7.6 billion. Estimates of 9 to 10 billion in 2050. Global GDP doubled between 1990 and 2015 and in China this is just staggering. So it went from 361 billion of GDP in China in 1990 to 10.5 trillion in 2015 just in kind of a generation. You know 28 fold increase in the size of the economy even though it's slowing down this week. I mean we're still talking about very very rapid rates of growth. So what happens in China and China is not alone. What's happening in India. What's happening in various parts of the world. We're just big relative to the planet and that has consequences obviously. So reports of people who have studied kind of global trends in natural capital and ecosystems and in biodiversity. Ecosystem services and biodiversity have all shown a massive decline in many of the services. So I'll just report one this is getting a little bit dated. I am a large number of people are now working on kind of a follow up to the Millennium Ecosystem Assessment which was published in 2005. So there's a thing called the Intergovernmental Platform on Biodiversity and Ecosystem Services or IPBES. Sounds like you've got the hiccups but that's what it is. So IPBES is trying to basically be like the IPCC but for Biodiversity and Ecosystem Services to repeated assessments of what are the status and trends in ecosystems and biodiversity. But anyway the Millennium Ecosystem Report I would love to use it. It's part of it's sitting on my computer. It needs to be off my computer shortly but it's not done yet so I can't use it. But anyway the Millennium Ecosystem Assessment did a very useful thing which they said here are the trends in ecosystem services from 1950 to 2050 year period. Kind of global trends. And most of the arrows that the triangles are pointing downwards so the majority of ecosystem services are declining over this time period. At the same time that material goods, the economy is growing greatly but these are declining. We're not paying attention to preserving the natural capital on which many of the important things we depend on require. But it's really interesting especially for economists looking at this. So I circled the ones that are going up and the ones that are going up so there's kind of one exception, the carbon. But the other ones are very explainable. Why are they going up when almost everything else is declining? These are going up because these are things like crop production, animal husbandry, aquaculture. These are things that people get paid for. So there's an incentive for them to continue to provide the services, continue to provide the natural capital that's necessary to produce those services. In many cases we're expanding the amount of agricultural land and reducing the amount of forest and grasslands in order to do this. So these are related. The rise in food production is related to the decline in many other services, water quality, carbon sequestration and so forth. So that leads me to think about this notion of you get what you pay for and you don't get what you don't pay for. So right now most of natural capital, most ecosystem services are invisible to most important public and private decisions and we see the result. I mean in some sense this should not be a surprise. So how do we try to correct that? That's the essence of really what the natural capital project and many other groups are trying to do. We're trying to get the values of nature for humanity back into the set, factored into important decisions that affect ecosystems. Can we correct this asymmetry? So farmers get paid for producing crops, they don't get paid for producing clean water or habitat or sequestering carbon with exceptions, but for the most part most of these ecosystem services there is no incentive for people to provide them. And this distortion is increasingly becoming harmful. I mean we see this in the climate news, so many of you are familiar with the IPCC report, but the dead zones around the world, the loss of habitat, I know Taylor cares about the pollinators. The list goes on and on, the things that we are losing because we are not paying attention to them and not giving them proper credit. So one way of saying this is there's kind of an old adage in management if you don't measure it or if you can't measure it you can't manage it and if you don't value it you won't sustain it. That's a lesson that I take from our recent past. Okay, well very briefly there are a number of ways that we can correct that. And this is work that friends of Taylor's and mine Jim Salisman recently published, he calls them the 5Ps, it's kind of a nice alliteration. You know we can basically have prescriptive rules, the laws and regulations, you can't cut down that forest, it's its own to be kept a forest. We can have penalties if you do cut down the forest, we can have payments, payments for ecosystem services to preserve the forest, we can have property rights, so establish someone owner of the forest and maybe that gives them the incentives to preserve the forest, recuse persuasion, please don't cut down the forest. Okay, various things have been tried in various combinations. So there are a number of government programs both in the United States and China, conservation reserve program which I'll talk about briefly later on, sloping lands conversion program and many others in China. These are examples where we're trying to provide payments, we're trying to provide incentives for actions taken by landowners or farmers to do things to maintain natural capital and the continued flow ecosystem services. There's activity in the private sector. So I've been on the board of the Nature Conservancy for the last nine years and they had a partnership with Dow Chemical. You can see here working together to value nature. So Dow has been trying to come up with ways of valuing nature and bringing that into its operations. Unilever has been trying to push for using sustainable agriculture in their supply chain and a number of other companies are doing various things. There are commodity certifications. So forest certification, FSC, there's the ISO 14000 series that tries to provide standards. There are a number of commodity round tables, soybeans and sugar, bon sucre, seafood. So there are a number of places where people have said we're going to certify producers who are doing sustainable production. One specific example in the area of water provision is what are called water funds. Some of you I'm sure are aware of what water funds are. They're payments from downstream beneficiaries of clean water to upstream providers of water. This actually started in New York City and New York City going up to farmers and landowners and the Catskills and saying we will pay for practices that move cattle away from streams, preserve buffers along streams and reservoirs. But it took off in Latin America and now I think it's 30 to 40 water funds in Latin America which are organized on this principle of downstream beneficiaries paying upstream providers to provide clean water. So there are a number of tools out there now to try to make the link between human actions and what happens in ecosystems and ultimately what happens to us and also on the incentive side like the policy, how do we provide incentives, how do we correct this asymmetry between marketed goods and ecosystem services for which oftentimes there is no payment. So I want to take these kind of general statements and general comments down to some specific examples in work that I and colleagues have done over the past few years in China and in the U.S. I'm going to start with the U.S. and some of the work here but I'm going to spend a bit more time actually on the Chinese examples because they're really interesting and I think we're more familiar generally with most stuff. I see some people who look like they're maybe grew up in China so you probably know more about China but most of the people in the audience I think are more familiar with the U.S. examples. So first of all, why focus on China and the U.S.? Well, I think they're both really interesting cases but they are, in terms of super-relatives, they are the two largest in terms of their economies, in terms of how much they export to the rest of the world, in terms of how much they import from the rest of the world, in terms of agricultural production, in terms of greenhouse gas. I mean almost any activity that you think of that affects ecosystems and nature. China and the U.S. are one and two, sometimes flipped. So what happens in China and what happens in the U.S. is important. Important for those countries obviously but also important for the world. And this was really brought home to me two years ago at a natural capital project symposium and we brought in a large delegation of Chinese who were there and they were very popular and they were very popular with some delegations from Sub-Saharan Africa. For example, we had a group from Mozambique and the Mozambicans really wanted to have a meeting with the Chinese because they said, we hear what you are doing with your programs to monitor natural capital in China. We want to do something similar. We often think of China's impact in terms of what they are importing from Africa or how they are building roads but also increasingly as a thought leader countries are looking to China. I think both countries are interesting. I am going to start with the U.S. Thinking about conserving natural capital ecosystem services here. We have a very long tradition in the U.S. Clearly going back into the 1800s, I will start with Teddy Roosevelt at the turn of the 19th, the turn of the 20th century, early 1900s. You can see the quote here. I have done work on something called inclusive wealth which is trying to look at giving to the next generations a set of wealth or assets that are at least as large as what we gave. Doing better for the next generation than we started with. Here he is over a hundred years ago basically saying that same thing. We have a long tradition of government actions to try to conserve so I have listed some not all of the important conservation acts. Going back into the 1800s, the world's first national park, Yellowstone, back in 1872 on up. You can see around the flowering of the environmental movement around 1970. In the 60s you had the Wilderness Act and the Wild and Senior Rivers Act and Marine Mammal Protection Act and the Coastal Zone Management Act and the Endangered Species Act all in that short burst of environmental activity. That is the formation of EPA and Clean Water and Clean Air Act about that time. We are still living with the legacy of that time period. There have been very few new environmental pieces of legislation and looking at the current Congress and the current administration we would not expect anything anytime soon. Most of the environmental groups or conservation groups are desperately playing defense. How do we keep these things still being vital and still protecting natural capital today? Even so there are a large range of programs. This is just from the Department of Agriculture and Natural Conservation Research Agency, Service at RCS. You can see it is kind of bewildering almost the number of programs. However, if you look at how these programs are funded, we see a falling standard. This is enrollment in the conservation reserve program, one of the largest. It has been steadily declining even prior to the current administration. I am going to get off of policy and talk about some modeling and results. This is a paper that came out in Proceedings of National Climate Sciences a few years ago. Josh Lawler from the University of Washington is the lead author. He had a large team of ecologists and economists and geographers and others. Basically what we are trying to do is we are trying to project ahead. Thinking where we are, where we were at the turn of the century, and where we might go in 2051, what is happening with land use and how could we project land use ahead and how could we think about levers to influence land use change and hence with the change in land use a change in the provision of some important ecosystem services. We were focused on carbon, we were focused on habitat for various species, and we were focused on agriculture and agricultural crop and timber production. So not a complete set of services by any means, but an important set. So we were looking at how has land use changed and one of the things actually that is just kind of important to note is land use change really depends, if you are looking at how it has changed in the past, it depends on relative prices. So we looked at two time periods and the changes in land use over these two time periods. So in the 1990s crop prices were really low. So agriculture prices were really low. We had a lot of land being retired from agriculture. If you project that out into the future it looks like we are going to continue to have a decline in agricultural land. However, more recently there was a kind of spike up in agricultural prices. So there was a period of high crop prices in the period of 2007-2012. You have a very different picture of kind of the underlying trends of what is going on. So we wanted to kind of consider both cases, if you will. So we considered the sort of high agricultural prices and low agricultural prices. And then we wanted to look at a couple of alternative policies to try to shift around the sort of baseline. Like what is happening due to market forces, particularly these agricultural crop demand and prices. But if we wanted to try to give incentives to preserve forests, we wanted to try to preserve natural habitats more generally or to contain urban development within current metropolitan areas. How would that affect both land use and then the subsequent flow of ecosystem services? So that is the analysis that we did. We looked at these land uses. So we have five kind of collapsing things into five big categories. So crops, pasture, forest, rangeland and urban. And there is a large data set underneath this. So we had the NRI National Resource Inventory. And we basically had an econometric model that looked at how did things change between 1992 and 97 as a function of characteristics of various parcels. So that is kind of the engine underneath this. It is driving the land use change. And then we, as I said, we looked at carbon storage. We looked at timber and agricultural production. And we also looked at habitat change. We considered a collection of almost 200 species, 194 species. What kinds of habitat did they need? How much habitat? What counts as habitat? What is their range? In four categories. I'm only going to talk about the bottom two, game species and at-risk birds. The at-risk, so threatened, endangered or species of special concern. Those are the ones for which there is further loss of habitat is particularly of concern. So we do this analysis. We run things forward. We look at what happens between our projections between 2001 and 2051. And you can see, so obviously if crop prices are low, you're going to get land coming out of agriculture. So that's the minus 9% there on the left. If you've got high prices, you have land going in. And then some things, there's just a secular trend out. So less pasture. If you've got a high demand for crops, you could even faster decline in pasture land. And then you can see, obviously urban is increasing. We have more cities. People are expanding. But in general, pasture is declining. Range land is declining. Cities are growing. Forests, we tend to be reforesting in the U.S. And then crops depend upon what you think about agricultural production. What does this mean in terms of services? Well, in terms of food production, part of this is driven by land use change. And you can see the difference between if you thought crop prices were low versus high. Part of this, why do you get these huge increases in production? We have, or at least we have had historically, increases in yield. So there's been a long-term secular trend of increasing production per acre. If this continues, if that trend continues, you can see that most of the increases basically due to changes in yield, not changes in land use. Those were very small. These are really large changes in yield. Carbon storage, with the increase in forest, you get an increase in biomass. Carbon stored in ecosystems. Soils, if you're expanding agriculture, you get a release of carbon from soils. And then finally, in timber production, we have this increase in forestry, which allows an increase in forestry products or timber output. Okay, so in terms of birds, we actually had, this was kind of a puzzle for us. How do we summarize the information about large numbers of species? So you have 194 in four categories. So you can think about roughly sort of 40, 50 species within each category. And they're doing all different kinds of things. They're not behaving very well. And so we chose to represent the changes for the species in terms of how many of the species were losing more than 10% of their habitat, how many of them were gaining more than 10% of their habitat, and how many were kind of in between there, not a large trend either way. So you can see what happens. Most actually have a little change in habitat, but the at-risk birds, there are a number of species of at-risk birds that lose more than 10% of their habitat. So what's interesting to us is we didn't know what patterns we would get, but generally on the ecosystem's service side of things, we were doing okay. We were getting carbon sequestration. Food production was going up and so forth. But for the species, we are continuing to lose habitat. And for the most at-risk species, that's showing up. That's the largest trend. So the other thing we wanted to do with this analysis was ask, well, how can we change this? Can we affect the outcome? So we considered three policies, one which paid people to plant trees and keep trees, so forest incentive, one that was trying to preserve natural habitat, so it could be forest, but it also could be grasslands, and then one that was containing urban areas. And you can see the effect. We wanted to change relative to those cases that I said before. So if we put on, for example, the incentive for forest, you get a lot more land coming into forest relative to without that policy, and it's coming out of almost all of the other sectors. So certainly crop, it's coming out of range and coming out of pasture. And similarly for the other two strategies, what does this mean in terms of services? Well, if you've got more forest, you tend to have more carbon storage. You also tend to have more timber production, but less food production. There are these trade-offs. And if you do things for native habitat, it's actually not good particularly for any of these ecosystem services. And if you contain cities, actually what happens is you tend to be good for all services because you're getting kind of more rural land. You're getting both more crop land and more forest. What happens for species? Here it's interesting. Let's just look at the at-risk birds. So the purple one, you get a decline in the number of species that are losing habitat or for which there's no change and a big increase in the number of species that are gaining habitat relative to no policy. So the point here is if you target these policies, you can in fact have some impact. But one of the things that was a little bit sobering for us is just how large these kind of secular changes are. So land-use change here and the underlying drivers of land-use change. You can design targeted policies which will do certain things for certain ecosystem services, but you can't have it all. We didn't find any policies that gave us all of them simultaneously. Okay, I want to get to China. So I want to talk about several examples of doing natural capital and ecosystem services in China. China in the modern period has not had as long of a history of conservation, but I think one of the kind of like in Silent Spring in the United States in the early 60s, the Yangtze River flood in 1998 was really a wake-up call in China. So it was a huge flood, thousands of people lost their lives, huge amount of property damage, and shortly after that the Chinese government got serious about we need to do large-scale conservation to help with flood mitigation, other problems of soil erosion and habitat provision and water quality, sandstorm prevention. So some of these problems, if you've been to China, you know that there are serious air and water problems still, from the top on down. So President Xi Jinping announced that the goal in China would be to become the ecological civilization of the 21st century. Okay, so a grand goal. Not just can we improve water quality somewhat, but we want to be the ecological civilization of the 21st century. So one of the famous quotes is, clear waters and lush mountains are gold and silver, we will not trade them for gold or silver. So strong statements from the very top about the importance of natural capital and the environment more generally in China. So we have been fortunate, we, meaning natural capital project, have been fortunate to work closely with colleagues at the Chinese Academy of Sciences the Chinese Academy of Sciences, unlike the US National Academy of Sciences, it's great to be a member of the National Academy of Sciences but basically it's a pat on the back. The Chinese National, the Chinese Academy works with the government on projects that the government deems of high importance in China. So their task with doing real work, you know we're like this honor society, they do real stuff. There are committees, so the National Research Council part of the National Academy does a lot of reports and so forth. But if you work with colleagues at the Chinese Academy of Sciences oftentimes they're working very closely with the government on high priority things. So for example, our colleagues have been tasked with thinking about where and how much to protect, how can we secure nature and worry about poverty alleviation and providing livelihoods, and how can we move beyond GDP as a metric for performance and thinking about incorporating ecological measures of performance. So under this first, this notion of where and how much to protect, so China has initiated what are called ecosystem function conservation areas or AFCAs. Our colleagues at Chinese Academy of Sciences were very influential in figuring out where to put these and for what reason, like is this for flood control or is it for habitat protection or for water resources or for sandstorm control. So you can see these are places on the ground in China which have been, for which the government has said the primary goal of management in these areas is actually for ecosystem functions. Not for agriculture, it's not for urban development. The primary goal in these areas is to provide these ecosystem services. Okay. They've also set up a new national park system. So they've always had a set of kind of ecological reserves or nature reserves, but now they're going to have a system of national parks. Where should the national parks be? Where should ecological reserves be? It's remarkable, but at least on paper, about, you know, it was 49% and roughly half the land in China has been designated as having a primary function, the preservation of natural capital and the provision of ecosystem services. I cannot imagine half of the United States being set up for that purpose. Okay. Burrowing down into particular areas, how are there going to be programs that both alleviate poverty, provide livelihoods, and provide for the protection of natural capital provision of ecosystem services? So this is a picture of Mi Yun Reservoir, which is north and east of Beijing, and it is the only surface water supply for Beijing. Beijing is in a dry area. North China is dry. South China is quite wet, but water supply for Beijing and other northern Chinese cities is, things are scarce. And so taking care of this watershed and this reservoir is of great importance. One of the things that they did, they tried a program of payment for ecosystem services in this watershed. They were paying farmers to get out of Paddy rice. Paddy rice very, you know, there's a lot of water obviously, a lot of nutrients, flushes a lot of nutrients into the streams, which ends up in the reservoir, which then downstream Beijing has to figure out how to clean up or deal with. So what did they do instead? For someone who comes from the Midwest, whose bane of existence is expansion of corn agriculture. They went into corn, but corn compared to rice is a good deal. Corn in the Midwest compared to almost anything else is not a good deal. So I had to get over my like inherent notions here. But anyway, we evaluated this program, you know, how much did farmers change their behavior? What was the impact then on water quality? What impact did this have on the livelihoods of farmers and their income? Very interesting project. We're doing many of these kinds of projects across China. They have paid two, approximately 200 million people are being paid at least part of their income to restore natural capital. And it's just staggering the size of these programs. And I have no idea what the llama is doing in that picture. Okay, so what about this last notion of, or one of these notions of, can, you know, how, so the government was interested in how have their investments in natural capital paid off? So can we see that following that big influx of conservation payments following the 1998 flood, has there been an improvement in equal-system services from investing in this natural capital? So this is a paper led by our colleague, Uiyang Zihun at the Chinese Academy of Sciences, published two years ago in Science. So the context here is, you know, again, there's been a large number of programs, a huge scale across all of China. What has been the impact? What benefits has China received from this investment? So we wanted to, you know, understand that. Our Chinese colleagues have collected information. There's a Chinese ecosystem assessment, kind of like the Millennium Ecosystem Assessment. They are tasked with kind of tracking underlying ecological statistics. There's a large number of statistics. So for example, there are, you know, satellite images and on the ground field surveys and records about it. Again, the scale of all of these things is sort of staggering. For us, it was wonderful. There's a huge base of information on which to basically do models of ecosystem services. I would love to say that we could directly measure these ecosystem services for the most part. They were not directly measured. So we're modeling. Like how much soil erosion would you expect if you had done these kinds of practices in these places? So if you, under the Sloping Lands Conversion Program, you put land into perennial vegetation, rather than annual crops, what could you expect as a difference in the amount of erosion? Or how fast would water runoff? Obviously these models that we use are built and from or use the studies that we have in China to calibrate them, but they're still modeled as opposed to actually measured output. Okay, still it's impressive how much they are doing and actually going forward, they are doing a lot of modeling. So we used the invest models for integrated valuation of ecosystem services and trade-offs to do this. We looked at everything from food production, to carbon, to have half a biodiversity flood, and so forth. So we looked at this set of seven outcomes. Okay, and the results, so we could plot this over all of China and look at what changed between 2000 and 2010. Oops, sorry. So we could show where were areas of high carbon sequestration. For example, obviously it's more in the areas of forest, where is the food production happening, where is soil erosion happening, where are important areas for water retention, for sandstorm prevention and so forth. So you can see that. And we did that for 2000 when we had data and we also did it for 2010. And then we looked at the change. And what was interesting was again, like in the US, most of the ecosystem services were actually showing an improvement. So for the Chinese government, this was good news that their investments to change land use, to try to preserve natural capital, was showing up as an improvement in the provision of these ecosystem services. So all of the things flood, I've seen food production, carbon sequestration, soil retention, sandstorm prevention, water retention, flood mitigation, all of those measures improved over this time period from 2000 to 2010. What did not improve, just like in the US, was protecting habitat for biodiversity. So oftentimes, and Taylor knows this well, I mean, the story is we're going, one of the, if you're interested in biodiversity protection, one of the ways you could justify that, we say we're going to do things which are good for people. We're going to provide for ecosystem service provision. And it has work, but it doesn't necessarily mean that biodiversity is also improving at the same time. And in fact here, it's going the opposite way. Okay. How am I doing it for time? I'm kind of about five, okay, a few more minutes. Good. All right. One last example. So China is embarking on this really ambitious project to develop what they call gross ecosystem product, GEP, as basically a complimentary measure to GDP. So you have an economic measure, you have a more ecologically based measure, but it is parallel in construction to GDP. So it's trying to give kinds of similar types of information, but really looking at what value is nature contributing to the economy and to well-being of people in China. This is part of a movement that's international. People have talked about the need to move beyond GDP for a long time. There's been a lot of work here at the GUND on this. This is a book back a few years ago, Joe Stiglitz and Marja Sen, two Nobel Prize winners in economics sponsored by the French government called Mismeasuring Our Lives, Why GDP Doesn't Add Up. And there's a third, I always feel sorry for this third, well, I don't know if I feel sorry for the third author, authoring something with two Nobel prizes, you know, because it's always like, Stiglitz and Sen, and then the Tuzi. Anyway, but, you know, so there's a lot of attention, this UN is working on this, World Bank, a whole bunch of people are, these groups are working on, trying to come up with measures. So anyway, GDP provides, you know, you like it or hate it, it does provide a clear and easily understood signal. It is the most, you know, it's a headline number, it is the most widely reported economic statistic, and maybe statistic in general. We don't have in the natural capital of the ecosystem services world or in all of ecology, kind of the equivalent clear signal. So how can we provide something that maybe supplies that headline role? So in China, they're developing and testing this measure of gross ecosystem product. We're right in the middle of this. Now the aim is actually quite ambitious. It's to try to reveal the contributions of ecosystems to the economy and human well-being to show the connections among regions like upstream and downstream, upwind and downwind and so forth. So what you do upwind affects whether there are dust storms in Beijing. To provide a basis for compensation, kind of like in water funds, but here we might pay grazers out in Inner Mongolia to do practices at stabilized soils so that their dust doesn't get wind blown and carry into Beijing and other northern Chinese cities. And also to serve as a performance metric for local and provincial government officials. So in China for many years, leaders were basically assessed by how fast is the economy growing? Again, people respond to incentives. So if you give incentives to have your province grow quickly in GDP, things grow quickly. I mean in China has been extraordinary in terms of its economic growth, but it has had really poor performance in many aspects of environment. So the push here now is to say let's try to even this up, let's try to get rid of again the asymmetry and have both ecological measures and this GDP, kind of straight market measures being reported. So GDP will be reported alongside GDP. Okay. So to do this, one part is you actually have to create the natural capital accounts on which ecosystem services, which are the flow of benefits, a crew. This they are committed to doing the Chinese government. Every five years they're going to undertake a Chinese ecosystem assessment. Once you have that, you need to be able to translate this into the flows of goods and services, directly or model the way we did it in that paper I just talked about. You need to have a way of valuing these ecosystem goods and services, pricing them. And I'll emphasize that step for just a moment. One way of doing all of this accounting is not to put things in monetary terms, but to leave them in ecosystem accounts or biophysical accounts. And you can certainly do that. Some of the accounting in the UN is going that route. The people we were working with in China said, no, we really want you to the extent possible to report this in monetary terms so we can use this. If you report things in non-monetary terms, it will get used less. Not that it is useless, but it will be used less often. So there's a real push here, and there's a tension here, because frankly doing this well is some things we can do quite well, some things it is a stretch. And so, you know, practice will evolve and we can talk about it. But anyway, I'll just very briefly talk about Qinghai province, a province in western China, up on the Tibetan Plateau, high for the most part, very dry, grassland. But it is the water tower of Asia because it's the headwaters of the Yellow River, and the Nekong River. So this water tower of Asia, you would think that what they do for water is going to be really important. It's a place where there is a lot of degraded overgrazed grasslands. There are also many endangered species. So it's not strictly a play for water, but there are a number of important conservation objectives here. We looked at a set of ecosystem goods and services to put into our GEP accounting. The obvious ones are provisioning goods, so timber, forest products, fisheries, agricultural crops, animals. We spent a lot of time sussing out what are called regulating services. So water supply, water quality, soil retention, sandstorm prevention, you can see the list. These are things for which it's really important, and largely right now they are invisible. So the provisioning goods actually show up by and large in GDP already. So when there's a problem in agriculture, that's known. When there's a problem in sandstorm prevention, you know, yeah, there's a sandstorm in Beijing, but what can you do to stop it? You know, what actions do you take? Well, this is really trying to get at the kind of underlying conditions that give rise to these issues in regulating services. So carbon, air and water purification, flood prevention, and so on. And then we would love to have a long list of cultural goods and services. We have one. So we're starting with one, ecotourism. We can do that. But in IPES, of the intergovernmental platform, there's huge arguments and huge debates about the importance of cultural services and how can we accurately describe them. So that's an area where I hope that, you know, five years from now giving a talk like this will have a longer list of reasonable things to say about that. Okay, I'm not going to say much about the, we can do this for provisioning services. It's going to be straightforward. For the most part, there are good statistics already. You can look at the change here we did between 2000 and 2015. Mostly it's going up, both in terms of monetary values and in terms of biophysical values. I wanted to talk very shortly about water because it's hugely important here. So, you know, how is water that originates in Shanghai, has it used downstream? So irrigation, hydropower, industrial and domestic use. So, and then, you know, there are various ways and a factor in what the values of those are. So what, oops, sorry, what is the value that you get from downstream hydropower production? Like, well, it's the amount or the share of water that's attributable back to Shanghai and what is the value of that electricity that's created from the hydropower from that particular dam. Okay, so you can do similar kinds of things for irrigation, for industrial and domestic use. Actually, water prices in China are actually less distorted than they are in the U.S. You can actually use them for exercises like this, which was a very pleasant surprise. You could not do a similar thing in the U.S. on that. So we went through this exercise and did this for all of those services and gave it our best attempt to do both biophysical values and the monetary values. We also did this for ecotourism and then you can sum this all together and one of the interesting points for us to date people have paid attention to provisioning services because it's easy. You can do that. Regulating services by and large have not been valued. They've not been quantified and not been valued. But if you look at the monetary values that is the largest category is coming up in regulating services. So I don't know that it's measured very precisely but I'm pretty sure it's not. But the magnitude, the point is that it is a large source of value and currently it has largely been ignored. So what do I take of this? The importance of regulatory services even though these things are really hard to do it is worth the effort to try to improve the results here. A large share of the value in Shanghai comes from water supply. It shouldn't be a surprise as it's called the water tower of Asia but not accounting for these regulatory services you'd largely ignore this. Provisioning services are easier to measure but not where the bulk of value comes in. So in terms of what lessons do I learn from this exercise and more generally this will take time. Still we're somewhere between the Wild West period and things actually starting to settle down and become more systematic. It will take a little bit of time and especially if this is going to be bought into by the UN system. So the people who are in control of the statistical accounts that countries do, they tend to be rather conservative and you have to prove that you're up to your that you can do this with people who do GDP. Chinese government is committed and they really want to integrate this into their decision making and if China does it again, it doesn't just stay in China, China is a role model for many other countries. One note, GEP is a statistic just like GDP is a statistic and it does not tell you everything that you want to know. In particular it doesn't tell you much about sustainability. You can over fish and have a large harvest today with a consequence of having poor harvests in the future. So you need to compliment GEP with measures of natural capital and have non declining measures of natural capital in order for you to actually be thinking about sustainability. So GEP is not the same as sustainable development and that you know as I said we need to have trends in natural capital as well. And then GEP is a useful compliment I mean having the Chinese government really wants this, they don't want to be reliant just upon these economic measures that they have now. There is however you can't just add GEP and GEP we are complimentary measures. There is overlap there are things that show up in both like crop production but there are things in GEP that just do not show up in GEP that are invisible in GEP. So it's important to expand our set of metrics to include the values of nature that currently don't show up. So finally one of the things that really struck me is thinking about when did GEP and basically the economic accounts, what was the spark? The spark was the great depression. So people had been playing around with economic accounts and wouldn't it be great but it was really the great depression that pushed governments to say we are flying blind. We need to have a set of macroeconomic performance metrics. Shouldn't the great degradation of natural capital now be the spark that said we need to have better ecological measures. We need to know what's happening in nature. So in the 21st century we're not flying blind anymore into the future. You know it's kind of long but with that let me stop and see if there are any questions. Thanks very much. We'll take, you know, 5 or 10 minutes of questions here and then probably a German next door where there's food and drinks and things to keep asking questions and get out of our seats and stuff. So I'll let you call them and then you can call them. Yeah. So one question is in China in terms of decision making. There's a tension between the kind of national communist party and the local communist party. And, you know, a lot of the development like factory here and there was because of local communist officials. So I was wondering kind of what your kind of take is on property in China and kind of how that plays into these decisions that are probably at the local level that then kind of maybe, you know, get aggregated. And these decisions are kind of you know, have that tension around kind of like promoting local growth. Yeah, it's a great question. In China as I've learned I'm certainly not expert on this but actually there's a Chinese proverb that I love. It's like the mountains are high and the emperors far away. So central government might say we're doing this but like what happens on the ground. So there's a really interesting difference between the AFKIS that I talked about these ecological function conservation areas which are kind of decreed from on high like you will set aside these areas and that's, you know, something that's done from Beijing outward. But there's another policy which I didn't talk about which is called redlining. Redlining is up to the local officials so there's a so these ecological redlining and so within the kind of redlining areas there's supposed to be protection of various degrees but it's, you know, there's a presumption that there's going to be kind of an ecological orientation but the local government, local officials get to choose what areas go inside of the ecological redlining that go out of the actual redlining. So part of this was this kind of realization of attention. It's like you can't, all these things can't come down from above or they're going to get a revolt from below and also they don't have enough to actually like monitor, not enough resources to monitor everywhere. So this was a you know, so it's interesting. I spent you know, six months trying to figure out we know we've got these EFCA's and then now there's this redlining and how do these like match up because they're both seem to be trying to do the same thing which is to get at the you know, water areas where conservation objectives are important. But the real difference as I said is one is more top-down, the other is bottom up so the second what we're going to say is here's your goal for your province you have to set aside so much of your land whether it's 10, 20% or 40% but you choose so the only thing you have to tell us is in the end the areas that you've chosen add up to the total but it's bubbled the property I am not this but I'm going to kind of dodge that one for the most part I'm still sort of trying to figure out this you know, okay well you get to use the land and you're kind of leasing this but it's not really yours, it's a government what does that really mean in practice I mean it's really interesting I wish I could answer it some of the early work in value of the services included crop-wilder properties it's fairly easy to put a number on it China has immense crop-wilder relative resources some of them are very vast if you added in those numbers or tried to know there that Nigel Max did in the UK where the Chinese were to do some of that work I'm curious to see where how those would affect the numbers that's a great point we do not have that in the current versions so my view of this in general is that this is kind of the first pass we're trying to do this in a systematic way but we're going to have for every ecosystem service that we actually do today we'll probably have five, ten in ten years time that's a really good suggestion I'll keep that in mind and I'd love the suggestion of who it is who's already started to assemble this information because that's the other part yeah, that's great thank you I actually have two questions which one do you want to answer do you want my modeling or my economics and policy question go for it so in general it seems like the approach that you have is sort of a land sparing versus land sharing mentality as ecologic and I'm curious to hear what have you thought about models that would better incorporate practices or ways that agriculture is using conserved with forest conservation habitat preservation as opposed to food production is here and forest around there and if so do you plan on moving some of your modeling in that direction in the future yeah, so some of the stuff we've done particularly in Minnesota it's a very good observation and some of the early work was like yes, it's putting stuff down it's one thing together like those stuff in the U.S. it is one of five things and that's it work that we've done in Minnesota we actually are incorporating did you do cover crop did you do what were your tillage practices when did you put on the fertilizer and how much so exactly this notion of it's not just corn it's what did you do in terms of managing conceptually it's not a problem we can think about instead of saying I have a block of land that's called corn I actually have a block of land that's called corn with conservation tillage with this level nitrogen and phosphorus applications so our limit really is not it's not conceptually difficult to get in the practices as opposed to just the land use and increasingly we are doing that because it's really important certainly in agriculture but almost anything else so the only limitation is do you have a good sense of what it does so we spend a lot of time working in Minnesota figuring out if you put in these buffers along streams what is the evidence for how it changes how much of that how much of the nutrients actually gets into the stream versus being unfortunately so in principle it's not I say this a lot in this one but we have evidence to say something reasonably about putting it into the things on the Minnesota stuff where we did the best practices the current set of best practices so we were trying to get that analysis we were trying to get to meet TMDLs which required roughly 70% reduction in phosphorus and sediment huge we weren't going to make it so we said okay let's follow the recommended best practices how much of a reduction do we get 10% I mean you know it was we were not getting close to the kinds of objectives for water quality that were being said just using some of these it's like you have to retire some land especially in the key places where it ties with your water quality it's helpful for the audio pickup for the video thank you so my question is on the fishery side and so we've seen it's like rampant ability for China to kind of conserve and restore where these functions and services are supplied I wonder if you've seen evidence for water quality if you've seen evidence sort of similar top down where those ecosystem services are demanded thinking of how we just have these cities kind of popping up and so are they going to take into this kind of well taking account of this ecosystem service and GDP thinking into kind of future urban development yeah it's a good question so when we first started I don't know the highest but I'll give you one anecdote which is not I'm going to start out in more positive I guess I'm going to start out in more positive which is they zone everything so there's no such thing as unplanned urban straw you can still have a planned urban straw but it's not things are zoned so in general the Chinese government in some sense it's rational that's why they keep coming to the Chinese Academy of Sciences tell us what are the consequences of doing it this way versus that way so that's the plus side the minus side is they're building a new city that can take the strain off of Beijing so where did they locate this new city in a place where you were taking seriously the kinds of urban ecosystem services like what's the flood risk here in particular you probably would not have put the city ready to put the city so why did it get located there I don't know the ins and outs of things but in some ways like people everywhere somebody is a promoter of this and you know it's maybe it's not monetary but it's like an ego thing I don't really know this story but they ended up putting the city not in a place which is that sensible from the point of view of what's happening to nature or what are going to be the benefits or costs to the city when it floods stay clear time for one more question and this gentleman had a question earlier so I'm going to pass the mic here but encourage everybody to stay for a reception because right next door to continue the conversation with Steve, Taylor and Sal so I thought that the China examples were really interesting because I know and read a lot of people who make a lot of hay about how the concept of valuing ecosystem services is sort of connected to capitalism and commodification and of course China is not like a fully planned economy but it's a partially planned one and it all seemed to me as if this concept of valuing ecosystem services kind of works best and makes the most sense within the Chinese context and so I wondered if you could kind of sort of elaborate how this has changed your thinking or how you try to change other people's thinking and what is the concept where it seems to be based on its significance as well within the context of a semi-authoritarian semi-planned economy compared to the situation that we have So the main answer I would give to you there's actually we could talk about this for a long time but the main answer that I would give to you on this is most ecosystem services in economic terms they are public goods so it's really hard to have somebody in a free market economy have an incentive to do what's necessary to continue to provide them and that's what we've seen with declining in China what we have to do is you have to convince the leaders that this is a public good which is not hard to do because most of these are public goods and that this is in the best interest of the citizens of China largely speaking the government will take actions to help provide those public goods they'll set up these big programs like the Slovenians conversion program and they will fund them well you know here we have these programs and there is we talk about providing some level of public goods but they're shrinking like with this current administration and we're going to get a large under provision of these it's really hard here we've got this market mythology like the free market will supply all goods free markets do really well in supplying private goods those things that are non-rival that have those elements to them and non-sluable and non-rival but in China you don't have to like pass that market test you have to be able to convincingly say this is going to improve the well-being of citizens of China broadly speaking and then you have a shot at getting things done so you know after the flood in 98 the leaders generally recognize that it was really important to protect watersheds and protect the natural capital so yeah I joke with people with them but it's not really a joke it's easier to do a lot of this work right now in China than it is to do here in the US okay so once again you've heard it several times but next door please continue but for now please join me