Replicable socio-economic impact assessment tools of transformational pathways

1 www.transformar.eu Socio-economic assessment of adaptation solutions A rapid cost-benefit assessment of an urban nature-based solution in Lappeenranta, Finland. Implementing adaptation solutions in Europe is increasingly important, as extreme weather events are on the rise. Analyzing the economic, environmental, and social impacts of such solutions is vital to their implementation, but remains complex. A number of tools exist for ecosystem service valuation, both in the urban and rural context. However, most are not applied in an operational context, and cannot be replicated without extensive effort. In TransformAr, we selected the Nature Smart Cities Business Model (NSC-BM) tool and applied it to assess the costs and benefits of an urban infiltration trench in the city of Lappeenranta, Finland, one of the TransformAr demonstrators. The NSC-BM is an easy-to-use tool to assess the costs and benefits of urban nature-based solutions. Socio-economic assessment Knowledge of the social, economic and environmental impact of potential adaptation solutions is vital for decision-making and implementation. However, assessing these impacts is challenging due to the diverse amount of strategies, the dynamic nature of ecosystems, the unpredictability of climate-induced changes, the difficulty of evaluating social or cultural dimensions (e.g., aesthetic appreciation), and the limited time and resources of (local) authorities. Which tools exist? A number of tools to valuate adaptation solutions exist. Van Oijstaeijen, Van Passel, & Cools (2020) provide an overview and evaluation. Most tools focus on biophysical features and do not incorporate economic considerations. This leads to struggles for (local) authorities to implement high-level policy goals. The results of this review fed a novel tool, developed in the interreg-2seas Nature Smart Cities project: The Nature Smart Cities Business Model (NSC-BM). NSC-BM is a comprehensive tool for estimating ecosystem services’ valuation qualitatively, quantitatively and monetarily, overcoming the previously mentioned shortcomings of other tools. The tool is designed for green urban infrastructure, and in TransformAr replicated for the urban nature-based solutions that are currently implemented. Key points Assessing the social, environmental, and economic impacts of adaptation solutions is vital to decision-making and implementation. Socio-economic assessment is challenging for a number of reasons (e.g., valuation of ecosystems). The Nature Smart Cities – Business Model aims to overcome the challenges by providing a straightforward tool for socio-economic assessment of nature-based solutions. An application to a case in Lappeenranta, Finland showed the usefulness and challenges of the model to analyse costs and benefits of an adaptation solution. Figure 1 A simple diagram of the dimensions of socio-economic assessment (from: Vis, Dörnbrack, & Haye, 2014). 2 www.transformar.eu Case study: Lappeenranta The case under study is located in the city of Lappeenranta, Finland, and covers 1750m2 of residential area in Koulukatu Street. The area is at risk of water stress and flooding. Therefore, 245m2 of the area is transformed into an infiltration area. In the NSC-BM (access to tool here), we compare the old area to the new area in terms of landscape types and ecosystem service outcomes. Steps of Nature Smart Cities model 1. Project description: The project site before and after renewal is defined in terms of land cover types (e.g., grass, grey infrastructure, …). 2. Selection of Ecosystem Services: Users indicate which ecosystem services matter for the project, usually determined by the local authorities (e.g., water retention or biodiversity). 3. Parameter selection: Depending on the selected Ecosystem Services, additional parameters should be filled out (e.g., Average precipitation per year). 4. Quantification: The model quantifies relevant outcomes, comparing the old and new scenarios (e.g., in terms of m3 water retained). 5. Qualification: Users score the different scenarios in terms of contribution to each of the ecosystem services from 0 (no contribution) to 3 (excellent contribution). 6. Monetization: The model uses pre-programmed costs and benefits, which can be adjusted to more accurate values by the user, to calculate costs and benefits of the scenarios. 7. Factsheet: The tool generated a factsheet of the results. Figure 2 The case and location of Lappeenranta, Finland. 3 www.transformar.eu The baseline scenario (old street) consisted mostly of grey infrastructure and some lawn and trees. The new scenario includes a larger variety of greenery (grass, flowers, shrubbery) and an infiltration area. The municipality determined that water retention and infiltration, habitat for biodiversity, aesthetic appreciation, carbon sequestration and air filtering are the prioritized ecosystem services. Case study results After filling out the important ecosystem services and requested parameters, the model quantifies contributions to ecosystem services (see Figure 4). The largest impact is on water retention; the new scenario retains 867 m3 water per year compared to 273 m3 in the previous scenario. The new street also sequesters more carbon than the old (108 kg/year compared to 97 kg/year). Air filtering is also improved (6,27 rather than 5,56 kg/ year). Finally, the new scenario is a better habitat for biodiversity, with increased potential for birds, butterflies and bees. Qualitatively, the new scenario also consistently scored higher than the old scenario (baseline), as visible in Figure 3. Figure 3 Qualification of the case in NSC-BM. Note: the diagram includes a hypothetical ‘grey’ scenario with only grey infrastructure for comparison. Key concepts Socio-economic assessment = Evaluation of the social and economic impacts of a project or policy on communities and the economy. Nature-based solution = An approach that uses natural processes and ecosystems to address environmental challenges. Ecosystem service (in climate adaptation context) = Natural processes that help communities cope with climate change impacts by preserving or restoring ecosystems (e.g., flood regulation, carbon sequestration). Nature Smart Cities – Business Model = A tool that allows to assess social, economic and environmental impacts (i.e., costs and benefits) of green infrastructure or nature-based solutions. 4 www.transformar.eu To calculate costs, the costs were adapted to the Finnish context. The investment costs of the new scenario are €83,100. The maintenance costs are calculated for various levels, as the maintenance cost of the infiltration area is unknown. In almost all scenarios, the maintenance cost will be higher in the new area due to the infiltration area (€1800-5600 per year compared to €1900 per year in the baseline scenario). The annual benefits of the renewed streets are estimated to be €841 compared to €257 for the old scenario. Note that both cost and benefit estimations should not be interpreted as absolutes. Not all ecosystem services can be monetized and the numbers only represent a subset of the added value. Despite the likelihood that costs are higher in the new case, it is concluded that the investment is valuable due to the increased benefits to ecosystem services and monetary benefits. Figure 4 Quantification of the case in NSC-BM. Considerations when applying NSC-BM The NSC-BM is a tool that is easily understood by many, facilitates effective communication among stakeholders, and provides valuable insights into cost implications. The NSC-BM can be completed in a few hours to a few days, depending on how much of the data requirements are readily available. It is a rapid assessment to gather first insights into the costs and benefits of a potential investment in urban nature-based solutions. The results can also be used in further cost-benefit analyses or the stipulation of adaptation pathways. The tool also has some limitations. The pre-programmed ecosystem impacts, costs and benefits allow for rapid assessment, but may not be accurate in every situation. The values in the model are set for the case study cities in the Nature Smart Cities project (e.g., Belgium, the Netherlands, …). Finland has higher prices, and while adjustments have been made towards Finnish prices, the values are likely underestimated. The tool allows to update the preprogrammed values to local values. The estimated values are intended to compare scenarios (rather than to calculate absolutes on the monetary value of ecosystem services). The rapid assessment of costs and benefits of specific, naturebased solutions provides initial numbers that can be put forward for decision-making at an early level. The outcome can reveal whether the estimated costs and benefits align with the expectations and whether particular weaknesses need to be mitigated. 5 www.transformar.eu Summary Socio-economic assessment of adaptation solutions is challenging due to limited resources, the difficulty of valuating ecosystem services and social/cultural dimensions, and the large variety of solutions. Yet, local authorities’ decision-making would benefit from assessing the impacts of solutions. The Nature Smart Cities – Business Model was proposed as the currently most comprehensive tool to analyse nature-based solutions or green infrastructure. It straightforwardly incorporates economic costs and benefits, next to biophysical values. The model was applied to a reconstructed area (i.e., the introduction of an infiltration area) in Lappeenranta, Finland. The renewed area demonstrated more environmental and monetary benefits than the old area. It is important to keep the limitations of the model in mind. The model is intended to rapidly screen and compare the costs and benefits of potential scenarios and solutions, rather than calculate absolutes of the provided ecosystem services. Still, it provides a solid basis for comparing two or more scenarios in terms of environmental and monetary costs and benefits, helping local authorities with limited resources or need to better assess the costs and benefits of nature-based solutions. Acknowledgements This summary sheet was based on deliverable 3.6 of the TransformAr project. TransformAr aims to demonstrate solutions and pathways to achieve climate resilience through transformational adaptation. This project has received funding from the European Union’s Horizon 2020 innovation action programme under grant agreement 101036683. Authors Roel L.G. Nagy – Senior Researcher at Department of Engineering Management, University of Antwerp, Belgium. Wito van Oijstaeijen – Senior Researcher at Department of Engineering Management, University of Antwerp, Belgium. Contact Jan Cools ([email protected]) – Project Coordinator of TransformAr, and Research Manager at the Institute of Environment and Sustainable Development at the University of Antwerp, Belgium. Rosaly Severijns ([email protected]) - Senior Researcher at Department of Engineering Management, University of Antwerp, Belgium. This project has received funding from the European Union’s Horizon H2020 innovation action programme under grant agreement 101036683.