Ecology, Environment and Conservation Paper

VALUATION OF ECOSYSTEM SERVICES FROM THE WATER RESOURCES OF PORTS AND ASSOCIATED PUBLIC CHARGES FOR THEM: A CASE OF SEA PORTS IN RUSSIA

A.I. Artemenkov and O.E. Medvedeva

Abstract

Ecosystem services of the marine environment can be considered as a socio-demographic, economic and environmental component of sustainable development. But till now they are not fully assessed. The unassessed services include the ecosystem services of the port waters, which are also elements of the marine environment adjacent to the coast. In this regard, the article sets out the task of identifying and valuating ecosystem services provided by the port waters. The study justifies attribution of benefits generated by shipping harbors to ecosystem services from marine environment and provides a justification for classifying these services into two categories: core provisioning and supporting services, as well as proposes an outline of a methodology for their valuation in monetary terms. For valuing core provisioning ecosystem services we propose to rely on the estimation of port water rents which are understood as a residual income from port activities, after deduction of all fair returns on, and costs associated with, fixed assets of the port infrastructure. This method was used to estimate the total value of ecosystem services in port water areas for Russia as a whole and to assess the specific values of ecosystem services per 1 sq. km of the port water areas in all the seaports of the country. The supporting services are proposed to be valued having regard to the rent from assimilation potential, which is generated by obviating the need to undertake any compensatory measures for environmental damage caused by the port activities. According to our findings, the aggregate port rent in the country is approximately 33-38 billion rubles (about USD 1,1-1,2 bln. if converted at PPP exchange rate). At the same time, compulsory levies for the use of water resources in seaport waters accruing to the national budget make up an insignificant fraction of this value –about 0.17% - which indicates the ineffectiveness of the current system for port water use levies. To remedy the situation, an algorithm for calculating payments for ecosystem services of the harbors which includes an environmental component is proposed, with the justification of caps for the maximum share of water rent appropriations (10%) that is feasible without disturbing the balance of interests between the state and private port entities. The topicality of this work lies in the analysis of a new category of ecosystem services of the marine environment, ecosystem services of port waters, as well as an analysis of possibilities for developing their valuations for the purpose of port management, including the generation of additional budgetary revenues.