Incorporating resilience in the assessment of Inclusive Wealth: An example from South East Australia

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Researchers show how loss of resilience means loss of welfare.

What is an extra unit of resilience worth? Previous research has shown how ecosystems can be included in wealth measurements. Now, centre researchers have tried to figure out how to put a price on resilience in order to include it in measures social-ecological welfare.

How to evaluate trade-offs
Using the Goulburn-Broken Catchment in south-eastern Australia as a case study, centre researchers Oonsie Biggs and Brian Walker have together with and partners in Australia and Sweden have examined how loss of resilience to soil salinity can affect the future sustainable development of the catchment.
 
- In order to assess whether a country or a region is embarking on a sustainable pathway, we need to find ways to properly evaluate trade-offs, especially the cost of losing resilience that leads to new risks, says co-author Oonsie Biggs.
 
- If changes along some forecast development path increase the risk of an ecological regime shift, then we need to be able to include those increases in risk in the overall economic assessment, she says.
 
Resilience as an insurance
The Goulburn-Broken Cathment is one of Australia´s most important agricultural regions. This vast area, which covers some 10 percent of the state of Victoria´s total area, is used for farming, forestry and fisheries.

In addition to agricultural production, nature conservation has also been identified as providing a significant contribution to regional welfare. There is a well-established trade-off between agricultural production and nature conservation which has led to the disappearance of many species and important ecosystem services.
 
In their study, Biggs and her colleagues studied the resilience of the topsoil used for crop production to variations in the water table that can lead to soil salinization. In this way, resilience could be regarded as an insurance against soil salinization.
 
Decline in resilience means decline in wealth
By including resilience in a wealth measurement, the researchers found that a decline in resilience can bring about a decline of wealth. The closer the threshold, the lower the stock of resilience, and the higher is the probability that the system will flip to an alternate regime.   

- We are concerned about what happens when a system exceeds its capacity for recovery. From a sustainable development perspective it is important to know how far a system is from a critical threshold, and how likely it is that it might cross the threshold, Biggs says.

The researchers acknowledge the difficulty of incorporating resilience because of uncertainties about the positions of thresholds and threshold effects, but argue that even if accurate data is not available, an initial assessment can be done by answering three key questions:
 
1. is there a known or suspected alternate regime in a stock´s (e.g. crop production, dairy production, nature conservation) forecast?

2. if so, how will a shift into the alternate regime affect social wellbeing (including which other capital stocks it affects and by how much?)

3. what is the probability of the stock crossing the threshold?

Information

Link to centre authors: Biggs, Oonsie, Walker, Brian
Full reference: Walker, B.H., L. Pearson, M. Harris, K.G. Mäler, L. Chuan-Zhong, R. Biggs and T. Baynes. Incorporating resilience in the assessment of Inclusive Wealth: An example from South East Australia. 2010. Environmental and Resource Economics 45: 183-202. DOI 10.1007/s10640-009-9311-7.

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