**3. Results**

Exchange where in 2009 carbon was trading at US\$2.10 per ton. Converting it using current exchange rates leads a value of \$2.67 per ton in Canadian funds. This resulted in a total value of \$668.8 million. However, during the past, exchange rates between US and Canadian dollar have fluctuated. In addition trading value of carbon at the Chicago Climate Exchange has also fluctuated from \$1.60 to \$2.15 per ton in US dollar. To see the change in the value of carbon sequestration, a sensitivity analysis was undertaken. The value of carbon sequestration ranged from \$508 to \$683 million per year (Table 3). On account of higher level of carbon sequestration, value of non-native grassland was higher ranging from \$326 to \$438/ha/yr compared to native grassland. If one argues that rate of sequestration or its unit value as shown in these tables can vary, further sensitivity analysis needs to be undertaken, which is presented in a later section.

**Exchange rate Trading Price Total value Value (Can \$/ha/yr)**

1.2718 1.601 2.03 508,503,429 213.15 326.10

1.2718 2.152 2.73 683,849,439 286.65 438.55

0.99842 2.10 2.10 526,038,030 220.50 337.35

**2009 Can \$ All grasslands Excluding native**

**grasslands**

**2009 Can \$/ton**

Base scenario 1.2718 2.10 2.67 668,819,781 280.35 428.91

The value of increasing soil nitrogen was determined as a product of estimated amount of nitrogen accumulation in the soil, area of grassland and the value of the accumulated nitrogen. Utilizing a 10:1 ratio of carbon to nitrogen accumulation [29] resulted in accumulation of 0 t nitrogen ha/yr in native grassland, and 0.047 and 0.056 t nitrogen ha/yr in naturalized and tame/seeded grassland, respectively. The accumulated nitrogen was valued at \$1.32/kg, the

Most goods and services in grasslands are not traded in the marketplace and require valuation techniques that reflect their existence outside the market system [27]. Techniques for the valuation of such non-market goods and services have been discussed above. Most of these techniques are time-consuming and require considerable resources to complete. Selection of benefit transfer as the method of choice in this study was based on cost-effectiveness and

value of urea fertilizer. This resulted in a value for nutrient cycling of \$81.47/ha.

**2009 US \$/ton**

**Table 3.** Sensitivity analysis of total value of carbon sequestration in Manitoba grasslands.

Lowest trading price between 2003-2010 at Chicago Climate Exchange.

Lower C price scenario

156 Agroecology

Higher C price scenario

Strong Canadian dollar

The exchange rate on April 21, 2010.

**2.4. Non-market-based valuation**

*2.3.3. Nutrient cycling*

1

2

Grasslands of various types occupy approximately 2.4 million ha of Manitoba lands (Table 5). Of this area, 64.5% is tame/seeded grassland and 34.6% is native grasslands. Naturalized grasslands make up less than 1% of the total grassland area. Almost half of Manitoba grass‐ lands (54%) are utilized for pasture, while another 44% are utilized for hay production. Most of the grassland area in Manitoba (90%) is privately-owned (Table 5).


1 Preferred transfer values were derived from a similar eco-zone as grassland in Manitoba. North America grassland values were preferred to global grassland values.

**Table 4.** Summary of grassland goods and services values1 reported in other studies and utilized in benefit transfer.

### **3.1. Market-based valuation**

lands (54%) are utilized for pasture, while another 44% are utilized for hay production. Most

**Single value \$/ha/yr Value range \$/ha/yr Notes Source**

5.14 Improved water quality-decreased sediment

64.52 Waste treatment services by forests (i.e.

**Water regulation**

7.14 1.48 – 7.14 Average of grassland in the world [24] **Erosion control**

13.34 2.97-53.45 Based on prairie soil in Canada [34] 53.45 Average of grassland in the world [24] **Soil formation** 10.7 10.7 Average of grassland in the world [19] **Waste treatment**

157.03 64.52-157.03 Average of world grassland [24] **Recreation & aesthetics**

\$5.14/ha/yr.

0.1 0.10-17.05 Based on discrete travel cost study in Alberta [32] **Refugium function**

households in Manitoba

0.25 0.20-4.60 \$1.48-2.69/household [14]

Preferred transfer values were derived from a similar eco-zone as grassland in Manitoba. North America grassland values

in Upper Assiniboine River Basin [14]

Upper Assiniboine River Basin [14]

removal of phosphorus and nitrogen [14]

[14]

[33]

Assuming that cropland provides no habitat to game species of wildlife, the average hunting value for lands in permanent cover is \$11.91/ha/yr, an upper bound is \$23.72/ha/yr. Revenue related to wildlife viewing is about

Individual households are willing to pay \$34.07 to conserve grassland habitat for burrowing owl, and there are 321,750 rural

reported in other studies and utilized in benefit transfer.

Estimate is based on reduced wind erosion in

of the grassland area in Manitoba (90%) is privately-owned (Table 5).

2.97

158 Agroecology

17.05

4.6

were preferred to global grassland values.

**Table 4.** Summary of grassland goods and services values1

1

### *3.1.1. Perennial forage production*

Most perennial forage production in Manitoba occurs on native (826,334 ha) or tame/seeded grasslands (1,484,999 ha), with only small amounts of naturalized grassland (18,211 ha) being utilized for this purpose (Table 5). Forages in Manitoba are primarily utilized for grazing and preserved forage (hay and silage) but may also be used for forage seed production (Table 5). The total value of forage production in Manitoba was approximately \$524 million/yr (Table 6). Sensitivity analysis of the volatility of forage prices indicated that a 20% increase in the price of hay would increase the value of seeded forage or pasture to \$629.5 million/yr. An equivalent decrease in the price of hay would reduce the value of seeded forage/pastures to \$419.7 million/ yr.


1 Compiled from several sources [24,35-37] and personal communication with Bill Gardiner (MAFRI), Glenn Friesen (MAFRI), Rick Andrews (Ducks Unlimited Canada), and Wybo Vanderschuit (Riding Mountain National Park).

2 Mainly forage seed production, green space and aesthetic appeal.

3 Grasslands which have been cultivated within the past eight years and are frequently used as part of the crop rotation.

4 Areas that were under cultivation or were seeded to forage and subsequently reverted to grassland (approximately eight to 15 years since last cultivation).

5 Areas that have never been broken, or have been re-established as grassland for such a length of time that native con‐ ditions have been restored (> 15 yr since last cultivation).

6 Conservation purposes (Rick Andrews, Ducks Unlimited, Canada, personal communication).

**Table 5.** Area of Manitoba grasslands by grass type, use and ownership1 .


1 Areas of different grassland types are shown in Table 5.

2 Defined in Table 5.

**Table 6.** Total annual value1 of forage and seed production from Manitoba grasslands.

#### *3.1.2. Carbon sequestration*

With 19,926 ha of naturalized grassland and 1,539,400 ha of tame/seeded grassland in Mani‐ toba, carbon sequestration in Manitoba grassland was estimated at approximately 250.5 million tons annually (Table 5). The average value of carbon sequestration was \$280.35/ha/yr for all types of grasses (Table 7). Alternative values that were estimated to account for fluctuations in Canadian-US dollar exchange showed that the total value of carbon sequestra‐ tion could range from approximately \$508.5 million/yr to \$683.8 million/yr (Table 7). The average value of carbon sequestration for all grasslands was approximately \$213.35 to \$286.65/ ha/yr or, if native grassland is excluded, \$326 to \$439/ha/yr (Table 7). The value of carbon sequestration in this study lies between estimates of \$267/ha/yr and \$469/ha/yr reported in other studies [28,38].


**Table 7.** Sensitivity analysis of the total value of carbon sequestration.

#### *3.1.3. Nutrient cycling*

Perennial forages can improve land productivity by increasing the nutrient content of soil. For example, inclusion of legumes in pastures will increase soil nitrogen due fixed atmospheric nitrogen being added to the soil [39]. The increase could also be due to the ability of forages to access nitrate from soil depths of more than one meter below the surface. With a total of 1,559,326 ha of naturalized and tame/seeded grassland, the total value of nutrient cycling was estimated at \$127.04 million/yr. If the price of nitrogen fluctuates by 20%, the total value of nitrogen will vary between \$101.63 and \$152.45 million/yr (Table 8).

Challenges and Opportunities in Estimating the Value of Goods and Services in Temperate Grasslands… http://dx.doi.org/10.5772/59899 161


1 Estimates are based on 2,385,660 ha of grassland except nutrient cycling (1,559,325 ha).

**Table 8.** The annual value of goods and services from Manitoba grasslands.

#### **3.2. Non-market-based valuation**

**Production Grassland type2 Hay Pasture Forage seed Total**

Total \$419,670,760 \$79,776,531 \$25,166,927 \$524,614,218

of forage and seed production from Manitoba grasslands.

With 19,926 ha of naturalized grassland and 1,539,400 ha of tame/seeded grassland in Mani‐ toba, carbon sequestration in Manitoba grassland was estimated at approximately 250.5 million tons annually (Table 5). The average value of carbon sequestration was \$280.35/ha/yr for all types of grasses (Table 7). Alternative values that were estimated to account for fluctuations in Canadian-US dollar exchange showed that the total value of carbon sequestra‐ tion could range from approximately \$508.5 million/yr to \$683.8 million/yr (Table 7). The average value of carbon sequestration for all grasslands was approximately \$213.35 to \$286.65/ ha/yr or, if native grassland is excluded, \$326 to \$439/ha/yr (Table 7). The value of carbon sequestration in this study lies between estimates of \$267/ha/yr and \$469/ha/yr reported in

**Source Price (\$/ha) Area (ha) Total value (2009 Can \$)**

This study 280.35 2,385,660 668,819,781 [38] 266.94 2,385,660 636,828,080 [28] 468.84 2,385,660 1,118,492,834

Perennial forages can improve land productivity by increasing the nutrient content of soil. For example, inclusion of legumes in pastures will increase soil nitrogen due fixed atmospheric nitrogen being added to the soil [39]. The increase could also be due to the ability of forages to access nitrate from soil depths of more than one meter below the surface. With a total of 1,559,326 ha of naturalized and tame/seeded grassland, the total value of nutrient cycling was estimated at \$127.04 million/yr. If the price of nitrogen fluctuates by 20%, the total value of

Native \$16,767,375 \$25,109,664 0 Naturalized \$88,984 \$485,111 0

**Table 7.** Sensitivity analysis of the total value of carbon sequestration.

nitrogen will vary between \$101.63 and \$152.45 million/yr (Table 8).

Areas of different grassland types are shown in Table 5.

1

160 Agroecology

2

Defined in Table 5.

**Table 6.** Total annual value1

other studies [28,38].

*3.1.3. Nutrient cycling*

*3.1.2. Carbon sequestration*

Tame/Seeded \$402,814,401 \$54,181,756 \$25,166,927

The value of water regulation was estimated to be \$12.26 million/yr or \$5.14/ha/yr (Table 8). The total value for erosion control in Manitoba grasslands was assessed to be \$32 million/yr or \$13/ha/yr while soil formation by grasslands was estimated to be \$26 million/yr (Table 8). Based on 2,385,660 ha of grassland, waste treatment in Manitoba grasslands was valued at approximately \$153.92 million/yr (Table 8). Cultural services from grasslands include recrea‐ tion, aesthetics, and cultural information. Perennial forage cover increases recreational activities such as hunting and wildlife viewing [14]. In riparian areas, perennial forage cover can increase the use of an area for fishing, camping, swimming, and canoeing [14]. Based on approximately 2.4 million ha of grassland and benefit transfer value of \$17.05/ha/yr (Table 4), the value of cultural services from Manitoba grasslands was estimated to be \$40.67 million/yr (Table 8). With 321,750 rural households in Manitoba in 2006, the total value for conserving the burrowing owl in Manitoba grasslands was estimated to be \$10.96 million/yr or approxi‐ mately \$4.60/ha/yr (Table 4). Using these estimates, the total willingness to pay by Manitoba rural households was estimated to range from \$0.25 to \$0.46 million/yr or \$0.20 to 0.37/ha/yr (Table 8).

### **3.3. Total value of Manitoba grasslands**

The total economic value of Manitoba grasslands varies between \$1,204 million/yr (\$527/ha/yr) to \$2,056 million/yr (\$883/ha/yr; Table 8). This range is relatively narrow as a consequence of the sensitivity analysis conducted. The scope of research for values that were derived from benefit transfer was limited to those studies conducted in a similar eco-zone to Manitoba grasslands. Further, a 20% price fluctuation in prices was assumed for values that are derived using market price. The economic value of Manitoba grasslands obtained in this study should be taken as a minimum value which is expected to change as information specific to Manitoba grasslands becomes available.

Among all the estimated values of various ecosystem services, besides the commercial (marketbased) values, carbon sequestration is an important ecosystem service (Figure 4). About a third of the total value of Manitoba grasslands is through production of forages and related goods. Under most expected conditions, the ecosystem service most important for this ecosystem is carbon sequestration. At this time, 42% of total value is credited to this service. The third most important ecosystem service for the Manitoba grassland is from waste treatment. High CO2 price 1,610.68 703.36 1,378.90 600.79 2,055.74 883.43 Table 8. The annual value of goods and services from Manitoba grasslands.

1Estimates are based on 2,385,660 ha of grassland except nutrient cycling (1,559,325 ha).

This study set out to provide a strategy for estimating the economic value of goods and services from Manitoba grasslands by utilizing market and non-market based approaches. Assigning value to goods and services such as perennial forage production and carbon sequestration that are traded in the open market is a matter of identifying prevailing market values. The market value of goods and services such as forage production will depend on the quality of the goods and services. The value of pasture, for example, should take into account season, pasture plant species, and pasture management since such factors will influence pasture quality. For hay, quality characteristics including nutrient content (protein and energy) as well as organoleptic characteristics, such as color, mold, and dust, to assign value would lead to a more objective price determination. Such a pricing system would give a range in prices for forage production. The strategy of assigning value based on forage quality was not employed in the current study due to inadequate information. Carbon sequestration is influenced by location of the grasslands [28] and by management practices that are imposed on the grasslands [10]. Carbon sequestration estimates reported in these studies were not measured directly and the differences in

estimates among studies suggest a need for direct carbon sequestration measurements in grasslands.

utilized to value ecosystem goods and services, benefit transfer will likely remain the method of choice.

Genetic, medicinal, and ornamental resources, water supply and cultural services, such as cultural and artistic information, and spiritual and historic information were not included in the valuation of Manitoba grasslands

Benefit transfer was used to valuate non-market goods and services in Manitoba grasslands. Challenges in applying benefit transfer analysis are mainly related to difficulties in identifying and selecting suitable studies for comparison, in combining data and in transferring data [40, 41]. It is also important to note that most studies are not designed with the aim of transferring [40, 41]. A more complex approach, which we did not use in this study, is to use meta-analysis to systematically analyze the impact of a study on estimated values [26]. The use of the benefit transfer method is not universally accepted and has been questioned. In most cases, the original studies will have valued small changes in specific and localized components of individual ecosystems, which makes it incorrect to extrapolate value estimates obtained from these localized scenarios to a much larger scale [26]. Benefit transfer has also been criticized as being dirty, quick and ugly [42]. Some economists do not consider benefit transfer as a methodology, but simply consider it as transfer of estimates from one location to other location [25]. Others (43) consider the transfer of valuations from one ecological and social context to another as dangerous because ecosystem values are highly dependent on location. Until more appropriate methods are

Figure 4. Distribution of total economic value of Manitoba grassland by type of ecosystem service **Figure 4.** Distribution of total economic value of Manitoba grassland by type of ecosystem service

**4. Discussion**
