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Samfundsøkonomisk analyse af naturgenopretnings- og kultursikringsprojekt af den østre del af Åmosen Summary and Conclusions
Main conclusionThe aim of the analysis is to clarify the socio-economic consequences of implementing a nature and culture enhancement project at the Åmose, dried-out marsh in West Zealand, as described in the Action Plan from 2001. Because of its archaeological findings, the Åmose area is unique, and offers great potentials in connection with the establishment of a large nature area in Zealand. The overall objective of the Åmose project is to protect the cultural-historic assets, restore nature, and improve the recreational assets. The Åmose project holds three scenarios. The cultural-historic assets in the area will be protected by restoring nature in the area through extensified agricultural production. The water level will be raised by cutting off drains and dikes and damming up watercourses. Recreational assets will be enhanced by establishing paths, information signs, and a visitors' centre etc. From the analysis it appears that each of the three Åmose scenarios gives a substantial welfare-economic surplus. The most extensive of the three projects, Scenario III, offers the largest welfare-economic surplus, followed by Scenario II and Scenario I. The evaluation of the surplus is based on the assumption that the value of enhancing and protecting the biological, cultural-historic, and recreational assets should be at least DKK 56 mill., DKK 85 mill., and DKK 59 mill. measured at present values, in order for the project to yield a surplus. The values resulting from a valuation proper of the biological, cultural-historic and recreational assets in the Åmose is significantly higher than these amounts, and highest for Scenario III. In terms of budget-economy, the analysis shows that the costs to be paid by the State for the three scenarios will be DKK 53 mill., DKK 92 mill., and DKK 118 mill. at present values. The analysis does not address possible co-financing by municipal or private stakeholders. For agriculture, the sale of land and compensation will yield a net surplus amounting to DKK 36 mill., DKK 67 mill., and DKK 87 mill. at present values. BackgroundThe Åmose is a 1,750 hectare overgrown lake area located east-northeast of the Tissø Lake in the county of West Zealand. Today, the area is a mixture of nature, agricultural production and forests. The Åmose area is characterised by very scattered infrastructure and buildings, and is the largest bog in Denmark and the largest moor in Zealand [16]. The location of Åmose is shown in the map. Map 1. Location of Åmose
Source: Lundhede et. al. (2005) The Åmose is recognised internationally for its cultural-historic values, in the form of rich and extraordinarily well-preserved findings from the Stone Age. Some of the findings have been excavated. However, archaeologists believe that considerable treasures still lie buried in the soil. These ancient monuments are threatened by destruction, because agricultural practices in the area, with artificially low water levels, and processing of the soil, cause oxygenation of the soil, and degradation of organic findings. In order to offset the risk that important cultural-historic values will be lost, there is a wish to raise the water level and extensify agricultural production in the Åmose area. These measures can be taken in a major nature restoration project, which will increase the volume of water in the landscape and, thus, secure better protection of the ancient monuments. The reason why the ancient monuments are not already being excavated is that, for research-ethical reasons, the monuments should remain buried in the ground, and be available to research by future generations. In the future, experts will have access to better methods and, thus, utilize the source material better than we can today. Another important aspect is that material from the Åmose held by Danish museums is already so extensive that it will take years before the material has been registered and used through publication. Moreover, according to the Danish Cultural Heritage Agency, the costs of implementing the project will probably be much lower than the costs of excavating the monuments. The perspectives of nature restoration are rather wide. The creation of a nature area in Zealand, of the size envisaged, will be unique. By carrying out a nature restoration project, we can preserve and protect a number of biological assets, including several rare animals and plants. Also the recreational assets gained by carrying out a nature restoration project are quite considerable, because – from the point of view of recreation - the composition and dimensions of the landscape make the area very interesting. The area also offers a great story-telling potential in relation to the cultural-historic assets which are almost unutilised today. In view of this, the West Zealand County and the Danish Forest and Nature Agency prepared the action plan ”Åmosen – Vestsjællands Grønne Hjerte” [17] (Åmose – the Green Heart of West Zealand) in 2001. The action plan reviews the consequences of implementing a project to restore the nature and safeguard cultural assets in the eastern part of the Åmose [18]. The action plan was prepared on the basis of studies of the biological, cultural-historic and recreational assets in the area. The action plan addresses different themes, for instance cultural-historic preservation interests, business interests, recreational potentials, project costs, etc. The objective of the cultural conservation and nature restoration projectThe overall objectives of the Åmose project are to (Danish Forest and Nature Agency 2001):
The cultural-historic assets in the area will be protected by restoring nature in the area covered by the project, by extensifying agricultural production in the area, and by raising the water level through cutting off drains and ditches and damming watercourses. The recreational opportunities will be enhanced by establishing paths, information signs, a visitors centre etc. It is important to note that the Åmose project changes the use of the land, and thus, does not restore the original meandering river bends of Åmose Å, like the recently completed project at Skjern river in western Jutland. The objectives are not listed in order of priority. The objective of the socio-economic analysisThe objective of the socio-economic analysis is to clarify the socio-economic consequences of implementing a project to restore nature and safeguard cultural assets in the West Zealand Åmose. The socio-economic analysis comprises a budget and a welfare-economic analysis. The budget-economic analysis illustrates the distributional consequences for the parties involved, while the welfare-economic analysis addresses the change of the welfare for society as a whole. The analysis focuses on three different scenarios for the Åmose project. The objective of the welfare-economic analysis is to assess how the different measures influence the welfare of Danish society. The welfare-economic analysis includes assets that cannot be traded as such - and therefore have no price. An example is the value of a nitrogen reduction, and the recreational value. The budget-economic analysis illustrates the direct economic consequences for each of the parties or sectors in the three different scenarios. The parties affected by the Åmose project are agriculture, the State and the county. Therefore, the analysis reviews the distributional consequences in the different scenarios. The results of a budget-economic analysis for agriculture cannot be used as a basis for calculating compensation to be paid to the landowners affected. The calculations show the economic consequences for agriculture over a longer time horizon. In connection with the decision on which alternatives are most appropriate, the analysis is, thus, based on the assumption that capital investments have not been made [19]. The underlying philosophy is that, when making decisions that reach far into the future, society should not be bound by choices and investments already made. Therefore, the basic assumption is that account must be taken of the full investments in each of the scenarios, no matter whether the investments have in fact been made or not. Afterwards, account can then be taken of investments already made, by fixing the optimal time for initiating the project, cf. Møller (2003). Basic characteristics of budget and welfare-economic analyses Analysis scenarios, consequences and dataThe socio-economic analysis illustrates three scenarios for the nature restoration and cultural enhancement project. The three scenarios are based on the action plan “Åmosen – Vestsjællands Grønne Hjerte” from 2001. The scenarios include 13 sub-areas presented in Form 1-1 in Chapter 1. Maps of the scenarios are presented in Annexes A and B. The three scenarios are: Scenario IV Scenario V Scenario VI Implementation of each of the three scenarios has a number of consequences for production and resources, and for environment and nature, see Table 1. In addition, other redistributional consequences will be seen, as a result of the State buying land, and farmers being paid compensation for lost production. Table 1 Consequences of implementing the project
The analysis is based on data and information in the report ”Åmosen – Vestsjællands Grønne Hjerte” from 2001, with background reports. Further, the analysis uses data from the report ”Opgørelse af mistet jordrente ved arealekstensivering” (Calculation of loss of income resulting from extensified use of land), prepared by Abiltrup (FØI) and Schou (National Environmental Research Institute NERI) in 2005, and information provided by the West Zealand agricultural service centre, West Zealand County, and the Danish Forest and Nature Agency. Valuation regarding the biological, cultural-historic and recreational assets is based on the valuation study ”Værdisætning af genopretningen af natur og fortidsminder i Store Åmose i VestSjælland” (Valuation of restoration of nature and ancient monuments in Store Åmose in West Zealand), which was prepared by NERI and the Institute of Local Government Studies Denmark, cf. Lundhede et al. 2005, targeted especially towards this socio-economic analysis, and therefore a valuation study relating to the specific area. Thus, the socio-economic analysis for the Åmose is the first of its kind in Denmark, basing its results on a valuation study prepared specifically for this area. Previous analyses, for instance for Skjern Å, transfers values from other studies, also studies made abroad [20]. All results of the analysis are calculated at present values and in 2004 prices. The Danish EPA guidelines have been used with a discount rate of 6 per cent in the budget-economic calculation, and 3 per cent in the welfare-economic calculation, thus deviating from the Ministry of Finance general recommendations of a 6 per cent welfare-economic discount rate. A sensitivity analysis was made, using a 6 per cent discount rate, which shows that this does not change the conclusions of the analysis. The time horizon is infinite, since the consequences of the project, in that it restores nature, reach far into the future. In this analysis the economic consequences are calculated as additional costs or benefits in relation to status quo. A basic analysis and a number of sensitivity analyses have been made, evaluating the sensitivity of the results by changing a number of key assumptions. Main conclusionsThe budget-economic results show that the project costs are to be born primarily by the State, while compensation is paid to agriculture in the area affected, compensating them for the loss of income in the future. Establishment costs paid by the State (land purchases, payment of compensation to farms, and capital expenditure etc.) amount to between DKK 52.8 mill. and DKK 117.9 mill. at present values, while the county will only be affected marginally through establishment/maintenance costs connected to the maintenance of watercourses or establishment of further facilities for the public, cf. Table 2. No position has been taken regarding any municipal or private joint financing. Agriculture will earn a budgeted surplus of between DKK 35.5 mill. and DKK 87.3 mill. at present value. In general, the conclusion is that agriculture will earn a greater net surplus the greater the project area, while the costs for the State and the county will rise with increasing project area. The welfare-economic results show that overall welfare is improved significantly by completing each of the three scenarios. Scenario III provides the best welfare-economic result, followed by II and I. The large welfare-economic surplus is primarily due to the values connected to improving and securing cultural historic and biological assets. The value of these assets is based on a valuation study prepared by NERI and the Institute of Local Government Studies - Denmark (Lundhede et al. 2005) for this analysis. Measuring the value of environmental and natural benefits involves great uncertainty. Therefore, in the social-economic analysis it was decided to focus on a break-even price. This means that all the other costs and benefits were calculated and then the necessary value of improving the biological, cultural historic and recreational assets was ascertained in order for the project to result in a welfare-economic surplus. In this way it is possible to compare the break-even price with the results of the valuation study and thus assess whether the uncertainty in the valuation is significant enough to affect the conclusion on the welfare-economic surplus from completing each of the three scenarios. The results of the analysis show that the break-even price should be at least DKK 56 mill., DKK 85 mill. and DKK 59 mill. respectively at present value for the three scenarios, if there is to be a welfare-economic surplus from completing the project, cf. Table 2. These amounts are far less than the willingness-to-pay results from Lundhede et al. (2005). On this basis it can be concluded that there will be a definite welfare benefit from completing each of the scenarios, and that the order of the scenarios prevails. Moreover, it can be concluded that the results of the analysis are robust with regard to the methodological uncertainty which is always linked to the results of valuation analyses. Table 2 shows the budget and welfare-economic results. It shows the welfare-economic results on the basis of the willingness-to-pay results using the break-even price. '>>' below break-even price indicates that the gains and net results are significantly larger than the figures stated. Table 2 Budget and welfare-economic net results (2004 prices)
Note: '>>' indicates that the gains and net results are far larger than the figures stated. Results of the analysisThe following describes the budget and welfare-economic results in more depth. Budget-economic analysis The budget economic analysis illustrates the direct economic consequences of the project for farmers, the State and the county. The analysis is based on the actual cash flows for society, i.e. the costs and income measured as actual prices. The environmental and nature effects are therefore not included. Tables 3 and 4 show the budget economic consequences for agriculture as well as the State and the county. Agriculture The results of the analysis show that, for agriculture as a sector, there is a net surplus from establishing each of the three scenarios. Scenarios I, II and III result in a budget economic surplus for agriculture of DKK 35.5 mill., 66.9 mill. and 87.3 mill., respectively, calculated at present value with an infinite time horizon and a discount rate of 6 per cent. The large surplus for agriculture primarily arises from sale of land to the State and compensation for limitations regarding rights to the remaining private areas. For Scenario III increased support for agro-environmental measures [22] is also significant. Hunting plays a less important role. Table 3 Budget-economic implications of the three scenarios for agriculture (2004 prices)
Compensation and sale of land are not higher than the loss facing agriculture when production is extensified, expressed by the change of income. On the face of it looks as if agriculture is getting excess compensation for its loss. It is important to note that the result should be related to the analysis method used, i.e. the magnitude of amounts is based on the assumption that the farmer starts from scratch and therefore has to invest in both machines and buildings, and in preparing the land for cultivation (technical choice approach). The individual farmer in the project area will probably be facing other conditions. If the aim was to calculate compensation, the farmer should receive compensation for the real capital that could no longer be used, i.e. the investments already made, but which do not have an alternative production value. Therefore, the result does not reflect the budgets and accounts for individual farm units in the project area. And further, the budget-economic results cannot be used directly as a basis for calculating possible compensation for losses on operation. County and State In the analysis, State and county are considered together, because existing data do not distinguish between these two. It is assessed that the county pays a very small share (1-2 per cent). From the results it appears that all three scenarios will cause State and county to suffer a budget-economic loss. The budget-economic loss in the three scenarios is DKK 52.8 mill., DKK 92.0 mill., and DKK 117.9 mill., at present values. The major items are purchase of agricultural land, capital investment, and compensation to farmers for restrictions on the use of land. Further, costs of managing these areas (changed economic rent (the economic rent is the remuneration of the production factor land measured as the residual after all other costs have been subtracted from the gross output economic rent)), and support for agro-environmental measures. Table 4 Budget-economic consequences of the three scenarios for county and State (2004 prices)
Note: Financing from other public authorities, for instance local authorities or private parties, may also occur, depending on the measures taken. The overall conclusion of the budget-economic distributional analysis is that Sate and county will face a number of costs by implementing the three scenarios, while agriculture will gain a significant surplus, no matter the scenario implemented. The costs do not necessarily have to be born by the State, since costs can also be born by other public authorities (for instance local authorities) or private parties, depending on the measures taken. Welfare-economic analysis The objective of the welfare-economic analysis is to assess how projects to restore nature and cultural assets affect welfare in society. This is done by calculating the welfare-economic consequences of the three scenarios. The welfare-economic results show that overall welfare increases significantly by implementing each of the three scenarios. The welfare-economic gains are largest for Scenario III, followed by Scenarios II and I. The positive welfare-economic results are primarily due to the value of effects on nature and the environment, especially the value of enhancing and protecting biological and cultural-historic assets. In order to be able to quantify these assets, NERI and the Institute of Local Government (Lundhede et al. 2005) have carried out a valuation study. The results show that the Danish population displays great willingness to pay (WTP) for overall improvement and safeguarding of cultural-historic, biological and recreational assets. According to Lundhede et al. (2005) the value of improving and safeguarding cultural-historic, biological and recreational assets is DKK 113 bn, DKK 203 bn, and DKK 260 bn, calculated at present values, for the three scenarios. The cultural-historic assets account for the major share, i.e. approx. 60 per cent of the overall willingness to pay, and biological assets account for almost 30 per cent. The quality of results of Lundhede et al. (2005) has been checked by Danish as well as foreign experts [24], and that they are based on the newest state-of-the-art valuation methods. Moreover, the level of the willingness-to-pay (WTP) identified in the valuation study is in the same order of magnitude as that obtained in similar Danish studies, e.g. Boiesen et al. (2005); Lundhede & Olsen (2005) and Hansen (2005). The valuation method used in the valuation study to quantify nature and environment goods is based on replies from a sample of the ordinary Danish population. Experience with valuation methods is fairly limited in Denmark, and methods are being continuously developed. Therefore, valuation of natural assets is facing great uncertainties and methodological challenges. International experience with the methods is greater, and studies also show very large WTP. Because of the methodological uncertainty of valuation, the socio-economic analysis focuses on a break-even price, i.e. all other costs and benefits are calculated and then the value is decided of improving biological, cultural-historic and recreational assets required in order for the project to yield a welfare-economic surplus. This method enables a comparison of break-even prices with the results of the valuation study. It also enables an assessment of whether the uncertainty of valuation will influence the conclusion regarding the welfare-economic surplus gained by implementing one of the three scenarios. The analysis shows that the break-even price must be at least DKK 56 mill., DKK 85 mill., and DKK 59 mill., at present values, for the three scenarios in order to obtain a welfare-economic surplus from the project, cf. Table 1-5. These figures are far below the WTP results of the Lundhede et al. (2005) study. Therefore, we may conclude that each of the scenarios yields solid welfare-economic gains, and that the relative order of scenarios remains unchanged. Table 5 below shows the results of the welfare-economic analysis with the break-even price. Table 5 Welfare-economic consequences to society of the three scenarios (2004 prices)
A solid and robust conclusion of the valuation study is that WTP of the Danish population is considerable for cultural enhancement and nature restoration projects. However, since the results of the valuation study are extremely high, an analysis was made of the sensitivity of the valuation study when changing key assumptions and premises. The aim was to assess whether – in spite of the uncertainties of valuation - the results of the valuation study are higher than the calculated break-even price, and whether the relative order of the three scenarios is affected. As already mentioned, valuation of environmental effects is characterised by uncertainty and methodological challenges. These aspects are described in great detail in Danish and international research literature. The authors of the valuation study [25] argue that WTP may be affected by:
To overcome these uncertainties and methodological challenges, a number of sensitivity analyses have been made, analysing a number of assumptions, for instance some of those mentioned above, in order to determine the robustness of the results of the valuation study. By comparing the results of the sensitivity analysis with the calculated break-even price, the robustness of the conclusion regarding the welfare-economic surplus of implementing the project can be assessed. Focus is on the following assumptions:
Moreover, all combinations of the above assumptions have been analysed. Figure 1 presents the results, starting with the sensitivity analyses that are affecting the results only slightly (to the left), thus indicating which – and how many – assumptions must be fulfilled before the result of the valuation study is lower than the break-even price. A more detailed description of the sensitivity analyses is given in Chapter 8. It may be concluded that a very conservative writing down of the results of the valuation study is required in order to come close to the break-even price: payment of a lump sum combined with at least one other sensitivity element. It may, thus, be concluded that implementation of each of the three project scenarios will yield a considerable welfare-economic surplus. It should also be noted that the relative order of scenarios does not change for any of the sensitivity analyses. By comparing the calculated break-even price with the results of the valuation study it can be assessed whether the break-even price is within the interval of the valuation study. Figure 1 shows that a number of the potential uncertainties can be changed without influencing whether the projects yield a surplus or not. Only in combination with the assumption that only the local area will benefit from the Åmose project in combination with one or several changed assumptions, will the project yield a welfare-economic deficit. In Lundhede et at (2005), the local area is calculated as a very small area, only comprising the residents in adjacent municipalities, i.e. less than 30,000 people. Figure 1 Range of sensitivity analyses made in the valuation study.
The analysis shows that WTP for improvement of biological, cultural-historic and recreational assets should be at least DKK 56 mill., DKK 85 mill., and DKK 59 mill., at present values, for the three scenarios, cf. Table 5. This interval is far below WTP results in Lundhede et al. (2005) between DKK 113 bn, and DKK 260 bn, calculated at present values. Table 6 shows the net gain resulting from direct application of the valuation study. Table 6 Welfare-economic consequences of the three scenarios for society– based on the reference results from Lundhede et al. (2005), (2004 prices)
The net gain above is based on the reference results from Lundhede et al. (2005). However, as stated above, the valuation results face a number of uncertainties and methodological challenges. The results in Table 6 should therefore be considered with some caution. A solid and robust conclusion of the valuation study is that WTP of the Danish population is considerable for projects safeguarding cultural assets and restoring nature. Therefore, it is concluded that the gains of enhancing the biological, cultural-historic and recreational assets are considerably larger than the break-even price. Thus, a considerable welfare-economic surplus can be gained from implementing the project. Moreover, it is concluded that the results of the analysis are very robust to the inherent uncertainties of a valuation study. Finally, it is safe to conclude that the largest welfare-economic gain is achieved with Scenario III, followed by Scenario II and Scenario I. The following sections focus on the other benefits, i.e. values other than the biological, cultural-historic and recreational assets. Value of nitrogen reduction Another environmental effect that contributes greatly to the welfare-economic surplus is the value of nitrogen reduction. With a conservative estimate of the reduction potential, nitrogen reduction is assessed to contribute DKK 13.2 mill., DKK 24.7 mill., and DKK 90.4 mill., at present values, to the welfare-economic gains. The reason why the welfare-economic gains are significantly larger in Scenario III than in Scenarios I and II, is that Scenario III entails larger areas of wetlands and lakes by damming the Åmose Å and Sandlyng Å rivers, and, thus, also larger reductions of nitrogen. Value of greenhouse gas reduction The third environmental effect is reduction of greenhouse gas emissions resulting from extensification of agriculture. Modern intensive agricultural practices cause emissions of methane (CH4) and nitrous oxide (N2O), and, thus, contribute to anthropogenic greenhouse effects. Emissions will be reduced when agriculture is exensified in the areas involved, resulting in welfare-economic gains in the three scenarios of DKK 2.0 mill., DKK 3.3 mill., and DKK 5.1 mill., at present values. Support for agro-environmental measures, and hunting Foreign exchange earnings will increase when payment of support from the EU for agro-environmental measures increases. The impact of hunting on the welfare-economic results is limited. A number of welfare-economic costs are also involved in the three scenarios. Taking intensive farmland out of production – changed economic rent The largest welfare-economic costs result from taking intensive farmland out of production, which, after implementation of the project, will be managed by haying and cattle grazing. The costs of taking farmland out of production are calculated as changed economic rent (the economic rent is the remuneration of the production factor land measured as the residual after all other costs have been subtracted from the gross output). In the three scenarios, the welfare-economic loss of extensifying farmland is assessed at DKK 468 mill., DKK 76.5 mill., and DKK 110.3 mill., at present values. Note that support for agro-environmental measures is calculated separately, and not included in the calculated income. Capital expenditure Capital expenditure is also a significant welfare-economic burden, amounting to DKK 14.2 mill., DKK 20.2 mill., and DKK 29.9 mill., at present values. Tax dead-weight loss (welfare loss resulting from the financing of public expenditure) The three scenarios will cause major budget-economic costs to the State, for the purchase of land and payment of compensation, i.e. transfers from State to agriculture. The costs should therefore not be included in the welfare-economic analysis, as the costs of the economy as a whole is not affected. Government expenditure must, however, be financed, resulting in a rather large loss of welfare in the form of tax distortion losses. In the three scenarios, the overall welfare-economic tax distortion losses in connection with purchase of land, payment of compensation, capital expenditure and additional support for agro-environmental measures are DKK 11.4 mill., DKK 20.6 mill., and DKK 26.7 mill., at present values. Sensitivity analyses Sensitivity analyses of key parameters are made in order to assess the significance of the assumptions used in the analysis, thus testing the robustness of the results. In a sensitivity analysis, several key parameters are changed, and the results are compared to the reference analysis. Only the sensitivity of welfare-economic results is being analysed. Chapter 8 gives a detailed account of all sensitivity analyses made. The following section only addresses the sensitivity analyses with more considerable effects on the results of the reference analysis. Please note that the result depends strongly on valuation of the recreational, biological and cultural-historic assets. The sensitivity analysis shows that, generally, the welfare-economic surplus increases considerably when changing the assumptions underlying the valuation of the recreational, biological and cultural-historic assets. Only in a very conservative estimate, the values of these effects are so modest that none of the three projects will yield a welfare-economic surplus. The magnitude of the welfare-economic surplus is also largely dependent on the discount rate used. The higher the rate, the smaller the welfare-economic surplus. Also the choice of time horizon affects the welfare-economic result. The shorter the time perspective, the smaller the welfare-economic surplus, A third dominating factor for the welfare-economic surplus is the magnitude and value of nitrogen reduction. A fourth factor significantly affecting the reference analysis is writing-up or writing-down of the economic rent by 25 per cent. The reference analysis assumes that the economic rent in the project area resulting from reduced crop yield and higher operational costs is 25 per cent lower than in West Zealand as a whole. A fifth factor influencing the result of the reference analysis is the inclusion or exclusion of the derived effects for trades related to agriculture. It should be noted that changes of tax distortion losses, capital expenditure, support for agro-environmental measures and income from hunting are less important to the welfare-economic result. Figure 2 shows the parameters affecting the results of the analysis. The figure does not include the value of the valuation study. Figure 2 Effect of the sensitivity analysis, percentage fluctuations of welfare-economic net result
Note: Columns show percentage fluctuations of welfare-economic net result when changing relevant parameters. Columns above the horizontal 0 line indicate increasing welfare-economic net results, and below, decreasing results. Sensitivity analyses - conclusions The sensitivity analyses do not change the order set in the reference analysis for Scenarios I-III. Based on the sensitivity analyses it is assessed that the results of the analysis are robust, since the valuation of the recreational, biological and cultural-historic assets is much higher than the fluctuations in the sensitivity analyses. The overall consequences are presented in Table 7, showing how each of the sensitivity analyses affects the welfare-economic results of the reference analysis. Table 7 Sensitivity analyses, presented as changes of welfare-economic net results in relation to the welfare-economic result of the reference analysis (DKK 1000)
* Use of break-even prices results in unchanged results for the sensitivity analyses, where the discount rate and time horizon are changed. When inserting the values from the valuation study in Lundhede et al (2005), it is concluded that the higher the discount rate used, the smaller the welfare-economic surplus. The same applies to the choice of time horizon: the shorter the time period, the smaller the welfare-economic surplus. Fodnoter [16] Cf. Danish Forest and Nature Agency (2001). [17] Online version of the report is available in Danish at: www.vestamt.dk/natur/pub/pdf/natur/plan_for_aamosen.pdf [18] In the following, the term 'Åmose' is used for the eastern part of the Åmose bog area. [19] This approach is called the 'technical approach' and is described further in Section 3.5 [20] I.e. benefit transfer [21] Only a very small proportion of these costs are incurred by the county (about 1-2%), the rest of the costs are incurred by the State. [22] These are subsidies for environmentally friendly agriculture. The Danish State and the EU each pay half. [23] Indicates economic loss resulting from extensifying agricultural practices in the project area – the value of lost production less all savings on production costs. [24] The study was reviewed amongst others by Ståle Navrud, Norway, whose experience with valuation of natural assets is extensive. [25] Lundhede et al. (2005) [26] In its autumn report 2004, the Danish Economic Council recommends to half WTP in order to take account of the large difference between real WTP and WTP alleged by respondents in a questionnaire, cf. Section 7.4.
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