Abstract:
Can markets assist by providing support for ecological restoration, and if so, under what conditions? The
first step in addressing this question is to develop a consistent methodology for economic evaluation of
ecological restoration projects. A risk analysis process was followed in which a system dynamics model
was constructed for eight diverse case study sites where ecological restoration is currently being pursued.
Restoration costs vary across each of these sites, as do the benefits associated with restored
ecosystem functioning. The system dynamics model simulates the ecological, hydrological and economic
benefits of ecological restoration and informs a portfolio mapping exercise where payoffs are matched
against the likelihood of success of a project, as well as a number of other factors (such as project costs
and risk measures). This is the first known application that couples ecological restoration with system
dynamics and portfolio mapping. The results suggest an approach that is able to move beyond traditional
indicators of project success, since the effect of discounting is virtually eliminated. We conclude that
systems dynamic modelling with portfolio mapping can guide decisions on when markets for restoration
activities may be feasible.
