Understanding the full range of benefits that native grasslands provide society is challenging because most ecosystem services are not associated with market prices. Existing studies have often drawn on secondary valuation estimates that are not locally based or empirically validated, and can provide misleading information on the total and relative economic values of ecosystem services. For biodiversity benefits in particular, there is existing evidence that people benefit from and are willing to pay for conservation of animals and species-at-risk, but less is known about people’s values for plant and insect diversity, especially with respect to conservation of genetic resources. The objective of this study is to measure the broader economic value of ecosystem services provided by grasslands relative to croplands. The main challenge will be understanding people's preferences and values for different types of plant, microbial, and insect diversity (genetic, species, and landscape) and linking these values to changes on the landscape.

We will begin by developing an ecosystem service framework in consultation with the project team and end-user partners in order to link ecosystem services with the adoption of specific agricultural management practices including using native species in pasture and increasing plant species and genetic diversity. Ecosystem services that have broader societal value will be prioritized (e.g., recreational value, biodiversity conservation, carbon sequestration, pollination services, pest control). Ecosystem service valuation will be conducted using non-market valuation methods including at least the following three approaches: carbon valuation, hedonic price methods, and stated preference methods to measure non-use values. We expect that these non-use values associated with native plant diversity, but not related to current or future use, are an important, but challenging to quantify, source of values.

In order to assign a social cost to carbon, we will then use the most recent and appropriate estimates of the economic value of changes in carbon stocks and emissions. This task will compare the relative merits of carbon offset prices, federal carbon pricing guidance, and the social cost of carbon approaches. This is a rapidly changing literature and we will incorporate recent advances in the science and economics of the social cost of carbon.

Finally we will estimate the economic values associated with increased ecosystem services by designing a stated preference study which will be administered to a target population of Canadian residents over 18 years old (including but not oversampling for agricultural producers). We will aim for 3,000 completed surveys with an even split between residents living in the three prairie provinces and the remaining provinces and territories. This sampling frame will allow us to compare preferences and values of people living near prairie grassland ecosystems with those of people living in other parts of the country. Besides regional differences, the large sample size will allow us to study the association between survey responses, including derived ecosystem service values and respondent characteristics such as identity factors, knowledge, and experiences with grassland conservation.

The survey responses to the valuation questions will be analyzed using the random utility maximization (RUM) theoretical framework to guide the implementation of discrete choice econometric models. The analysis will include models that incorporate observed and unobserved preference heterogeneity including latent class and mixed logit models. The modeling framework will allow us to estimate the non-use value associated with improved ecosystem services. We will use follow-up questions in the survey to identify respondents who did not answer the trade-off questions seriously, as informed by recommendations of Johnston et al. To assess geographic differences in preferences in utilization of native grassland species, we will compare responses to the valuation question from respondents from the three prairie provinces with responses from the rest of Canada.

The econometric model parameters estimated from the survey responses will be used to quantify the economic benefits of marginal and non-marginal changes in ecosystem service endpoints. Including the broader societal benefits of ecosystem services associated with different management actions will allow a more complete comparison of the costs and benefits of GHG-reducing agricultural practices. This information will inform the delivery of agricultural and agri-environmental policy instruments by estimating the social welfare implications of instruments that encourage the adoption of select management practices.