DEPARTMENT OF NATURAL CAPITAL VALUATION, COST-BENEFIT ANALYSIS, INTEGRATED RESOURCE AND DECISION SUPPORT SYSTEMS
Head: Prof. Phoebe Koundouri
National accounting systems that treat nature as a free, unlimited resource fail to account for the vital goods and services nature provides to people. Natural capital accounting (NCA) is the measurement and valuation of nature’s benefits in terms of ecosystem goods and services — like fresh water, flood control and forest products — to be incorporated into a general standard format consistent with conventional national accounts in order to make “nature’s values visible”. Our department aims to achieve this goal by elaborating on a structured approach to valuation that can help decision-makers recognize, demonstrate and capture the values of ecosystems and their biodiversity. This approach considers the ecosystem services and biodiversity that are linked to human welfare, recognizing the benefits for society. It highlights the complex connections between the ecosystem and human activities, indicating that its protection should be the priority.
Cost-benefit analysis is a process for evaluating the merits of a particular project or course of action in a systematic and rigorous way. Social cost-benefit analysis refers to cases where the project has a broad impact across society and, as such, is usually carried out by the government. Social Costs Benefit Analysis integrates natural capital values, together with all other social values in Investment Selection Processes. Experts and evaluators are well aware that the evaluation (and thus the implementation) of investments is based on key parameters that cannot be objectively measured. The Social Discount Rate (SDR) is one of the most important such parameters and debates about discounting have always occupied an important place in environmental policy and economics. Given that the EU recommendations on the discount rate upon which the selection of investments will be based are very weak, our department aims to inform interested audience on current policy practices with regards to the short and long run SDRs. Our research focuses on: (a) the level of integration of the state-of-the-art of the relevant academic literature into policy, (b) the effect of this integration, on the assessment of country-specific and international environmental and energy projects/programs/policies and SDGs implementation, (c) sources of concerns and the way forward.