Gravitational natural hazards: Valuing the protective function of Alpine forests

- Paper values - for the first time in this spatial dimension - the benefits of protective forests in Alpine regions.
- First, the replacement cost method values benefits by saving on substitute technical measures of the protective function.
- Second, the hedonic price approach values price discounts if real-estate is located in hazard zones.
- Results indicate the high value of protective forests even under very conservative assumptions.
- Policy conclusions emphasize the potentials for increasing benefits of protective forests by reducing commercial forestry.

Forests produce significant non-market benefits by protecting residential and commercial real estate as well as all kinds of infrastructure (e.g. rail tracks, highways, power lines) against gravitational natural hazards such as avalanches, mudslides, and rockfall. The Austrian Federal Forests (Österreichische Bundesforste - ÖBf) recently commissioned a research project on the valuation of this ecosystem service by means of the replacement cost method and the hedonic pricing approach.Based on the international literature, this paper focuses on a careful and realistic design of the baseline scenario with which the “marginal change” in ecosystem services can be assessed and valued. While the (current) management scenario is rather clear and reflects the approach pursued by the ÖBf (reasonably labeled as multifunctional forestry), the design of the baseline scenario (intensified commercial forestry) assumes a reduced protective function of the forests which, however, would still have to be in line with strict legal frameworks such as the Austrian Forest Act or European nature conservation directives.Given these strict frameworks, the potential leeway for commercial forestry is rather limited; still, the current multifunctional forest management secures ecosystem services worth up to EUR 14.7 m per year (valued at replacement costs of technical measures to substitute the protective function of forests), which corresponds to EUR 268 per hectare and year. The result of the hedonic pricing approach for property in hazard zones protected by forests is substantially lower: The ecosystem service is valued at EUR 2.9 m per year (which corresponds to an annual per-hectare value of EUR 53). The results in general underline the importance of multifunctional forestry and of the ecosystem services function sustained especially in state-owned forests.