Integrating Environmental Impact Assessment and Ecosystem Service Evaluation in Cost-Benefit Analysis: A Cyclical-Incremental Approach

Abstract

Development projects inevitably affect ecosystem services (ES). Accordingly, environmental impact assessment (EIA) has gained attention worldwide, with ES valuation serving as a complementary approach to environmental decision-making. This study proposes a framework to quantify the environmental costs and benefits associated with ES changes within the EIA process, thereby making these impacts explicit in the environmental dimension of cost-benefit analysis (CBA). For this purpose, a cyclical-incremental approach (CIA) was designed with strong feedback loops to the early steps of EIA and ES valuation. The proposed CIA is designed to improve the realism and objectivity of EIA through at least two assessment rounds. The approach was applied in its first round to five ES—habitat quality, carbon sequestration, oxygen production, food production, and forage production—in a case study of a sulfuric acid plant at the Sarcheshmeh Copper Complex in Kerman, Iran. In the CBA conducted for these five assessed ES, no positive benefit was identified. The highest annual financial losses are associated with carbon sequestration ($72,877) and food production ($55,277), indicating that both provisioning and supporting/regulating services have suffered the greatest damage. The total annual financial loss for the five assessed ES is $155,109, with no corresponding benefit identified among the assessed services in this first-round application. The present study demonstrates the first round of the proposed CIA, while subsequent rounds using monitoring data are required to validate and progressively refine its application. Its outputs can assist decision-makers by making the environmental costs and benefits of development projects explicit and quantifiable.