Sunday, February 21, 2010: 10:10 AM
Room 17A (San Diego Convention Center)
Financial investors have used portfolio theory for decades to optimize investment returns given accepted levels of risk through consideration of covariance among individual assets. The current emphasis on ecosystem-based management of natural systems across multiple sectors based on the delivery of ecosystem services (i.e. assets) poses a ripe opportunity to apply these economic theories in a novel context. Here we demonstrate the methods for and potential utility of applying portfolio theory to a marine case study with services tied to fisheries or recreation. We focus on the set of management problems where spatial (rather than temporal) variance in the delivery of ecosystem services is what is known and needed, i.e. spatially explicit management decisions such as zoning or protected areas, and in doing so provide the first translation of portfolio theory into the spatial realm. We compare mapped portfolio solutions to uniform regulations (such as reducing overall fishery quotas), demonstrating that portfolio theory helps identify optimal management solutions and highlights unnecessary trade-offs that result from choosing suboptimal solutions. We also quantify gains from using portfolio approaches to management versus traditional approaches that ignore innate covariance among ecosystem services. These gains can come from improved predictability and/or higher return for the same amount of risk. Finally, we explore how realistic management constraints, such as fixed proportion of protected area, modify optimal portfolio solutions. In a time of heightened concern over rapid environmental degradation, finding management solutions that optimize the return on a portfolio of ecosystem services while minimizing risk are greatly needed.
