Valuing Ecosystem Services

Welcome back! In this post, I will address the economic valuation of ES.

ES Valuation

Viewing ecosystems in monetary terms is an integral part of the ES approach in an attempt to explicitly articulate economic values of certain services as natural capital or goods and services. It aims to a directly encourage the conservation of ecosystems and promote political action from otherwise often sceptical policy makers (Redford and Adams 2009). Valuation of ES can occur in both use and nonuse elements. Use elements are directly beneficial and used by humans, such as fisheries while nonuse elements are indirect impacts such as water quality regulation and carbon sequestration. Valuation of ecosystem services can be conducted via the following four pathways (Brauman et.al 2007):

1) Valuing total ES flow
2) Value of alterations to ES
3) Valuing the distribution of costs and benefits from ES production and delivery

The economic valuation of ES represents natural capital, one of four kinds of capital in 21st century economic theory grounded in the economic concept of substitutability and market environmentalism (Chee 2004).

Source

The mainstreaming of the ES concept since the publication of the Millennium Ecosystem Assessment in scientific literature had led to intense, seemingly obsessive tendency to assign monetary values to ecosystem services using market-based instruments. Gomez-Baggathun et.al. (2010) identified three stages in the historical development in valuing ES in economic terms (Table 1). Conceptualised initially to raising awareness and allow ethical justification for environmental conservation, the ES concept gradually shifted to an emphasis on different ways to cash in ES as commodities on potential markets. What is also interesting is a shift in the concept nature and human-nature relationships, from valuing the physical usage of land and labor to the monetary analysis and exchange values available for monetization. 

Two practical approaches to addressing ES delivery through market-based instruments are markets for ecosystem services schemes and payments for ecosystem services schemes (Simpson 2011).

• Markets for Ecosystem Services - polluter pays principle 
• Payments for Ecosystem Services - compensation from beneficiaries for the maintenance and protection of ecosystem services 

Criticisms of economic valuation of ES

Redford and Adams (2009) identified 7 major problems with the ES concept:

1. Obsession with economic logic - monetary valuation and its implications often outweighs scientific justification for environmental conservation
2. Not all ES sustains human life - raises question of interlinked ecosystem functions
• Promotes an anthropocentric view of ES rather than bio-centric views/intrinsic values of nature (Schroter et.al. 2014)
• Not all ES have desirable outcomes to humans (McCauley 2006); presence of disservices such as diseases and pathogen diffusion
3. Some ES may be provided by unnatural systems as well as natural systems - defeats primary aim of conservation, values provided such as monocultural agriculture are often from unnatural systems (Simpson 2011)
4. Increasing justified to maximize single services at the expense of others - novel ecosystems: anthropogenic construct which effectively delivers ES but lack biodiversity of natural systems
5. Markets may not exist for some ES which does not lend themselves to pricing
6. Power relations neglected in ES concept - rights to ES complicates the design of market-based schemes with problems of power, access and maximization of revenue/profit
• ES often used May not safeguard biodiversity and instead divert attention to economics
7. Unknown impacts of climate change on ES delivery

Commodification

Apart from the concerns outlined above, many have criticised the ES concept in bringing conservation too close to economic logic and risks 'selling out to nature' (McCauley 2006). I do agree with this to some degree as ES does not exist solely for human exploitation and nature conservation should occur solely to protect the intrinsic natural functioning instead of turning a profit. This leads to widespread debate on whether the ES concept encourages the treatment of natural systems as purely tradable commodities available for human exploitation. Discrete quantification of monetary values of a single service also risks neglecting the complex linkages between ecosystem functions (Gomez-Baggethun and Ruiz-Perez 2011).

I do take a more practical view in that while the ES concept has its pitfalls and may rely too much on economic logic, it does encourage interdisciplinary research on ecosystem science and ecosystem functioning. As we shall discuss, there are successful examples which utilizes the ES concept to reach conservation aims.