Valuing Ecosystem Services is Difficult and Controversial

Lynne Kiesling

I find two things especially intriguing about environmental economics. One is the pervasiveness of ill-defined property rights as causes of environmental issues, and how it opens up one’s thinking to look at environmental issues as challenges of ill-defined property rights. Another is the tension between the anthropocentric nature of environmental economics (and economics itself, naturally, as a study of human action and human choices) and the argument for some form of autonomy or moral standing for “the environment” on its own.

Thus the burgeoning research on ecosystem services is particularly interesting. As described in its Wikipedia entry:

Humankind benefits from a multitude of resources and processes that are supplied by natural ecosystems. Collectively, these benefits are known as ecosystem services and include products like clean drinking water and processes such as the decomposition of wastes. While scientists and environmentalists have discussed ecosystem services for decades, these services were popularized and their definitions formalized by the United Nations 2004 Millennium Ecosystem Assessment (MA), a four-year study involving more than 1,300 scientists worldwide.[1] This grouped ecosystem services into four broad categories: provisioning, such as the production of food and water; regulating, such as the control of climate and disease; supporting, such as nutrient cycles and crop pollination; and cultural, such as spiritual and recreational benefits.

The attempt to estimate a value for ecosystem services is an effort to quantify the benefits provided to humans (there’s the anthropocentric part) of ecosystems, to give benchmarks for changes over time in those relationships (due to human or other actions), and to think about ways to define and enforce use rights in ecosystems in ways that will reflect the value of ecosystem benefits and their tradeoffs with other benefits and costs we face (there’s the property rights part).

Earlier this month the UK government published their first National Ecosystem Assessment report, using estimates of effects such as the reduction in health care costs associated with increased green space. From the BBC’s report on the study:

Services like pollination by insects, water and air purification by soils and plants, the flood alleviation provided by woods and marshes upstream of towns and cities, and even the value of living close to a green space in terms of savings to the NHS – a service the Government’s bean counters put at £300 per person per year.

According to Defra’s chief scientist, Dr Bob Watson, we’ve consistently failed to factor-in the billions of pounds these ecosystem services are worth to our economy.

See also this Yahoo article on the report. Analyses like this one are very difficult, because so much is hard to quantify; of the four dimensions, only provisioning and cultural (and within cultural, recreational is easier than spiritual) have any good ways to quantify the benefits. And not surprisingly, such estimates as these are controversial, either on the grounds of estimation specifics or on the grounds of “how can you try to place a monetary value on the environment?” (my students do a great job of answering that one!)

Research like this is quite interesting and useful, but another question is what to do with the results — it’s nice to have some estimate of the value of ecosystems among the four dimensions described above, but if degradation of ecosystems is reducing their ability to provide these benefits, how do we change environmental policy in ways to create use rights in ecosystems? Those use rights (and potentially the tradeability of those use rights) are an essential part of weighing the tradeoff between the value of the ecosystem services and the value of alternative activities that degrade those services.

One thought on “Valuing Ecosystem Services is Difficult and Controversial

  1. Two problems:

    1) Few people willing to pay that $, so politicians “do it for them.”
    2) LOTS of disagreement on valuations.

    You’re talking the right idea (trading > prices > values), but current mechanisms AT BEST use these numbers to bludgeon others in Cost-benefit wars.

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