Valuing Ecosystem Services

The Case of Multi-functional Wetlands

R. Kerry Turner, Stavros Georgiou, Brendan Fisher

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136549151
• Edition: 1
• Topic: Economics
• Subtopic: Environmental Economics
• Index: Economics

Ecosystem services can be broadly defined as the aspects of ecosystems that provide benefits to people. This book provides guidance on the valuation of ecosystem services, using the case of multifunctional wetlands to illustrate and make recommendations regarding the methods and techniques that can be applied to appraise management options. It provides a review of ecosystem service valuation rationale, including its importance from both a policy and project appraisal perspective, and a useful reference when considering policy and appraisal of ecosystem management options. It shows how legal obligations and other high-level management targets should be taken into account in valuation exercises, thus giving important policy context to the management options.
The authors set out what they call an Ecosystem Services Approach to the full appraisal of the role of ecosystem services in the economy and society. Although concentrating on wetlands, the approaches suggested provide an assessment framework that can be applied to other types of ecosystem assets.

1
Introduction

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Although natural ecosystems perform many services and are potentially very valuable, these values have often been ignored, with the result that degradation of ecosystems has occurred. The debate over what is the value of ecosystems, or of the environment and nature more generally, has highlighted the fact that the concept is complex and multidimensional. An economic perspective on ecosystems portrays them as natural assets providing a flow of goods and services, physical as well as aesthetic, intrinsic and moral. While it can be argued that biodiversity has intrinsic value in and of itself (either assigned by humans, or, more controversially, possessed regardless of human recognition), we do not accept as a consequence that allocation decisions involving environmental assets should be decided solely by non-economic means (O’Neil, 1997; Sagoff, 2004). Deliberative processes need not be seen as substitutes for economic cost–benefit analysis. The latter can better inform the former in a complementary relationship. We will set out what we call an Ecosystem Services Approach (ESApp) to the full appraisal of the role of ecosystem services in the economy and society.

The main problem when including the full range of ecosystem goods and services in economic choices is that many of these goods and services are not valued on markets. There is a gap between market valuation and the economic value of many ecosystem services. The non-marketed gaps must first be identified and then where possible monetized. In the case of many of the services, the identification of economically relevant services is of special importance, since over time those services not allocated by the market have continuously gained in significance as society has evolved.

The main objective of this book is to provide guidance on ESApp and the valuation of ecosystem services, using the case of multi-functional wetlands to illustrate and make recommendations regarding the methods and techniques that can be applied to appraise ecosystem management options. To this aim the book offers: a review of ESApp and ecosystem service valuation rationale, including their importance from both a policy and a project appraisal perspective; a useful reference when considering policy and appraisal of ecosystem management options; and ways in which legal obligations and other high-level management targets should be taken into account in valuation exercises, thus giving important policy context to the management options. Although concentrating on wetlands, the approaches suggested provide an assessment framework for other types of ecosystem assets.

The book is structured in the following way. Chapter 2 presents the relevant conceptual background. This covers the ecosystem services approach that provides the framework and linkages between ecosystems, their healthy functioning and the outcomes in terms of goods and services of benefit to human society. Chapter 3 then sets the valuation procedure within a range of possible policy contexts, and explores the correct procedures to adopt given the prevailing circumstances, that is, ecosystem conversion, ecosystem creation and ecosystem trade-offs. It also sets out the basis of socio-economic project, policy and programme appraisal and distinguishes between cost-effectiveness analysis, cost–benefit analysis and multi-criteria analysis. Chapters 4 and 5 provide guidelines on the practical application of the ecosystem services approach to the case of multi-functional wetlands. Chapter 6 describes a number of selective wetland case studies that outline the approach and the valuation techniques used in the previous sections. Finally we provide conclusions and an assessment of future prospects for the further deployment of the ecosystem services approach and its policy impact.

REFERENCES

O’Neil, J. (1997) ‘Managing without prices: The monetary valuation of biodiversity’. Ambio 26: 546–550

Sagoff, M. (2004) Price, Principle and the Environment. Cambridge University Press: Cambridge

2
The Ecosystem Services Approach to Natural Resource Management

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Historically, conservation rationales have been centred on scientific and/or ethical grounds. The founding of the world’s first legislated national park, Yellowstone, was a function of preserving the ‘wonders within’. Likewise, international agreements such as the Convention on International Trade in Endangered Species (CITES) and the Convention on Biological Diversity (CBD) invoke ethical arguments for saving the ‘last of ’, as well as biological variation. Biodiversity and ecosystem conservation has more recently incorporated utilitarian arguments, such as biodiversity as an insurance policy against undesirable changes in ecosystem services. Moving from purely scientific and ethical conservation motivations, a whole range of utilitarian arguments have sprung up under the concept of ecosystem services. A massive undertaking in this realm was the UN’s Millennium Ecosystem Assessment (MEA, 2005). This was the product of over 1300 scientists’ input and was explicitly structured around the concept of ecosystem services as an attempt to fully integrate ecological sustainability, conservation and human welfare. But how did we get to ecosystem services?

Humanity is completely reliant upon nature for our welfare and survival. The history of civilization is, at its most basic, a story of people trying to find places where natural resources are abundant and protection from the elements is available. Around 10,000 years ago when we began to domesticate nature the story changed a bit as we were now harnessing nature’s services more directly through husbandry and agriculture. Humankind has always recognized the importance of what we now call ecosystem services. The ancient Greeks saw how important soil retention was when deforestation led to thinning soils resulting in their eventual reliance on olive trees for income since these can persist in poor soils. The classic example is of the society on Easter Island where cultural beliefs led to complete deforestation precluding soil retention, water regulation and raw material provision for sea vessels (see Ponting, 1993). Jared Diamond’s Collapse: How Societies Choose or Fail to Succeed (2005) painstakingly documents the collapse of several societies throughout history, and points to loss of habitat and the services supplied by ecosystems (including fish stocking, soil retention, biomass production and water regulation) as the key factors in their demise.

In the 20th century, key issues like deforestation, ozone depletion, fisheries collapses and climate change have galvanized scientific investigation and political movements on the role that well-functioning ecosystems have in supplying or improving human welfare. Two such examples are the collapse of cod stocks in the North Atlantic Ocean in the early 1990s and stratospheric depletion of ozone. The marine ecosystems responsible for continually providing cod to the US and western Europe since the 10th century could no longer function at the level of extraction and completely collapsed less than two decades ago. We consider this a loss of ecosystem functioning. Since humanity derived welfare benefits from this ecological process (i.e. fish), the provision of fish stocks from this area is considered an ecosystem service. In the other example, the release of chlorofluorocarbons, which were at one time considered to be a wonderful invention for their benign effect on environmental systems, caused a breakdown in the ecosystem service we could call atmospheric regulation. One human disservice caused by the breakdown of functioning would be the rise in skin cancer incidents in the southern hemisphere.

This strong and positive relationship between well-functioning ecosystems and human welfare is unquestioned. The two endpoints are connected by what we are now calling ecosystem services. In this book we take a systematic look at what ecosystem services are; the roles of biodiversity and human agents in providing and appropriating them; how mapping can aid effective management decisions; and the importance of integrating policy-oriented science into a common methodology for ecosystem service evaluation. All these investigations can be integrated under a common approach that we are calling an Ecosystem Services Approach (ESApp). We argue that investigations of ecosystem services will require a systems approach from concept definition through compensation mechanisms to post-policy appraisal (Figure 2.1). A key aspect is a ‘closed loop’ structure, starting with biophysical research and closing with policy appraisal. Using Figure 2.1 as a guide, illustrating the ESApp is the purpose of this chapter.

Figure 2.1 Framework for an Ecosystem Services Approach (ESApp)

ECOSYSTEM SERVICES DEFINED

Before we can talk about an ecosystem services approach we need to understand precisely what ecosystem services are. In the literature, there seems to be a consensus on a general meaning of ecosystem services. A few definitions in the literature are repeatedly cited (Costanza et al, 1997; Daily, 1997; MEA, 2005). The Millennium Assessment (MA) (MEA, 2005) defines ecosystem services as ‘the benefits people obtain from ecosystems and divides ecosystem services into supporting, regulating, provisioning and cultural services’. This definition is general by design and, while it provides a context for discussion, it falls short as an operative definition. Despite the proliferation of interest in ecosystem services there have been relatively few attempts to define the concept clearly to make it operational (de Groot et al, 2002; Boyd and Banzhaf, 2007). Our position is that there is no single classification system for ecosystem services that is appropriate for use in all cases. In fact, a classification system should be informed by (1) the characteristics of the ecosystem or phenomena under investigation; and (2) the decision making context for which ecosystem services are being considered. We believe that there needs to be a clear and consistent definition of what ecosystem services are. This is because a functional definition, widely agreed upon, would allow for meaningful comparisons across different projects, policy contexts, time and space. Such a definition would also provide us with boundaries for the characteristics we are interested in. For example, if we use the MA definition, that is, benefits to humans, then the characteristics in focus include things outside ecological systems, such as imputed cultural and/or symbolic meanings. However, if ecosystem services are defined as ecological phenomena, as we propose in this book, then the characteristics we are interested in are characteristics of ecological systems only. Some of the identified characteristics, along with the decision context for mobilizing ecosystem services, will inform an appropriate classification system for use.

Drawing on Boyd and Banzhaf, we propose that ecosystem services are the aspects of ecosystems consumed and/or utilized to produce human well-being. Defined this way, ecosystem services include ecosystem organization (structure), operation (process) and outflows, as all are consumed or utilized by humanity either directly or indirectly.

The study of ecosystems has always demanded a systems approach or holistic view in order to truly understand operation and process (Allen and Starr, 1982). Investigating ecosystem services will require the same level of systemic insight, and whether they are consumed directly (raw materials) or indirectly (nutrient cycling) the key points of the definition (i.e. ecological components and connection to human welfare) are satisfied. Despite calling for this encompassing definition, it is also important to delineate between direct consumption and indirect utilization of ecosystem services. This will be important for valuation as well as for any natural capital accounting systems. In the ESApp we designate services to be either intermediate or final with human welfare benefits flowing from these final services. Figure 2.2 illustrates this delineation. For example, when considering the human benefit (i.e. product) of wild fruits, food provision is the final service and pollination an intermediate service.

Figure 2.2 Relationships among intermediate services, final services and benefits

This delineation is not strict as services are often a function of the beneficiary’s perspective (Boyd, 2007). For example, water regulation services provided by vegetated landscape might be valued as a final service to someone interested in steady water supply, but valued as an intermediate service to someone interested in a final service of clean water for the benefit of drinking water. In this way the ESApp differs from the MA and its typology of supporting, regulating, provisioning and cultural services. While these categories undoubtedly offer strong heuristic value they can lead to confusion when trying to operationalize (either through accounting systems or for valuation purposes) ecosystem services. For example, nutrient cycling is a supporting service in the MA, water regulation is a regulating service, and recreation is a cultural service. However, all three could be referring to the same benefit that humans are concerned with, such as clean water. In accounting systems, valuation exercises and policy decisions we are most often concerned with benefits, and therefore a more transparent method for evaluation is simply to consider the system in terms of intermediate services, final services and benefits. Given this schema we know only to add up, value or weigh the benefits for comparison.

Additionally, just as discrete ecosystems can deliver several ecosystem services, ecosystem processes can provide multiple benefits for human welfare. These are considered ‘joint products’. Figure 2.3 is a simplified linear schematic of this situation. W...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Figures, Tables and Boxes
• Acknowledgements
• List of Acronyms and Abbreviations
• 1. Introduction
• 2. The Ecosystem Services Approach to Natural Resource Management
• 3. Policy Appraisal Perspectives and Socio-economic Appraisal Approaches
• 4. The Ecosystem Services Approach: Valuation of Multi-functional Wetlands
• 5. Economic Valuation of Wetland Ecosystem Services in Practice
• 6. Valuation of Multi-functional Wetland: Case Studies
• 7. Conclusions and Future Prospects
• Appendix A. Economic Valuation Techniques
• Appendix B. Wetland Ecosystem Services: Overview of Empirical Studies
• Appendix C. Case Studies Used for Policy Review and Survey
• Bibliography
• Index