Accounting for Nature's Benefits: The Dollar Value of Ecosystem Services

Abstract

Healthy ecosystems provide us with fertile soil, clean water, timber, and food. They reduce the spread of diseases. They protect against flooding. Worldwide, they regulate atmospheric concentrations of oxygen and carbon dioxide. They moderate climate. Without these and other “ecosystem services,” we’d all perish.1 One hallmark of the history of civilization is an ever-increasing exploitation of ecosystem services coupled with substitution of technology for these services, particularly where ecosystems have been exploited beyond their ability to provide.2 Agriculture is a hybrid of exploitation and substitution that enabled people to live in greater, denser populations that drove further exploitation and substitution. Modern plumbing made close quarters far less noxious but led to exploitation of ecosystems’ ability to break down sewage, and to substitution with expensive sewage treatment technologies. Exploitation of fossil fuels led to a slew of modern conveniences, including fishing fleets that are so effective at catching their prey that they threaten fisheries globally.3,4 All this exploitation strained ecosystems, but in the past, when the population was a fraction of what it is now, these strains were local rather than global phenomena. In 2005 the Millennium Ecosystem Assessment (MA),5 a sweeping survey conducted under the auspices of the United Nations, found that approximately 60% of 24 ecosystem services examined were being degraded or used unsustainably.6 “Every year we lose three to five trillion dollars’ worth of natural capital, roughly equivalent to the amount of money we lost in the financial crisis of 2008–2009,” says Dolf de Groot, leader of the Research Program on Integrated Ecosystem Assessment and Management at Wageningen University, the Netherlands. The value of ecosystem services typically goes unaccounted for in business and policy decisions and in market prices. For commercial purposes, if ecosystem services are recognized at all, they are perceived as free goods, like clean air and water. So it’s not surprising that much of the degradation of ecosystems is rooted in what the President’s Council of Advisors on Science and Technology (PCAST), an independent group of U.S. scientists and engineers, describes as “widespread under-appreciation of the importance of environmental capital for human well-being and . . . the absence of the value of its services from the economic balance sheets of producers and consumers.”7 PCAST and other groups are working to build recognition of ecosystem services and, importantly, to valuate them—that is, calculate values for these services to help policy makers and resource managers make rational decisions that factor important environmental and human health outcomes into the bottom line.