The Economic Approach to Ecosystem Services and Biodiversity: Policy Design and Institutions Matter

Abstract

An economic approach to ecosystem services provision and biodiversity conservation may add a rationale for addressing conservation objectives in the policy sphere. It also has the potential to raise additional funding sources through market-based instruments. However, it is important to clearly take into account and communicate the challenges and limitations of valuation and the design of policy instruments.Economic approaches continue to gain traction in biodiversity policy, particularly encouraged by the TEEB initiative (The Economics of Ecosystems and Biodiversity). While proponents of this paradigm shift consider it a win-win situation for nature and humans, its critics fear counterproductive effects of an increased commodification of nature. This article demonstrates the political and institutional implications of economic valuation and the use of economic instruments, and discusses challenges for policy implementation. Our results show, first, that economic valuation can be a worthwhile tool for assessing the value of nature, but its results must be interpreted carefully, and second, that it is important to consider the economic approach in its anthropocentric framework and to focus on the careful design of biodiversity-related economic instruments.