The Valuation of Ecosystem Services in International Investment Arbitration

Abstract

Ecosystem services are essential to human life, inextricably woven into the foundations of our civilizations and economies. This article lays the theoretical foundation for the incorporation of ecosystem services valuation into international arbitration, applying the scientific and economic scholarship in this area to legal dispute resolution. Traditional international investment law and modern legal scholarship fail to address either the value ecosystem services bring to landowners or the repercussions of investor activity on their fragile health and vitality. The evolution of international dispute resolution and growing threats to the natural environment urge the development of a new perspective that closes these gaps. Investor-state dispute settlement is a flexible enforcement framework used by thousands of international investment agreements. It provides an ideal forum for inaugurating the internalization of the positive externalities generated by these precious resources. Recognizing the economic and environmental importance of these services and their impact on legal relationships, this article unfolds a legal basis for incorporating the valuation of ecosystem services into damages calculations in international investment arbitration awards.