Ecosystem valuation
Encyclopedia
Ecosystem valuation is a widely used tool in determining the impact of human activities on an environmental system, by assigning an economic value to an ecosystem
or its ecosystem services
.
valued as it would be on commodity markets: for the value of water, wood, fish or game, that is purified or nurseried or generated or harboured in that ecosystem. Thus, a price can be put on the natural capital
of an ecosystem based on the price of natural resources
it yields each year.
More complex arguments in ecosystem valuation regard environmental ethics
and deep ecology
. Economists and some ecologists concentrate upon ecosystem services
and the assignment of values in a service economy
to all that Nature does "for humans". Studies compiled by ecologist Robert Costanza
in the 1990s argued strongly that even just considering the most basic seventeen of these services, the combined value of the ecosystems of the earth was worth more (US$33T) each year than the whole human exchange economy (US$25T) at that time (1995). Other studies have focused on the marginal value
of ecosystem changes, which can be used in cost-benefit analysis
of environmental policies.
In Natural Capitalism
, 1999, Paul Hawken
, Amory Lovins
and Hunter Lovins
advanced an argument to assign the value of Earth
in current currency
. See value of Earth article for that and other examples of this extreme case of ecosystem valuation - biosphere valuation.
Economists assign several types of values to ecosystems:
Methods to place a monetary value on ecosystem services where there are no market prices include "stated preference" methods and "revealed preference" methods. Stated preference methods, such as the contingent valuation
method ask people for their willingness to pay
for a certain ecosystem (service). Revealed preference methods, such as hedonic pricing and the travel cost method, use a relation with a market good or service to estimate the willingness-to-pay for the service.
measures that affect the value of life
and quality of life
, are usually thought to be part of economics
. Natural capital
and individual capital
are studied ecology
as living systems, however, this does not extend to the economics of valuation by which they are related:
Considering "valuation" as an "economic not ecological issue" reflects the way these fields divide of the activities of humans versus non-humans in "making a living". When humans go out to get food or homes, that is studied in "economics", but when non-humans do it, that is "ecology", though it is clear that there are motivations, methods and certainly bodily needs in common.
Since animals do not put explicit prices on ecosystems they use, but do behave as if they are valuable, e.g. by selecting one territory vs. another, defending their territories, etc, it is mostly a matter of definition whether ecology should include valuation as an issue. It may be anthropocentric to do so, since "valuation" more clearly refers to a human perception rather than being an "objective" attribute of the system perceived. Ecology itself is also human perception, and such related concepts as a food chain
are constructed by humans to help them understand ecosystems. In many cases by those who hold that markets and pricing exist independently of any individual human observers and "users", and especially those who deem markets to be "out of control", ecosystem valuation is considered a (marginal, ignored) part of economics. Others argue that natural capital
is an economic concept that is at least as viable as financial capital, which itself is determined on subjective valuation. Some even suggest that valuation of ecosystem services is more cogent than financial valuation, as the ecosystem would continue after the collapse of the economy, while the inverse is not valid.
Some versions of conflict theory
focus on the role of resource scarcity in sparking or propagating human conflicts - in effect holding that the resources or ecosystems they fight over are being held so valuable that they are worth considerable risk of harm to control. This is at least a relative notion of value and value at risk
applied to ecosystem.
Ecosystem
An ecosystem is a biological environment consisting of all the organisms living in a particular area, as well as all the nonliving , physical components of the environment with which the organisms interact, such as air, soil, water and sunlight....
or its ecosystem services
Ecosystem services
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...
.
Value of ecosystem services
The simplest form of ecosystem valuation for economists is to hold that an ecosystem has a value equivalent to its ecological yieldEcological yield
Ecological yield is the harvestable population growth of an ecosystem. It is most commonly measured in forestry;sustainable forestry is defined as that which does not harvest more wood in a year than has grown in that year, within a given patch of forest....
valued as it would be on commodity markets: for the value of water, wood, fish or game, that is purified or nurseried or generated or harboured in that ecosystem. Thus, a price can be put on the natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...
of an ecosystem based on the price of natural resources
Natural Resources
Natural Resources is a soul album released by Motown girl group Martha Reeves and the Vandellas in 1970 on the Gordy label. The album is significant for the Vietnam War ballad "I Should Be Proud" and the slow jam, "Love Guess Who"...
it yields each year.
More complex arguments in ecosystem valuation regard environmental ethics
Environmental ethics
Environmental ethics is the part of environmental philosophy which considers extending the traditional boundaries of ethics from solely including humans to including the non-human world...
and deep ecology
Deep ecology
Deep ecology is a contemporary ecological philosophy that recognizes an inherent worth of all living beings, regardless of their instrumental utility to human needs. The philosophy emphasizes the interdependence of organisms within ecosystems and that of ecosystems with each other within the...
. Economists and some ecologists concentrate upon ecosystem services
Ecosystem services
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...
and the assignment of values in a service economy
Service economy
Service economy can refer to one or both of two recent economic developments. One is the increased importance of the service sector in industrialized economies. Services account for a higher percentage of US GDP than 20 years ago...
to all that Nature does "for humans". Studies compiled by ecologist Robert Costanza
Robert Costanza
Robert Costanza is an American ecological economist is a University Professor of Sustainability at Portland State University in Oregon.- Biography :Robert Costanza was born in Pittsburgh, Pennsylvania....
in the 1990s argued strongly that even just considering the most basic seventeen of these services, the combined value of the ecosystems of the earth was worth more (US$33T) each year than the whole human exchange economy (US$25T) at that time (1995). Other studies have focused on the marginal value
Marginal value
A marginal value is#a value that holds true given particular constraints,#the change in a value associated with a specific change in some independent variable, whether it be of that variable or of a dependent variable, or...
of ecosystem changes, which can be used in cost-benefit analysis
Cost-benefit analysis
Cost–benefit analysis , sometimes called benefit–cost analysis , is a systematic process for calculating and comparing benefits and costs of a project for two purposes: to determine if it is a sound investment , to see how it compares with alternate projects...
of environmental policies.
In Natural Capitalism
Natural capitalism
Natural Capitalism: Creating the Next Industrial Revolution is a 1999 book co-authored by Paul Hawken, Amory Lovins and Hunter Lovins. It has been translated into a dozen languages and was the subject of a Harvard Business Review summary....
, 1999, Paul Hawken
Paul Hawken
Paul Hawken is an environmentalist, entrepreneur, and author.-Life:Paul Hawken had a Swedish grandmother and a Scottish grandfather with a farm. His father worked at UC Berkeley...
, Amory Lovins
Amory Lovins
Amory Bloch Lovins is an American environmental scientist and writer, Chairman and Chief Scientist of the Rocky Mountain Institute. He has worked in the field of energy policy and related areas for four decades...
and Hunter Lovins
Hunter Lovins
L. Hunter Lovins is an author and a promoter of sustainable development for over 30 years, is president of Natural Capitalism Solutions, a 5013 non-profit in Longmont, Colorado and the Chief Insurgent of the Madrone Project...
advanced an argument to assign the value of Earth
Value of Earth
In green economics, value of Earth is the ultimate in ecosystem valuation, and important to value of life calculations. It begins with the simple problem that if the Earth ceases to support life, and human life does not continue elsewhere, all economic activity will also cease.-Methods of...
in current currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
. See value of Earth article for that and other examples of this extreme case of ecosystem valuation - biosphere valuation.
Economists assign several types of values to ecosystems:
- direct use value attributed to direct utilisation of ecosystem services;
- indirect use value attributed to indirect utilisation of ecosystem services, through the positive externalities that ecosystems provide;
- option value attributed to preserving the option to utilise ecosystem services in the future;
- existence value attributed to the pure existence of an ecosystem
- altruistic value based on the welfare the ecosystem may give other people
- bequest value based on the welfare the ecosystem may give future generations
Methods to place a monetary value on ecosystem services where there are no market prices include "stated preference" methods and "revealed preference" methods. Stated preference methods, such as the contingent valuation
Contingent valuation
Contingent valuation is a survey-based economic technique for the valuation of non-market resources, such as environmental preservation or the impact of contamination...
method ask people for their willingness to pay
Willingness to pay
In economics, the willingness to pay is the maximum amount a person would be willing to pay, sacrifice or exchange in order to receive a good or to avoid something undesired, such as pollution...
for a certain ecosystem (service). Revealed preference methods, such as hedonic pricing and the travel cost method, use a relation with a market good or service to estimate the willingness-to-pay for the service.
Is valuation economics, or ecology?
Such valuation, and that of the effectiveness of various environmental healthEnvironmental health
Environmental health is the branch of public health that is concerned with all aspects of the natural and built environment that may affect human health...
measures that affect the value of life
Value of life
The potency of life is an economic value assigned to life in general, or to specific living organisms. In social and political sciences, it is the marginal cost of death prevention in a certain class of circumstances. As such, it is a statistical term, the cost of reducing the number of deaths by...
and quality of life
Quality of life
The term quality of life is used to evaluate the general well-being of individuals and societies. The term is used in a wide range of contexts, including the fields of international development, healthcare, and politics. Quality of life should not be confused with the concept of standard of...
, are usually thought to be part of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
. Natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...
and individual capital
Individual capital
Individual capital, also known as human capital, comprises inalienable or personal traits of persons, tied to their bodies and available only through their own free will, such as skill, creativity, enterprise, courage, capacity for moral example, non-communicable wisdom, invention or empathy,...
are studied ecology
Ecology
Ecology is the scientific study of the relations that living organisms have with respect to each other and their natural environment. Variables of interest to ecologists include the composition, distribution, amount , number, and changing states of organisms within and among ecosystems...
as living systems, however, this does not extend to the economics of valuation by which they are related:
Considering "valuation" as an "economic not ecological issue" reflects the way these fields divide of the activities of humans versus non-humans in "making a living". When humans go out to get food or homes, that is studied in "economics", but when non-humans do it, that is "ecology", though it is clear that there are motivations, methods and certainly bodily needs in common.
Since animals do not put explicit prices on ecosystems they use, but do behave as if they are valuable, e.g. by selecting one territory vs. another, defending their territories, etc, it is mostly a matter of definition whether ecology should include valuation as an issue. It may be anthropocentric to do so, since "valuation" more clearly refers to a human perception rather than being an "objective" attribute of the system perceived. Ecology itself is also human perception, and such related concepts as a food chain
Food chain
A food web depicts feeding connections in an ecological community. Ecologists can broadly lump all life forms into one of two categories called trophic levels: 1) the autotrophs, and 2) the heterotrophs...
are constructed by humans to help them understand ecosystems. In many cases by those who hold that markets and pricing exist independently of any individual human observers and "users", and especially those who deem markets to be "out of control", ecosystem valuation is considered a (marginal, ignored) part of economics. Others argue that natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...
is an economic concept that is at least as viable as financial capital, which itself is determined on subjective valuation. Some even suggest that valuation of ecosystem services is more cogent than financial valuation, as the ecosystem would continue after the collapse of the economy, while the inverse is not valid.
Some versions of conflict theory
Conflict theory
Conflict theories are perspectives in social science that emphasize the social, political or material inequality of a social group, that critique the broad socio-political system, or that otherwise detract from structural functionalism and ideological conservativism...
focus on the role of resource scarcity in sparking or propagating human conflicts - in effect holding that the resources or ecosystems they fight over are being held so valuable that they are worth considerable risk of harm to control. This is at least a relative notion of value and value at risk
Value at risk
In financial mathematics and financial risk management, Value at Risk is a widely used risk measure of the risk of loss on a specific portfolio of financial assets...
applied to ecosystem.
See also
- Ecological EconomicsEcological economicsImage:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumbpoly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26...
- Environmental EthicsEnvironmental ethicsEnvironmental ethics is the part of environmental philosophy which considers extending the traditional boundaries of ethics from solely including humans to including the non-human world...
- Deep EcologyDeep ecologyDeep ecology is a contemporary ecological philosophy that recognizes an inherent worth of all living beings, regardless of their instrumental utility to human needs. The philosophy emphasizes the interdependence of organisms within ecosystems and that of ecosystems with each other within the...
- Earth EconomicsEarth EconomicsEarth Economics, a 501c3 non-profit headquartered in Tacoma, Washington, United States, is dedicated to researching and applying the economic solutions of tomorrow today. Earth Economics provides robust, science-based, ecologically-sound, economic analysis, policy and tools to governments,...