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Why We Should Put a Price Tag on Ecosystem Services

Gina-Marie Cheeseman
| Wednesday August 17th, 2011 | 5 Comments

A recent article in the New York Times about the work Stanford University biology professor Gretchen Daily is doing in Africa and Costa Rica highlights the importance of ecosystem services, or putting a value on ecosystems. Daily co-founded the Natural Capital Project (NCP) in November 2006. NCP, as Daily told the New York Times, works to “quantify in biophysical and dollar terms the value of conserving the forest and its wildlife.”

NCP is a joint venture between Stanford University’s Woods Institute for the Environment, the University of Minnesota’s Institute on the Environment, The Nature Conservancy (TNC) and the World Wildlife Fund (WWF). NCP developed software tools for Integrated Valuation of Ecosystem Services and Tradeoffs (InVest) which allows “decision makers” to put a value on natural capital, as its website states. InVest includes coastal and marine ecosystem services.

NCP has several projects in North America: the Sierra Nevada region in California, the Hawaiian Islands, and the West Coast of Vancouver Island in Canada’s British Columbia. NCP’s other projects are located in China’s Upper Yangtze River Basin, Coastal Belize, Sumatra (Indonesia), Northern Andes and Southern Central America (NASCA), and Tanzania’s Eastern Arc Mountains.

The Sierra Nevada Region project caught my attention because I have roots in the area. NCP’s website gives some interesting facts about the region, which helps someone understand both the importance of NCP having a demonstration project there, and the importance of ecosystem services:

  • The Sierra Nevada Mountains are a 650 kilometer region that includes Yosemite Valley, Lake Tahoe and Mt. Whitney
  • The Sierra Nevada produces approximately $2.2 billion worth of commodities and services a year (water resources, timber, ranching, mining, recreation and tourism), with water comprising 60 percent of the total value, or over $1.32 billion
  • The region’s watersheds (rivers, lakes and streams) supply 65 percent of California’s urban and rural water supply, and almost all of the water for western Nevada
  • NCP calls the region “California’s principal watershed” that supports the 5th largest economy in the world (California)
  • By 2040, almost 20 percent of the region’s private forests and rangelands could be affected by development
  • Climate change could also be a threat as the snowpack could be reduced which would mean California and Nevada would have less of a water supply
  • The human population in the region has tripled since 1970

NCP’s project in the Sierra Nevadas, its California Demonstration Site, compiles relevant data by mapping and modeling ecosystem service production and human dimensions in the region. The point of the demonstration site is to give decision-makers the tools to “identify and properly value ecosystem services and assess the costs and benefits of their protection.”

From Dow to the World Bank: putting a value on ecosystems is all the rage

Putting a value on ecosystems is not something that only NCP does. There are companies who seek to quantify ecosystems. For example, Dow Chemical, the company that brings us pesticides, announced its partnership in January with TNC to put a value on ecosystems.

Last October, the World Bank launched its Global Partnership for Ecosystems and Ecosystem Services Valuation and Wealth Accounting. The partnership builds on the UNEP project The Economics of Ecosystems and Biodiversity (TEEB), and will include both developed and developing countries, international organizations like the UNEP and NGOs.

The World Business Council for Sustainable Development (WBSCD) released its Guide to Corporate Ecosystem Valuation (CEV) in April. The Guide provides a framework for companies to improve “corporate decision-making through valuing ecosystem services,” according to the WBCSD.

Photo: Flickr user, Modery


▼▼▼      5 Comments     ▼▼▼

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  • http://www.activelymovingwater.com chris corbin

    Agreed. A price tag on Ecosystem Services is critical, although clearly defining these complex systems constitutes the first hurdle. I specialize in defining, valuing, and marketing water rights. These eco-assets are relatively straight forward in comparison to the larger systems depicted in this article and the complexities associated with water rights are endless.

  • Robert Vincin

    The only baseline assets of Mankind and all living matter are soil-water-vegetation-atmoshphere all else but commodities The world puts a monitory value on the commodities and rushes to prop up failing Banks. Each of the assets are inter linked UNCCD specifies the assets 60% damaged. If the assets were under control of Earth Inc the receiver Nature will soon demonstrate displeasure and move further into control. 300years of land stripping back to deserts reflecting heat CO2e to upper atmosphere coupled with perpetual volcanic eruption still leads the horror anthropogenic emissions of late. While there is established technology to capture nox sox mercury and chemical they are not applied by Governments.
    Yes a value needs to be applied to all the above assets and paid for. If UNFCCC -IPCC was amalgamated with say UNCCD WHO and agencies cover poverty and like aid then By applying a value to say desert reversal back to sustainable food fodder and in time as soil grows forestry and potable water restoration then jobs created poverty reversed a value to this above Kyoto Carbon trading would see offset payments putting a value on the assets that can reflect on page 3 of annual reports. Robert Vincin sat on UNCTAD UNFCCC from 1996-01 we set such modelling. He is in Asia Major reversing Gobi and assisting other continents desert reversal growing soil etc

  • http://progressivetimes.wordpress.com T. Caine

    Putting a price tag on nature is, at most, a temporary solution to try and convey how valuable our natural resources are and how interconnected we are to earth’s ecological services. At the same time, it comes with drawbacks of its own. Two of them stick out to me.

    One, The first is that the entire mentality reeks of the misdirected ethos that we are slowly “mastering” nature, as if we have even begun to understand the complexities of natural ecosystems enough to catalog their parts and rate their worth relative to how many Big Macs they could buy.

    Second is that affixing a price, however high, to a natural resource is creating a point where it would be theoretically valuable to cash in and sell it off for a greater opportunity. The dollar value has relatively little meaning given that its very existence is trying to represent something unquantifiable. What is the difference between saying that the annual value of all the natural capital in the world is $33 trillion vs. $35 trillion? Both try to convey that environmental systems are really, really valuable, but both are wrong. Nature isn’t valuable, it’s invaluable.

  • RAMGraal

    T. Caine (August 20,2011 at 14:57 PM PDT) makes two good points; one will be extended here. The “mentality” s/he mentions is not only a “misdirected ethos”,it is an emerging “thought-form” which, should it become prevalent in our culture, would eventually create rents in the web of moral imaginations in which the Natural World has been embedded since the Creation.
    “Monetary” evaluations -Human “Market Value” assessments- cripple the critical moral-emotional-aesthetic relationship human beings are meant to have to Nature. Energy follows thought (in this case “money” can be considered as concretized thought)and if statistics replace the sacred or associations move more towards revenue models rather than reverence, the Being Who wears the Natural world as a great garment will have no choice than to, one day, forcibly resist this thought-form with one of its own.
    And be assured, all the banks on the earth and all the treasuries that ever were, haven’t enough money to buy back one second of that terrible Day.

  • K. Thomas

    Why put a price on nature when some big and mighty company, who doesn’t care about how much they spend and do anything to get what they want, can just come along, pay for the land and tear everything down in their way and put up a Walmart or mall or any other store when you really don’t need it. All I’m asking is WHY”Why put a price on nature when some big and mighty company, who doesn’t care about how much they spend and do anything to get what they want, can just come along, pay for the land and tear everything down in their way and put up a Walmart or mall or any other store when you really don’t need it.All I’m asking is WHY? Not trying to be rude, I’m just stating what I think.