Why We Should Put a Price Tag on Ecosystem Services

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 5^th 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