Everything about Ecosystem Valuation totally explained
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.
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 yield valued as it would be on
commodity markets: for the value of water, wood, fish or game, that's 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
nature's 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:
- 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 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.
Is valuation economics, or ecology?
Such valuation, and that of the effectiveness of various
environmental health 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 doesn't extend to the economics of
valuation by which they're 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's studied in "economics", but when non-humans do it, that's "ecology", though it's clear that there are motivations, methods and certainly bodily needs in common.
Since animals don't put explicit prices on ecosystems they use, but do behave as if they're valuable, for example by defending turf or access to water, it's 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's 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 isn't 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're worth considerable risk of harm to control. This is at least a relative notion of value and
value at risk applied to ecosystem.
Further Information
Get more info on 'Ecosystem Valuation'.
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