Ecosystem Services

There have been a number of attempts in recent years to put a dollar amount on the value of ecosystem services: the services and benefits we receive from nature daily, for free.

To my mind, this is an essential project. GNP, after all, is an outmoded artifact of neoclassical economics at its most simpleminded; it's a typical example of the Refusing-To-Pay-Any-Attention Principle: if it's too difficult to assign a dollar amount to the "services" a forest provides, just look at the going board-foot rate for timber, and leave it at that.

Previously, the boilerplate objection to valuing ecosystem services in this way was that services like nitrogen fixation, or the pest control provided by snakes and raptors, weren't traded on the open market, and thus couldn't be priced accurately. It's not a very compelling argument. Intangibles like "mental anguish" and "suffering" are routinely assigned a cash value in court proceedings; if subjective states of being can be assigned an approximate cash value in dollars, so can the value of the nitrogen cycle. Obviously, such valuations won't be perfect...but if we must reject economic projections whenever they fail to mirror reality, we might as well scrap traditional economics altogether.

There are a couple of interesting recent developments in the study of ecosystem services, as noted by Joel Makower. First, as most readers probably know, the Millennium Ecosystem Assessment reports were released. Although they're extremely depressing at first glance - and at second glance, for that matter - it's important to understand that they're not necessarily a death sentence. As Makower notes:

The challenge of reversing the degradation of ecosystems while meeting increasing demands can be met under some scenarios involving significant policy and institutional changes. Options that exist to conserve or enhance ecosystem services that reduce negative trade-offs or that will positively impact other services. Protection of natural forests, for example, not only conserves wildlife but also supplies fresh water and reduces carbon emissions.

WorldChanging has considerably more on this line of thought, including a breakdown of the types of future societies that MEA sees as possible.

Second, a new site called Ecosystems Marketplace has been launched in order to "capture the value associated with ecosystem services." An article in the Guardian describes it thusly:

Backed by the non-profit conservation group Forest Trends, Citigroup and ABN Amro banks said they were committed to initiatives, including a new online information service, following the Kyoto treaty. Investors will be able to track the price of carbon and other commodities linked to the environment in a market that ABN Amro believes could be worth euros 45bn (£30bn) by 2012.

Trading in ecosystem services frequently involves the concept of mitigation and conservation banking, a system under which habitat can be developed in one area in return for strengthening protections in another. I have mixed emotions about arrangements of this type, but just such a public-private partnership in the Southeast does seem to have saved the red-cockaded woodpecker. And also, I think that this sort of trading shows a heartening shift in attitude among businesses that have traditionally been reflexively adversarial towards the environment; it may be a useful transitional stage between thoughtless rapacity and an actual commitment to sustainability. As Makower says,

[T]he growth of ecosystem credits and banking represent significant steps forward by establishing price tags on nature’s services. Creating a market for species and habitats helps to monetize their value for the first time. Whether those prices truly represent the ecosystems’ value may be up for debate, but it’s a promising start.