What’s the problem, who pays – and what about the rest of the natural world?
What’s the problem?
‘Ecosystem services’ and ‘Payment for Ecosystem Services’ have gained in prominence in recent years. The UN ‘The Economics of Ecosystems and Biodiversity’ (TEEB) and the UK National Ecosystem Assessment (UK NEA) reports have highlighted the importance of the natural environment to the economy.
Ecosystem services are the goods and services which arise from the natural environment. Whilst the value of some ecosystem services can be seen through market transactions, such as for timber or wood for fuel, many are non-market ‘common pool resources’ or ‘public goods’ – such as regulation of the climate, maintaining water quality, mitigating flooding and biodiversity.
In these cases the lack of clear, or any, property rights means they are either over-exploited or undersupplied. Where existing natural resources are freely available without regulation or restriction to access they tend to be over used. A classic example is over-fishing, where wild fish are available ‘free’ without restriction they tend to be over-fished, leading to an eventual collapse of fish stocks.
Conversely where say, land use change in the upper catchment might benefit water quality or flood mitigation downstream through tree planting or creating wetland, the cost to the landowner in the absence of any payment means there is little incentive to act. In this case a valuable ecosystem service is undersupplied.
Payment for ecosystem services (PES) is an attempt to create a market for the benefits which arise from ecosystems – to link through market transactions, the beneficiaries of the ecosystem service with those who are able to protect or supply it. The nascent carbon market is an example of where people and businesses with net CO2 emissions are able to offset these through buying carbon sequestration or some other form of carbon abatement through tree planting or renewable energy schemes. In practice there are relatively few other examples of this kind of ‘pure’ PES, although linking land management in the water catchment for water quality and flood mitigation, to water customers may offer opportunities.
However the valuation of ecosystem services does provide a tool for ensuring that the benefits from the natural environment are taken into account in decision making and built into government incentives. Through understanding the economic value of protecting habitats such as ancient grassland or bog, or creating new habit through for instance woodland creation, these can be considered alongside competing land uses.
What about the rest of the natural world?
So does this mean for those parts of the natural environment which have no clear ecosystem service there is no value? Here we need to make the distinction between a value for specific goods and services and the value which people more generally place on the natural environment.Many people support the conservation of tigers, although they are unlikely to ever see a tiger in the wild, and gain no direct benefit from their conservation. By asking people what they would notionally be willing to pay to see tigers conserved, economist are able to calculate the value people place on tiger conservation. This willingness to pay (WTP) can then become a measure in decision making by giving it a monetary value which can be compared to other costs and benefits.
Is everything just money?
None of this is unproblematic. Many people will baulk at the very idea that a monetary value should be placed on the natural environment. Surely the natural environment has an intrinsic value outside any monetary value we may ascribe? But the idea of ‘value’ is itself a human constructed notion, and if everything might have intrinsic value this makes it difficult if you’re trying to decide between competing options. What it does perhaps do is set a tone for debate that recognises that not all things can be measured in strictly monetary terms and that there may be some value beyond immediate use.
Decisions about habitat protection in the face of development, consideration of how we mitigate impacts from one activity by setting it against another, development of incentives for provision of ecosystem services by farmers and landowners, and design of agri-environment schemes and so on, all require that we have some understanding of value – a way in which to compare apparently different and diverse options.
Environmental valuation does not provide an unqualified answer. The values which arise are not objective and absolute, they are a recognition of a value and one tool, but not the only tool, in decision making where the environment is affected or where land use change is likely. Participation, representation, active communities and individuals, government and non-governmental organisations, businesses and landowners, debate and negotiation – all these are also part of the way in which we reach decisions about environmental issues.
Mike Townsend, Communications and Evidence Adviser