Can You Put a Price on Nature?

SP-02 Integrating the Economics of Ecosystem Services into Sustainable Forest Management

How much would you pay for beautiful mountain views? How much for forests that purify your drinking water, or the protection of solitary and remote wilderness? If you’re struggling to come up with a dollar amount, you’re not alone. Valuating nature is a challenging but crucial part of research on ecosystem services.

Source: www.shutterstock.com
Source: www.shutterstock.com

The 2005 Millennium Ecosystem Assessment popularized the notion of ecosystem services. Assessment authors identified four categories of ecosystem services: provisioning, regulating, cultural, and supporting. For example, woody biomass is a provisioning service (fuel for human communities) and a regulating service. Trees help regulate atmospheric greenhouse gases by utilizing carbon dioxide as they grow.

Forest economists around the world are exploring the links between ecosystem services and sustainable forest management. Presenters in the IUFRO subplenary session on ecosystem services illustrated diverse methods and contexts for forging this link. They also shared opportunities and obstacles for ecosystem service research. Challenges include:

  • The lack of markets for ecosystem services,
  • Research gaps on economic costs and benefits of forest management, and
  • Inappropriate methods for assessing the value of nature.

Markets for ecosystem services

Connecting ecosystem services to sustainable forest management requires new ways of valuating nature, but it also requires new economic markets. Such markets can be slow to develop, even when public support is high.

Woody biomass is an ecosystem service hampered by weak markets. Reasons include high transportation costs and low prices for woody biomass, as well as technology for liquid biofuels that seem infeasible at commercial scales.

However, enthusiasm for biomass abounds. Donald Grebner (University of Mississippi) reported that 85% of forest landowners he surveyed in Mississippi are willing to supply woody biomass under certain conditions. The challenge is to turn this interest into actual transactions.

Research on economic costs and benefits

Research on costs and benefits of management practices can draw attention to ecosystem services. In the absence of this research, government agencies and businesses might prefer the status quo over altered behavior.

Elizabeth Kindler (Göttingen University) blamed lack of research on lackluster integration of ecosystem service into German forestry enterprises. Rousing awareness of responsibility of businesses to curb the loss of biodiversity was central to The Economics of Ecosystem and Biodiversity (TEEB) initiative, a global effort from 2007-2010.

However, TEEB did little to change forest practices in Germany. Such was the case in Lower Saxony, a German state, which according to Elizabeth, was the birthplace of Volkswagen and Jägermeister. Forests cover over 25% of Lower Saxony, and forest enterprises and businesses generate substantial revenue for the state.

The Lower Saxony Forest Service prepared an assessment of biodiversity across the state, but not in conjunction with a monetary valuation of biodiversity. Forest enterprises in Lower Saxony never embraced TEEB, partially due to unknown costs and benefits of forest management to biodiversity.

Inappropriate methods for valuation

In other contexts, the monetary valuation of ecosystem services is not possible or even desirable. Shashi Kant (University of Toronto) illustrated this through his research with Canadian First Nations.

Economists use stated preference methods to valuate ecosystem services. Shashi finds these methods inappropriate for lower-income and native communities. A low “willingness to pay” for ecosystem services can reflect a low capability to pay. The monetization of Nature is also nonsensical to communities who view ecosystem services as inextricably linked to their culture and livelihood.

Shashi found the “life satisfaction” approach more harmonious with First Nations’ view of ecosystem services. A holistic view of nature makes it harder for Tribal members to isolate the value of a single resource. For example, hunting opportunities are tied to provisioning services (i.e., meat) and cultural services (i.e., relationship building).

Life satisfaction methodology does not produce dollar values of ecosystem services, so can this research grab the attention of policy makers and corporations? According to Shashi, monetary values aren’t always vital to decision makers. Policy analysts can use data from life satisfaction research to prioritize projects and assess success. Shashi’s analysis in Canada reveals the relative contribution of new health services or financial support to life satisfaction of First Nations.

So can you put a price on nature? Some people can and others can’t or won’t due to their worldview. Doing so is often necessary to grab the attention of policy makers and corporations, but showing impacts on human livelihoods can also promote ecosystem services.

Written by: Megan S. Matonis

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