Downloaded by [University of Florida] at 05:26 23 February 2017 ‘A landmark study on one of the most pressing problems facing society, balancing economic growth and ecological protection to achieve a sustainable future.’ Simon Levin, Moffett Professor of Biology, Department of Ecology and Evolution Behavior, Princeton University, USA ‘TEEB brings a rigorous economic focus to bear on the problems of ecosystem degradation and biodi- versity loss, and on their impacts on human welfare. TEEB is a very timely and useful study not only of the economic and social dimensions of the problem, but also of a set of practical solutions which deserve the attention of policy-makers around the world.’ Nicholas Stern, I.G. Patel Professor of Economics and Government at the London School of Economics and Chairman of the Grantham Research Institute on Climate Change and the Environment ‘The [TEEB] project should show us all how expensive the global destruction of the natural world has become and, it is hoped, persuade us to slow down.’ The Guardian ‘Biodiversity is the living fabric of this planet — the quantum and the variability of all its ecosystems, species, and genes. And yet, modern economies remain largely blind to the huge value of the abundance and diversity of this web of life, and the crucial and valuable roles it plays in human health, nutrition, habitation and indeed in the health and functioning of our economies. Humanity has instead fabricated the illusion that somehow we can get by without biodiversity, or that it is somehow peripheral to our con- temporary world. The truth is we need it more than ever on a planet of six billion heading to over nine billion people by 2050. This volume of “TEEB” explores the challenges involved in addressing the eco- nomic invisibility of biodiversity, and organises the science and economics in a way decision makers would Downloaded by [University of Florida] at 05:26 23 February 2017 find it hard to ignore.’ Achim Steiner, Executive Director, United Nations Environment Programme Downloaded by [University of Florida] at 05:26 23 February 2017 The Economics of Ecosystems and Biodiversity Ecological and Economic Foundations Human well-being relies critically on ecosystem services provided by nature. Examples include water and air quality regulation, nutrient cycling and decomposition, plant pollination and flood control, all of which are dependent on biodiversity. They are predominantly public goods with limited or no markets and do not command any price in the conventional economic system, so their loss is often not detected and continues unaddressed and unabated. This in turn not only impacts human well-being, but also seriously undermines the sustainability of the economic system. It is against this background that TEEB: The Economics of Ecosystems and Biodiversity project was set up in 2007 and led by the United Nations Environment Programme to provide a comprehensive global assessment of economic aspects of these issues. This book, written by a team of international experts, represents the scientific state of the art, providing a comprehensive assessment of the fundamental ecolo- gical and economic principles of measuring and valuing ecosystem services and biodiversity, and showing how these can be mainstreamed into public policies. This volume, along with the subsequent TEEB outputs, provides the authoritative knowledge and guidance to drive forward the biodiversity conservation agenda for the next decade. This volume is an output of TEEB: The Economics of Ecosystems and Biodiversity study and has been edited by Pushpam Kumar, Reader in Environmental Economics, University of Liverpool, UK. TEEB is hosted by the United Nations Environment Programme (UNEP) and supported by the European Commission, the German Federal Ministry for the Environment (BMU) and the UK Department for Environment, Food and Rural Affairs (DEFRA), recently joined by Norway's Ministry for Foreign Affairs, The Netherlands’ Ministry of Housing (VROM), the UK Department for International Development (DFID) and also the Swedish International Development Cooperation Agency (SIDA). The study leader is Pavan Sukhdev, who is also Special Adviser – Green Economy Initiative, UNEP. Downloaded by [University of Florida] at 05:26 23 February 2017 Downloaded by [University of Florida] at 05:26 23 February 2017 The Economics of Ecosystems and Biodiversity Ecological and Economic Foundations Edited by Pushpam Kumar Downloaded by [University of Florida] at 05:26 23 February 2017 First published 2010 by Earthscan First published in paperback 2012 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2010, 2012 United Nations Environment Programme The right of the United Nations Environment Programme to be identified as author of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. The recommended full citation for this volume is as follows: TEEB (2012), The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations. Edited by Pushpam Kumar. Routledge, Abingdon and New York. Disclaimer The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the United Nations Environment Programme concerning the legal status of any country, territory, city or area or of its authorities, or concerning de- limitation of its frontiers or boundaries. Moreover, the views expressed do not necessarily represent the decision or the stated policy of the United Nations Environment Programme, nor does citing of trade names or commercial processes constitute endorsement. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data The economics of ecosystems and biodiversity : ecological and economic foundations / edited by Pushpam Kumar. p. cm. “An Output of TEEB: The Economics of Ecosystems and Biodiversity.” Includes bibliographical references and index. 1. Ecology–Economic aspects. 2. Ecosystem services. 3. Biodiversity–Economic aspects. 4. Environmental economics. I. Kumar, Pushpam. II. Economics of Ecosystems and Biodiversity (Project) QH541.15.E25E36 2010 333.95–dc22 2010028008 ISBN13: 978-1-84971-212-5 (hbk) ISBN13: 978-0-415-50108-8 (pbk) Downloaded by [University of Florida] at 05:26 23 February 2017 Typeset by Domex e-Data Pvt. Ltd Contents List of Figures, Tables and Boxes vii List of Contributors xi Acknowledgements xv Preface xvii List of Acronyms and Abbreviations xxix Glossary xxxi Introduction 1 1 Integrating the Ecological and Economic Dimensions in Biodiversity and Ecosystem Service Valuation 9 Introduction 12 Review of existing frameworks linking ecology and economics 13 TEEB-conceptual framework 21 Annex 1 Classification of ecosystems used in TEEB 38 Annex 2 Ecosystem service classification: Brief literature survey and TEEB classification 39 2 Biodiversity, Ecosystems and Ecosystem Services 41 Introduction 45 Biodiversity and ecosystems 45 The links between biodiversity, ecosystem functions and ecosystem services 56 Managing multiple ecosystem services 81 Management of ecosystem services: Dealing with uncertainty and change 84 Biodiversity, ecosystem services and human well-being 91 Conclusions and further research 95 3 Measuring Biophysical Quantities and the Use of Indicators 113 Introduction 116 Existing measures and indicators 119 Downloaded by [University of Florida] at 05:26 23 February 2017 In search of relevant indicators for ecosystem services 134 Link to valuation and further work 141 4 The Socio-cultural Context of Ecosystem and Biodiversity Valuation 149 Introduction 152 The trade-offs of valuation 157 The challenges of valuation: Ecosystems, biodiversity and level of analysis 166 Final remarks 174 Prelims.indd 5 9/16/2010 6:53:40 PM vi The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations 5 The Economics of Valuing Ecosystem Services and Biodiversity 183 Introduction 187 Economic valuation of ecosystem services 189 Valuation methods, welfare measures and uncertainty 196 Insurance value, resilience and (quasi-)option value 218 Valuation across stakeholders and applying valuation in developing countries 225 Benefit transfer and scaling up values 229 Conclusions 239 Annex 1 Applied sources for technical support on biodiversity valuation for national agency teams 256 6 Discounting, Ethics and Options for Maintaining Biodiversity and Ecosystem Integrity 257 Introduction 260 The Ramsey discounting equation and intergenerational welfare 264 Recent behavioural literature on discounting, risk and uncertainty 268 Ecosystems and biodiversity in the very long run 271 The total value of ecosystems and biodiversity and the discounting equation 272 Does a low discount rate promote conservation?