Ecosystem Services Economics (ESE) Working Paper Series Division of Environmental Policy Implementation Paper N° 5 Environment for Development The “Ecosystem Service Framework”: A Critical Assessment R. David Simpson January 2011 The United Nations Environment Programme Papers in this series are not formal publications of UNEP. They are circulated to encourage thought and discussion. The use and citation of this paper should take this into account. The views expressed are those of the authors and should not be attributed to UNEP. Copies are available from the Ecosystem Services Economics Unit, Division of Environmental Policy Implementation, UNEP, Nairobi, Kenya. The views expressed in this Policy Series do not necessarily reflect the views or policies of UNEP or contributory organization(s). 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David Simpson* National Center for Environmental Economics United States Environmental Protection Agency January 2011 UNEP * The opinions expressed in this paper are the author’s, and do not necessarily reflect those of the United States Environmental Protection Agency. The author would like to thank Emma Roach for research assistance and my colleagues at the National Center for Environmental Economics for many helpful comments. 2 THE “ECOSYS T E M S ERVICE FRAMEWORK”: A C RI T I C A L A SSESSMEN T Table of contents Preface .............................................................................................................................................................. 3 Abstract ............................................................................................................................................................. 4 1. Introduction ............................................................................................................................................... 4 2. The value of ecosystem services: Some prominent examples ...................................................................... 6 3. Impediments to estimating ecosystem service values .................................................................................. 9 4. How does the ecosystem services framework change conservation policy? ............................................... 16 References ....................................................................................................................................................... 19 THE “ECOSYS T E M S ERVICE FRAMEWORK”: A C RI T I C A L A SSESSMEN T 3 Preface In last ten years, the economic analysis of ecosystem services has caught the imaginations of the decision-makers. Economic values of ecosystem services at global level have been in the centre of debate. The Millennium Ecosystem Assessment (MA) and recently concluded, the Economics of Ecosystems and Biodiversity (TEEB) have provided adequate rationale for economic approach to management of ecosystems. However, robust estimation of ecosys- tem services whether it is for payments for ecosystem services or for national level green accounting are scarce and inadequate. The paper provides a critical angle to the whole debate. The author questions both the justification for adopting an “ecosystem service framework” and the extent to which some prominent examples of valuation of regulating services can withstand detailed scrutiny. The views expressed in the chapter may be seen as controversial by many readers, but they highlight some of the fundamental theoretical and methodological considerations that underpin this field of ecological economics. Ibrahim Thiaw, Director, Division of Environmental Policy Implementation (DEPI) United Nations Environment Programme (UNEP) 4 THE “ECOSYS T E M S ERVICE FRAMEWORK”: A C RI T I C A L A SSESSMEN T Abstract Natural ecosystems provide services to society. Conservation advocates have shown considerable enthusiasm in recent years for an “ecosystem service framework”. They hope that an appeal to the value of ecosystem services will result in greater funding. Yet it is not unusual to find examples in which an author states at one point that the value of ecosystem services is great, while shortly thereafter stating that values have not yet been quantified. The values of ecosystem services have not yet been estimated with any generality or precision. While several celebrated studies have addressed valuation, most are problematic. Moreover, there are a number of reasons for which valuing ecosystem services remains a daunting exercise. Foremost among these is a “paradox of valuation”: it would be most useful to estimate the value of ecosystem services that are dispersed over a very broad public, but it is precisely under these circumstances that it is most difficult to use the tools of economic value estimation. How, then, does an “ecosystem service framework” affect conservation strategy when the value of ecosystem services remains uncertain? It certainly motivates more research. Unless and until such research yields more precise and compelling evidence of values, however – and there is little reason to be optimistic that it soon will – the status quo will likely prevail in conservation policy. That is, conservation will be largely motivated by the importance of providing global public goods (largely carbon sequestration and biodiversity protection), and will require international transfers from wealthier to poorer countries. 1. Introduction In recent years considerable enthusiasm has grown for an “Ecosystem service framework” (Daily and Turner 2008) to conservation policy. Gretchen Daily and Pamela Matson write that such an approach has sparked … a growing feeling of Renaissance in the conservation community. This flows from the promise in reaching, together with a much more diverse and powerful set of leaders than in the past, for new approaches that align economic forces with conservation, and that explicitly link human and environmental well-being. And this promise is flowering thanks to substantial recent advances in key areas of inquiry, such as ecology, economics, and institutions, and their integration. (Daily and Matson, 2006, references omitted) Many hope that the ecosystem services framework will provide a new and generous source of conservation funding. Heather Tallis and Peter Kareiva (2005) write that “realization of the market worth of ecosystem services has the potential to increase conservation funding by orders of magnitude.” This enthusiasm has sparked an impressive volume of work within the ecosystem service framework (Daily and Turner 2008). Fisher and coauthors (2009) document an exponential increase in the number of published papers employing the terms “ecosystem services” or “ecological services,” beginning from essentially none in the early 1980’s to more than 250 in 2007, the last year for which they have data. Some rough idea of the currency of the term can be gleaned from the fact that entering “ecosystem services” in the Google search engine returns about 4.7 million entries.1 The Millennium Ecosystem Assessment, a multi-year, multi-million dollar international undertaking involving over 1,300 scientists from around the world was conducted to assess the consequences of ecosystem change, and consequent alterations in the flow of ecosystem services, for human well-being (MA 2005). This work may continue under a recently proposed “Intergovernmental Platform on Biodiversity and Ecosystem Services” (IPBES), modeled on the Nobel-prize-winning Intergovernmental Panel on Climate Change (IPCC). In November of 2008 representatives of 78 nations and 25 international NGOs met to consider establishment of an 1 Search conducted 17 April 2009. To get some idea of societal priorities and the zeitgeist, this is about half the number returned when one searches for “Julia Roberts”, and slightly more than are returned for “Matthew McConaughey”. THE “ECOSYS T E M S ERVICE FRAMEWORK”: A C RI T I C A L A SSESSMEN T 5 IPBES (UNEP 2008a). At the meeting an approximately US$18.4 million “Programme of Work and Budget” was presented (although not yet adopted; UNEP 2008b). Organizations around the world are adopting an ecosystem services approach to ecological decision making. Yet the elements of that approach are not as settled as its widespread adoption might make it appear. One often encounters passages such as the following: “Although the societal benefits of native ecosystems areclearly immense, they remain largely unquantified for all but a few services” (Ricketts, et al., 2004, emphases added; see also Kareiva and Ruffo 2009; Daily et al. 2009). But if benefits are “largely unquantified” what is the basis for concluding that they are “clearly immense”? Is there really much evidence supporting the contention that the services supplied by natural ecosystems are of great value and that they are being squandered by unwise