United States Office of Water September 2015 Environmental Protection Agency Office of Research and Development EPA-800-R-15-002 National Ecosystem Services Classification System (NESCS): Framework Design and Policy Application Final Report NESCS Four-Group Classification Environment End-Products of Nature Direct Use Non-Use Direct User Structure / Types of Final ES Use Water • Extractive/ Consumptive Aquatic Flora Uses Industries Fauna • In-Situ (Non-Extractive/ Flows of Non-Consumptive) Uses Other Biotic Natural Final Terrestrial Material Households Ecosystem Atmospheric Components Services Soil Atmospheric Government Other Abiotic Natural Material Non-Use Composite End-Products • Existence Other End-Products • Bequest (Supply) (Demand) ACKNOWLEDGEMENTS The authors thank Jennifer Richkus, Jennifer Phelan, Robert Truesdale, Mary Barber, David Bellard, and others from RTI International for providing feedback and research support during the development of this report. The early leadership of former EPA employee John Powers proved instrumental in launching this effort. The authors thank Amanda Nahlik, Tony Olsen, Kevin Summers, Kathryn Saterson, Randy Bruins, Christine Davis, Bryan Hubbell, Julie Hewitt, Ashley Allen, Todd Doley, Karen Milam, David Simpson, and others at EPA for their discussion and feedback on earlier versions of this document. In addition, the authors thank V. Kerry Smith, Neville D. Crossman, and Brendan Fisher for review comments. Finally, the authors would like to thank participants of the two NESCS Workshops held in 2012 and 2013, as well as participants of an ACES session in 2014. Any factual or attribution errors are the responsibility of the authors alone. ADDITIONAL INFORMATION This document was developed under U.S. EPA Contract EP-W-11-029 with RTI International (Paramita Sinha and George Van Houtven), in collaboration with the ORISE Participant Program between U.S. EPA and U.S. DOE (Charles R. Rhodes), under the direction of Joel Corona and Dixon Landers, U.S. EPA, Office of Water and Office of Research and Development, respectively. Peer review for this report was conducted under U.S. EPA Contract EP-C-12-045 with Versar, Inc. (David Bottimore). This report may not necessarily reflect the views of U.S. EPA and no official endorsement should be inferred. To provide feedback on this report or any other aspect of the NESCS approach, please send comments by email to [email protected]. United States Environmental Protection Agency. 2015. National Ecosystem Services Classification System (NESCS): Framework Design and Policy Application. EPA-800-R-15-002. United States Environmental Protection Agency, Washington, DC. EPA-800-R-15-002 September 2015 CONTENTS Section Page Executive Summary ....................................................................................................ES-1 1 Introduction .......................................................................................................................1 1.1 Overview ..................................................................................................................1 1.2 Review of Basic Concepts .......................................................................................3 1.2.1 Classification Systems .................................................................................3 1.2.2 Ecosystem Services ......................................................................................3 1.2.3 Services in the Market .................................................................................4 1.2.4 Economic Versus Ecosystem Services ........................................................5 1.3 General Approach for NESCS .................................................................................5 1.4 Summary of Requirements and Key Features of NESCS ........................................7 1.5 Overview of the Report ..........................................................................................10 2 Review of Ecosystem Services Classification Literature ...............................................11 2.1 Introduction ............................................................................................................11 2.2 Daily et al. (1997) ..................................................................................................14 2.2.1 Objective ....................................................................................................14 2.2.2 Definition and Discussion ..........................................................................14 2.2.3 Limitations .................................................................................................15 2.3 de Groot et al. (2002) .............................................................................................16 2.3.1 Objective ....................................................................................................16 2.3.2 Definition and Discussion ..........................................................................16 2.3.3 Limitations .................................................................................................17 2.4 Millennium Ecosystem Assessment (2005) ...........................................................18 2.4.1 Objective ....................................................................................................18 2.4.2 Definition and Discussion ..........................................................................18 iii 2.4.3 Limitations .................................................................................................21 2.5 Boyd and Banzhaf (2007) ......................................................................................21 2.5.1 Objective ....................................................................................................21 2.5.2 Definition and Discussion ..........................................................................22 2.5.3 Limitations .................................................................................................23 2.6 Wallace (2007) .......................................................................................................23 2.6.1 Objective ....................................................................................................23 2.6.2 Definition and Discussion ..........................................................................24 2.6.3 Limitations .................................................................................................25 2.7 Fisher and Turner (2008) .......................................................................................26 2.7.1 Objective ....................................................................................................26 2.7.2 Definition and Discussion ..........................................................................26 2.7.3 Limitations .................................................................................................28 2.8 Roy Haines-Young and Marion Potschin (2010a, 2010b, 2013): Common International Classification for Ecosystem Services (CICES) ...............................29 2.8.1 Objective ....................................................................................................29 2.8.2 Definition and Discussion ..........................................................................29 2.8.3 Limitations .................................................................................................32 2.9 Staub et al. (2011): Indicators for Ecosystem Goods and Services .......................32 2.9.1 Objective ....................................................................................................32 2.9.2 Definition and Discussion ..........................................................................32 2.9.3 Limitations .................................................................................................35 2.10 Landers and Nahlik (2013): Final Ecosystem Goods and Services Classification System (FEGS-CS) .........................................................................35 2.10.1 Objective ....................................................................................................35 2.10.2 Definition and Discussion ..........................................................................36 2.10.3 Limitations .................................................................................................40 2.11 Summary ................................................................................................................40 2.12 Key Lessons Learned .............................................................................................44 3 Review of economic classification and accounting systems ..........................................47 3.1 Introduction ............................................................................................................47 iv 3.2 What Are the Main Systems of Economic Accounts? ...........................................47 3.2.1 National Market-Sector Accounts..............................................................47 3.2.2 Non-market Accounts ................................................................................49 3.3 How Are Classification Systems Used in Economic Accounts? ...........................51 3.3.1 North American Classification Systems ....................................................51 3.3.2 UN Classification Systems ........................................................................52