Paying for Ecosystem Services

Nature provides us benefits and the idea of trying to quantify these benefits occupies the days of environmental economists.  

In a fascinating essay in the 4 November 2011 Science, Ann Kinzig and colleagues write:

"The Millennium Ecosystem Assessment concluded that over the past 50 years, 60% of all ecosystem services (ES) had declined as a direct result of the growth of agriculture, forestry, fisheries, industries, and urban areas ( 1). This is not surprising: We get what we pay for. Markets exist for the products of agriculture, aquaculture, and forestry. But the benefits of watershed protection ( 2), habitat provision ( 3), pest and disease regulation ( 4), climatic regulation ( 5), and hazard protection ( 6) are largely unpriced. Because existing markets seldom refl ect the full social cost of production, we have incorrect measures of the scarcity of some ES and no measures for the rest."

They go on to discuss how we must do more than simply have governments buy land or protect watersheds if we want to preserve these ecosystem services and they go on to highlight trade-offs that emerge when trying to protect the variety of ecosystem services.   For instance, if one country reduces carbon production with a cap-and-trade scheme, manufacturing may shift to another place. Incentives to produce biofuels, may cause rainforest destruction that reduces biodiversity.  And, creating corridors to connect various patches of habitat may increase disease risk caused by wild animals encountering domestic animals.

Fascinating reading and the stimulus for a variety of dinner party conversations...