ESA 2012 Symposium #23, Commodifying Nature: The Scientific Basis for Ecosystem Service Valuation in Environmental Decision Making

Friday morning is a tough spot at an ESA meeting. It is the last day of a six-day conference, and there are only morning events, so many people evacuate before this final session. And for those who do drag themselves out of bed for sessions beginning at 8 am (perhaps, like me, for the sixth day in a row), there is the problem of fatigue: by the time Friday rolls around, the amount of information that has been disseminated already may overwhelm anything new provided on this final day. Someone’s sessions have to go on Friday, but it was a shame that the very important Symposium 23, Commodifying Nature: The Scientific Basis for Ecosystem Services Valuation In Environmental Decision Making, ended up in this least-desirable spot.

Robert Costanza led off the symposium with a talk entitled “The promise and pitfalls of ecosystem service valuation“. He was the first of many speakers to quibble with the symposium title by pointing out that ecosystem service valuation is not the same as commodifying nature. “Commodifying” nature suggests that ecosystem services will be bundled into privatized, tradable commodities, whereas valuation simply means assessing the importance we place on a particular service. Making this distinction seemed important to Costanza, but he also seemed to be a bit frustrated by the way that some people bristle at the thought of assigning a dollar value to nature, as he pointed out that even human lives are assessed (at least implicitly, but sometimes explicitly) in terms of monetary value. It is an interesting problem faced by advocates of the ecosystem service approach: not placing a monetary value on important services provided by nature is to ignore their role in the economy and potentially allow them to go unvalued, but the idea of putting a dollar value on nature strikes many people as crass.

Costanza’s role was to provide an overview of ecosystem service valuation, and he began by discussing the Rockstrom et al. (2009) paper assessing planetary boundaries. He highlighted the real balancing act that human societies must perform, exploiting natural capital enough to provide for the basic needs of their citizens, but avoiding over-exploitation that pushes past these nine boundaries. This sustainable range for humanity has been described as the “donut”, because when one represents the boundaries as a series of spokes supporting a circular boundary, a sustainable range of impact can be represented as a strip just inside the boundary limits. An interesting question is ‘how wide is this strip?’. If the strip is pretty wide, that suggests that basic human needs can be met with minimal exploitation and we have a pretty wide range of ‘exploitation space’ for providing for needs beyond that minimum. But if the strip is very narrow, this suggests that we have very little room for ‘value-added’ impact above that required for basic survival. Although an exact estimation of the thickness of this ‘donut strip’ is probably hard to come by, it is pretty clear what it depends on: the population size and the per-capita impact of basic need fulfillment. The importance of population control for sustainability (the topic of an earlier organized oral session) in part depends on how close this ‘baseline impact’ of meeting basic human needs is to the outer “planetary boundary” of sustainable impact. In order to understand the relative importance of population control and the development of lower-impact technologies on sustainability, we will need to get a general sense of the boundaries of this donut of sustainability (and perhaps consider a slightly less goofy term — can I suggest “lifesaver”?).

Costanza went on to discuss the growing interest in ecosystem services, pointing out an expanding publication record and the emergence of inter-disciplinary conferences like the recent Ecosystem Services Partnership Conference held in Portland days before the ESA conference commenced. He suggested that while the RIO+20 Conference had been disappointing in terms of its ability to produce tangible policy agreements, it was remarkable in its generation of consensus around the concepts of natural capital and ecosystem services. He also reviewed some of the basic ideas needed to understand ecosystem services, including several misconceptions about the concept. He reminded us that the benefits of ecosystem services often require human inputs of other forms of capital (social, material), and that ecosystem services make a significant contribution to the human economy. He advocated for public goods valuation, a process not performed well by the conventional economy, and again differentiated the goal of maintaining public goods through public valuation from the commodification of these goods into private property. He asserted that “the market” is only one part of the overall human economy, and that expressing the value of ecosystem services in terms of monetary units is not the same thing as incorporating these services into the market.

Costanza suggested that we need to create a “full world” model of the ecological-economic system, one that does not separate human economic systems from the ecological systems in which they operate and with which they interact. Such full models must also include indices of human well-being, and Costanza called for advancing the “science of happiness” to better understand the conditions fostering and best metrics for measuring human welfare. He affirmed that studies of human happiness show that material wealth can only advance human well-being so far, and that human satisfaction asymptotes when only material well-being is considered. This reality of human nature creates some real problems for economies, which generally only express human well-being in material terms. Not only are non-monetary metrics of life satisfaction more difficult to devise and measure, they also suggest that there are limits to the monetary valuation of ecosystem services: given that much of what makes people happy is not a function of their material wealth, asking them to place a monetary value on many ecosystem services may place everyday people in a confusing space.

Costanza outlined a few different techniques for assigning values to ecosystem services, including “avoided cost”, “replacement cost”, and “marginal product estimation”. He also pointed out that all ecosystem services are not the same. Some are “rival”, which means that their use can be understood as a zero-sum game (if I use the service, you cannot), whereas other are non-rival, meaning that they can be enjoyed communally. There is also an important distinction between “excludable” and “non-excludable” services, which helps delineate which ecosystem services can and cannot be privatized. Different ecosystem services can be categorized as one of the four possible combinations resulting from being either “rival or “non-rival” and “excludable” or “non-excludable”.

Costanza concluded by discussing the human toll wreaked by Hurricane Katrina and how spatially-explicit models can be used to understand the value of a hectare of wetlands in protecting human well-being. Such models need to consider the risk posed by the natural threat (in this case a hurricane), the effectiveness of wetlands at reducing risk, and the potential human infrastructure at stake. Such “multiscale models” have been applied to specific ecosystem services, but need to be made more general. Costanza’s last pitch was for a new journal of which he is the editor, Solutions, which sounds like an interesting publication. It is a hybrid of popular and peer-reviewed scientific articles, and it requires that no more than 30% of any submission be spent characterizing problems.

Sarah Gergel, a landscape ecologist from the University of British Columbia was the next speaker. Her talk, “Heterogeneity and historic patterns of ecosystem services: Ecological, economic and cultural implications“,  began with an interesting thought experiment that asked attendees to consider how we would react to having our supply of chocolate and/or coffee cut off due to resource mismanagement, or if we were asked to apply for a special permit in order to consume these resources. Such a suggestion hits close to home for conference attendees, whose attentiveness and attendance is arguably fueled by a steady supply of coffee. Gergel used this thought experiment to help the audience understand the perspective of many indigenous populations, whose livelihoods and cultural identity can be directly impacted by ecosystem service policy. While this question of equity would re-emerge at the end of her talk, her main focus was on the scale at which ecosystem services are measured. She used the example of forestry valuation in British Columbia to point out that our conventional, coarse-scale valuation methods (for example, those based on LandSat imagery) often miss important details that can only be resolved at smaller scales. In forestry, the specific tree species present in a stand have a huge impact on their economic and cultural value, and trying to understand the resulting ecosystem services without any fine-scale assessment may lead to poor decisions about how to use these resources. Such classification errors have important implications for the end-users of ecosystem services. Gergel showed some fascinating landscape work that attempted to combine small-scale maps of available forest and aquatic resources with an assessment of the perspectives of different end-users. What becomes clear from such an assessment is that the particular valuation of individuals makes a huge difference in how you place value on ecosystem services. To a lumberjack or timber company, a stand of forest may be evaluated simply for its potential volume of lumber, but for those seeking to use that same forest for recreational or cultural purposes the valuation is much different. This problem is vexing: we cannot simply ask what the potential instrumental value of ecosystem services should be: we also need to make valuations about which of these uses deserves greatest priority. This tied into Gergel’s consideration of equity; she suggested that we value jobs over commodities as a means of better addressing needs related to human well-being. Clearly scientists can only go so far in addressing the problem of how to value ecosystem services: to complete the full process, societies must make decisions about what they value most.

Jennifer Morse was the next speaker, and presented a talk entitled “Quantifying multiple ecosystem services and their underlying ecosystem functions in North Carolina’s largest wetlands mitigation bank“. Although I was not entirely clear on how this works, she described a “wetland mitigation banking scheme” by which landowners were being encouraged to return agricultural fields to their original configuration as wetland forests. Apparently the state of North Carolina is paying for the restoration of these services, the most specific valuation described in the talks thus far. Morse presented some valuable multi-dimensional graphs showing how different land uses provide different portfolios of ecosystem services. Whereas farmland produces only one major ecosystem service (food), wetlands provide a more diverse portfolio but do not produce significant food. Morse then discussed her assessment of a particular wetland conversion at a site called Timberlake. She asked the question “how do we decide whether a restoration project is successful?”, and showed several direct measurements used to understand the impact of restoration on the provision of ecosystem services. She was the first to point out the importance of direct monitoring of ecosystem services, as the models used to predict the outcome of management decisions are imprecise and overly general.

Bobby Cochran from the Willamette Partnership, a non-profit with the mission to increase conservation in the Pacific Northwest, presented a talk entitled “The Willamette Partnership – Developing a market for trading ecosystem services“. His talk was a nice combination of theoretical concerns and real-world examples. Much of the work of his organization focuses on river restoration, specifically to improve the conditions for fish. One of these conditions is temperature: fish do not like warm temperatures, but many human activities either directly or indirectly increase the temperature of rivers and streams. Solving this problem can take one of two forms: human-engineered or ecosystem-produced. Generally the engineering solution (for example, the construction of a water cooling facility) is extremely resource-intensive and therefore expensive. Natural restoration efforts (for example, restoring a riparian forest) are generally less expensive and more effective. Cochran questioned whether ecosystem markets are capable of generating such restoration of ecosystem services: his experience seemed to point to direct regulatory mandates rather than impact credit swapping as the primary driver of restoration. He also pointed out how important it is that we develop environmental metrics for assessing the success of restoration, and that these metrics need to find the proper balance between overly-complex but accurate models and overly-simplistic but understandable models for valuation. He suggested that a good biodiversity metric is nested in the landscape context, has been validated, is practical and easy to use, and can be applied at different scales. He showed on online calculator provided by the Willamette Partnership that can be used for ecosystem service crediting. Such calculators can be used to make estimates of the potential impact of restoration efforts, but “performance tracking systems” also need to be established to verify that predicted benefits were realized. This need for monitoring feedback was a major theme of the session.

Anne Neale from the Environmental Protection Agency presented “The National Atlas for Sustainability: Mapping indicators and indices of ecosystem services“. She introduced an emerging online project of the EPA called the National Atlas for Sustainability. Although not yet fully realized, the atlas will soon allow visitors to the EPA‘s website to use geospatial data to assess the intensity of both ecosystem service provision and human impacts at the scale of LandSat imagery. Such combined databases have tremendous educational and social potential, as they allow both citizens and decision-makers to understand the geographical component of interaction with our environment. Like a lot of other presenters, Neale was careful to point out that the goal of the atlas was not to place a specific value on services, but rather to provide a resource that would allow for community assessment (and potentially valuation) of these services. She explained that the project is part of a larger executive mandate to include ecosystem services in the considerations and presentations of federal agencies. If you do not think that who controls the Whitehouse has serious implications for how ecosystem services are valued, Neale’s presentation implied otherwise. I am excited for this project to become fully realized, as it could provide some great teaching tools. If you want to check out the project you can do so here, and you can play around with beta maps here. There is also an Eco-health Relation Browser that allows users to make the connection between human health and the provision of particular ecosystem services.

Morgan Robertson, an economist from the University of Kentucky, was next to speak on “To bundle or to stack? The challenges in marketing multiple ecosystem services“. The topic of his talk was rather narrow in focus but seems to me to be really important to the process of ecosystem valuation. “Bundling” and “stacking” of ecosystem services refers to two ways of valuing the various services provided by a particular area. Local, state, and federal incentive programs have awarded credits for those whose land use decisions provide or preserve ecosystem services, but these incentive programs often reward particular outcomes for particular services. If a site provides multiple ecosystem services, how should these be credited? On the one hand, allowing multiple credits for multiple services may be a great means of incentivizing landholders to maintain diverse, robust ecosystems and avoid creating perverse incentives to create monocultures providing only a single service. On the other hand, allowing credits to be “stacked” may be a form of ecological double-dipping, especially if landholders are credited twice for services provided by a single ecological function. At first pass such double-crediting may not seem problematic, but if you consider that there are limits to how many credits society can provide to incentivize ecosystem preservation or restoration, stacking threatens to reduce the overall outcome of crediting programs. Robertson did not seem to have a preferred solution to this problem, but he suggested that regulations are needed in order to resolve this issue. Part of these regulations have to include some agreement between different scales of governance to better harmonize the impacts of local, state, and federal crediting schemes.

The last invited speaker was Becky Chaplin-Kramer, whose talk (“Looking ahead: How can we use market tools to sustain ecosystems?“) was about the Natural Capital Project. She asked how we can use the market and other tools to sustain ecosystems, and discussed the specific example of Latin American water funds. These funds are designed to maintain ecosystem services for downstream users. These downstream users are generally more affluent than upstream users, but depend on the quality and quantity of water downstream for agricultural and other economic activities. Paying poor upstream farmers and other users to be good stewards of the watershed turns out to be a good strategy for downstream users, so much so that they are willing to voluntarily pay into these funds. The problem then becomes how to most effectively use the funds to maintain ecosystem services. Chaplin-Kramer suggested that there are five lessons to learned from her organization’s work in Latin America, British Columbia, and Sumatra. The first is that models predicting the outcome of policy decisions need to be as simple as possible. Echoing what Cochran had suggested earlier, she explained that the potential accuracy of overly-complex models is almost always outweighed by the costs of providing the volumes of data demanded by these models. She suggested that the best models for ecosystem valuation are the product of iteration: novel models are far less valuable than derived models whose modification is driven by trial-and-error. Chaplin-Kramer suggested that it was important to “devolve power” by involving locals in the process of ecosystem service valuation, and that a “show me the money” approach often does not get at what local people really want and need. Like others she called for further development of non-monetary metrics of human well-being. Her final lesson was to deal with uncertainty honestly: to admit what we do and do not know about the provision of ecosystem services.

Unfortunately this session failed to make any provision for discussion, which almost completely limited potential for audience participation. The odd decision was made to spend the last twenty minutes of the session allowing each speaker to come up again and summarize what they thought were the emerging themes of the symposium. While this was somewhat interesting, I think that the symposium would have been better served by allowing the audience to ask questions of the speakers in panel format.

Should we assign monetary value to ecosystem services? This is a tough problem, as the decision as to what to do depends on whether you want what is correct or what works. Rationally speaking, incorporating natural goods and services into our economy by assigning them a dollar value makes perfect sense: we live in an economy in which monetary currencies are the medium through which large-scale social value is constructed. Thus, it is ‘correct’ to consider the monetary value of ecosystem services and to ask that economic structures within our society incorporate this value in their decision-making processes. But regardless of whether or not this view is accurate and correct, we also want to know what works. Here the counter-intuitive complexities of human cognition and culture come into play: many people are upset by an explicit valuation of nature. This discomfort is, in a way, quite understandable and perhaps laudable. As humans, we do maintain a short list of things in our heads that are ‘priceless’, things whose value is seemingly infinite. This is a good thing, as it usually indicates a deep and committed love, the kind of love that motivates people to care for each other and perhaps for other living and non-living components of their environment. It would be a tragedy if a monetary valuation of nature led us down the path to placing a dollar value on everything, and we also need to consider the possibility that policies based solely on monetary valuations may not have resonance with the general public.

So if our goal is to protect the natural systems upon which we depend, what works best? Should we try to convince enough people that nature is priceless, or should we incorporate natural service valuations into every one of our decisions? It seems to me that the answer to this depends on scale. At the larger social scales that generate regulations (state, federal, and international), economic valuation has to play a role. This role can be direct, as when we fine users for degrading ecosystem services or credit those who preserve natural capital. Or, alternatively, the monetary valuation can be indirect, as when we choose to prohibit particular activities that degrade our natural capital. In either scenario, I believe that having some understanding of the overall monetary value of these services can prevent decision-makers from inappropriately misjudging the true importance of these services to a society. As many of the speakers in this symposium pointed out, making an estimate of the monetary value of ecosystem services is not equivalent to commodifying those services. The commodity model of economics actually does a very poor job of representing most ecosystem services, as the value of natural commodities actually stems from the productive function of ecosystems, a value that is difficult if not impossible to commodify. The real aversion to valuing ecosystems monetarily comes at the personal level. As I hiked through the amazing forests of the Columbia Gorge just days before the conference, it would have been impossible for me to put a price on that experience, and doing so would have cheapened my visit. Encouraging this personal ‘infinite valuation of nature’ is critical to the sustainability movement, so we need to make sure that large-scale social valuations of natural services are not misinterpreted as crass instrumentalizations of natural services whose limit value is truly infinite.

So where to go with ecosystem valuation? As many of the speakers pointed out, we need to do a better job of helping the public understand the difference between commodification of nature and asserting the public good value of ecosystem services. We also need to better educate the public about how the economy works so that more decision-makers can see that our material economy depends on non-material inputs from both people and ecosystems. Indices of human well-being seem to be the next frontier: if we can find ways of producing meaningful metrics of both material and non-material well-being, we will begin to get around the problem of assigning monetary value to all goods. But until such metrics are developed and gain widespread acceptance, we need to be realistic about the role of simple dollar-and-cents mechanisms of incentivizing the preservation of natural capital: the ecosystem service approach deserves a major seat at the conservation table.