The unrealised potential of ecosystems

by ESPA researcher Elisa Morgera
April 12, 2016
  • The economic value of the entire biosphere is estimated at US$ 33 trillion a year - if ecosystem services were paid for, the prices of goods would be much higher, and if not given due consideration, human welfare will suffer
  • Lack of coherence, scientific uncertainty and the complexity of the research, and integration of equity, justice and human rights are key challenges facing ecosystem analysis (particularly true of the marine environment).
  • Coral reefs are worth over US$ 30 billion contributing to the livelihoods and subsistence of at least 275 million people
  • Small scale fishing is vital for poverty alleviation, so how do we manage conflicts with large scale fisheries and ensure access to marine resources in a sustainable and fair way? 

Research on the valuation of ecosystem services has been a growing field over the last decade as a result of the Millennium Ecosystem Assessment, but with more limited application in the marine realm. This blog post starts by providing some background on the emergence of the ecosystem services discourse and its uptake in international biodiversity processes, and an overview of shortcomings in ecosystem services research, with a special focus on marine ecosystems. As the second post in a series discussing fair and equitable benefit-sharing in the context of the ecosystem approach to fisheries management under the Marine Benefits project, the post concludes with some questions for further exploration.


Research on valuation of ecosystem services has been a growing field over recent decades. The valuation of environmental externalities has been the object of study by economists for considerably longer, and used by managers in different contexts, such as in watershed management to calculate user/polluter fees. As widely understood, valuation of ecosystem services comprises both monetary and non-monetary values, with total economic value being the terminology used to describe different types of economic value (i.e. utilitarian, and non-utilitarian values). Total economic value, therefore, “extends beyond the marketed and priced commodities to which economists have conventionally limited their analysis.” For instance, coral reefs have been the object of valuation exercises, which have estimated to contribute to livelihoods by a figure surpassing US$ 30 billion. Benefits from reef systems directly contribute to the livelihoods and subsistence of at least 275 million people, and reach roughly 850 million people globally who live within 100km distance from these reefs.

Economic valuation of ecosystem services can be used for assessing the monetary cost of environmental damage for compensation purposes, for calculating biodiversity offsets, for the calculation of environmental fines, and to inform trade-offs in decision-making processes. Valuation has thus been perceived by many as a way to give nature a “voice" in policy-making and decision-making processes. Arguably, valuation could better prepare decision-makers to identify short and long-term trade-offs between conservation and development measures, and portfolios of activities.

Research and policy on ecosystem services

A landmark paper by  Costanza et al (1997) popularised the concept of ecosystems services, by estimating the economic value of the entire biosphere as being in an average of US$ 33 trillion/year, in contrast with the global gross national product (GNP), which at the time was US$ 18 trillion/ year. Despite the comparison with the global GNP, the authors recognize that some ecosystem services are irreplaceable, which makes trade-offs in this context impossible. The comparison serves to highlight the fact that if ecosystem services were paid for, the prices of goods would be much higher. The study concludes that if ecosystem services are not given due consideration in decision making, human welfare will suffer dramatic losses. An update of the 1997 estimates was conducted by Costanza et al (2014), which concluded that the current values are approximately US$125 trillion/year. The authors also calculated the losses in ecosystem services (of between US$4.3 trillion/year and US $20.2 trillion/year) due to changes in land use between 1997 and 2011.

Costanza’s 1997 study has attracted both praises and criticisms. Some perceived this valuation approach and narrative as an opportunity to convince governments about the economic benefits of conservation, and to demonstrate that the costs of inaction (not-conserving) are often higher than the costs of conservation measures. Critics, on the other hand, underscored that the economic values attributed by Costanza et al are too high and difficult to translate into meaningful policy instruments. Critics also saw valuation as a means for privatization or commodification of ecosystem services – a notion thatCostanza et al (2014) refute on the basis that most ecosystem services are public goods or common assets that cannot be appropriated. Other criticisms have highlighted the anthropocentric nature of the ecosystem services concept, which contradicts the notion of the intrinsic value of nature.

Nevertheless, the concept of ecosystem services was introduced in the Millennium Ecosystem Assessment (MA) – a global scientific assessment commissioned by the UN Secretary-General in 2001 – as “the benefits people obtain from ecosystems.” The MA distinguished between:

  • provisioning services such as food, water, timber, and fiber;
  • regulating services that affect climate, floods, disease, wastes, and water quality;
  • cultural services that provide recreational, aesthetic, and spiritual benefits; and
  • supporting services such as soil formation, photosynthesis, and nutrient cycling.”

Importantly, the value of intermediate services such as regulating and supporting services are normally not accounted for in valuation exercises, as often these values are indirectly reflected in the final services or benefits that they support. Similarly, cultural services, including spiritual values, cultural identity and traditional knowledge, tend to be difficult to quantify in monetary terms, and can be subjective to individuals or groups within society. Hence some authors have expressed concern that due to such incommensurability, cultural services can be easily sidelined in ecosystem services exercises, which tend to focus on provisioning services, with the result that valuations risk weakening respective outcomes in decision-making process. Consideration of international obligations related toprocedural fairness (including the reference to “fair” in relation to benefit-sharing), therefore, could add value to the ecosystem services discourse, by shedding light on the role of deliberative and participatory decision-making processes in relation to valuation.

Since the MA, numerous studies and initiatives have been attempting to apply the ecosystem services concept, with one of the most visible being The Economics of Ecosystems and Biodiversity (TEEB), a global initiative focused on “making nature’s values visible”. TEEB emerged out of a commitment made by environmental ministers of the G8+5 during a meeting in Germany in 2007 to initiate a process to analyse the “global economic benefit of biological diversity, the costs of the loss of biodiversity and the failure to take protective measures versus the costs of effective conservation.” Since then, TEEB has successfully influenced the policy agenda, particularly with respect to international policy processes related to biodiversity, most notably in the CBD Strategic Plan for Biodiversity 2011-2020 and the Aichi Biodiversity Targets, and previously in itsEcosystem Approach Guidelines. The latest review of the implementation of the Aichi Targets, however, concluded that progress towards realizing Aichi Target 2 on the integration of biodiversity values, for instance, has been insufficient and that at the current rate it will not be achieved in time. The review also notes that it is unclear if the incorporation of biodiversity values has actually taken place. In this respect, the work of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services(IPBES) may contribute with further guidance for the application of these concepts in a more systematic manner.

Main shortcomings in the application of the ecosystem service framework(s)

Besides the criticisms on the ecosystem services concept briefly discussed above, a number of issues have challenged the potential realisation of the ecosystem services (ES) framework(s), not exclusively but particularly in the marine context. Most notably:

  • Lack of coherence

A plethora of different and often divergent approaches, methodologies and conceptualisations around biodiversity and ecosystem services have emerged in the literature, which suggests a single, coherent ES framework is currently lacking (See Lele (2013)). While deep-ecologists seem to reinforce the notion of intrinsic value of biodiversity, conservation biologists underscore the importance of biodiversity as a life-supporting system for the planet and humanity, and economists focus on natural capital and accounting and payment for ecosystem services. Thus, depending on the approach chosen, different emphases on particular aspects of ecosystem services will emerge, such as their functional role, their utilitarian aspects, or their health and wellbeing values. This lack of consistency can create confusion among policy-makers, as highlighted in the case of the Baltic Sea, for instance. In addition, in the absence of a single, coherent ES approach, it is unclear whether and how the intrinsic value of biodiversity is factored in.

  • Multi-scalar considerations

Ecosystem services and natural capital accounting mechanisms to date have tended to focus on local contexts, although literature has started to emerge on transboundaryecosystems, where regional and globallevel beneficiaries have been identified. This means that most of the ecosystem services literature is helpful to explore intra-State dimensions of equity and fairness, and only little research is available to contextualise ecosystem services from an inter-State perspective. This imbalance also indicates that it may be difficult at this stage to rely on the ES literature to better understand ES flows from the local to the global level and vice versa, which appears an essential task in the case of marine ecosystems.

  • Scientific uncertainty and non-economic values

Valuation of ecosystem services can be difficult, if not impossible, when ecological processes and underlying functions (e.g. supporting and regulating services) are still not fully understood, like in the instance of marine ecological processes. In other words, valuation techniques are currently unable to properly reflect ecological systems that are the object of scientific uncertainty. For instance, in a valuation study for the Bay of Bengal Large Marine Ecosystem, the authors identified crucial “data on the links between mangrove/coral reefs and fisheries productivity” to be lacking. If the basic ecological flows and relationships are not properly understood or studied for a given ecosystem, valuation exercises are compromised or undermined. Furthermore, this kind of uncertainty can be aggravated by increasing climate change effects on all 4 categories of ecosystem services.

Existence values such as cultural services have proven difficult to assess as well. The World Ocean Assessment (also discussed here) has recognized a significant knowledge gap with regard to cultural services including aesthetic and spiritual ones: “the understanding and visibility of socio-cultural-health-economic benefits from ecosystems (i.e., the understanding of the demand for ecosystem benefits) remain fragmented and are lagging behind, especially for oceans.”

Therefore, a better understanding of marine supporting, regulating and cultural services, in particular, is essential not only for the realization of the full potential of the ES framework(s) towards human wellbeing, but also for the implementation of the ecosystem approach, which comprises a much broader framework for long-term sustainability.

  • Equity and poverty considerations

ES framework(s) as proposed by the Millennium Assessment continues to face criticisms concerning the absence of proper integration of fairness and equity, including inter-generational equity, due to oversimplification and omissions regarding the relationship between the environment (and environmental processes and services) and society.

On the other hand, a study by UNEP-WCMC on valuation suggests that “[o]ften, equity objectives are considered separately, with groups of “winners” and “losers” from specific projects or policies being identified, and this information is considered alongside valuation and other information in decision-making processes.”

It thus appears important to contrast the lack of clarity with regard to the link between equity and ecosystem services with (intra- and inter-generational) equity and fairness components of the CBD ecosystem approach (principles 1, 4, 10, 12). The ecosystem approach may provide a broader and complementary framework for the investigation and analysis of equity and justice than the ES framework(s) alone, especially when considering wellbeing in all its forms. Consideration of the international obligations underpinning the ecosystem approach, including the reference to “equitable” in relation to benefit-sharing, therefore, adds value to the ecosystem services discourse by bringing about a broader approach that systematically includes equity issues.

The MA directly links changes on ecosystem services to impacts on human health and welfare, with well-being being understood as “at the opposite end of a continuum from poverty, which has been defined as a “pronounced deprivation in well-being.”  But Suich et al highlighted that while the provision of ecosystem services is “widely assumed to contribute to poverty alleviation, particularly in rural areas in developing countries…limited attention has been paid to understanding the ways in which ecosystem services actually do contribute to poverty alleviation, or even if is possible in practice.” Suich et al indeed noted that most ecosystem services studies only focus on income rather than on multiple dimensions of poverty (food security and nutrition, health, assets, education and skills, property rights, etc). This is a significant gap when contrasted with CBD Parties’ recognition in 2014 of the need “to integrate biodiversity and nature’s benefits to people, including ecosystem services and functions, into poverty eradication and development strategies, initiatives and processes at all levels, and vice versa” (Chennai Guidance for the Integration of Biodiversity and Poverty Eradication).

Seeking benefit-sharing in marine ecosystem services for poverty alleviation

The challenges highlighted above appear particularly relevant from a marine perspective. There are still few ecosystem services studies that explore marine systems, and of these none that explores the linkages between marine ecosystem systems and poverty alleviation.

Beyond the ES literature, however, an extensive body of literature exists on the human dimensions of small-scale fisheries including poverty considerations. In effect, Jentoft and Midré argue that access to fisheries resources is crucial to livelihood security.

Access to resources also bring about a number of other complexities, including those with respect to:

  1. use conflicts with large-scale fisheries, such as those from distant-water fleets fishing the ‘surplus’ (and how this surplus is calculated) on the basis of bilateral fisheries access agreements;
  2. access to resources that have not been depleted by large-scale operations;
  3. fishery resource allocation; and
  4. sustainability of the resource exploitation.

These questions remain to be studied in their clear connection with international human rights regarding the right to food and health, and possibly to a healthy and productive marine environment. Among the existing studies on marine ecosystem services, food provision (particularly fisheries) is the most analysed, whereas the main gaps relate to the “capacity for provisioning and cultural services, benefit for regulating and maintenance services, and service flow in all categories.” But if these intermediate services are not properly considered, decision-making on trade-offs may compromise the sustainability of the ultimate provisioning services and associated human rights.

In addition, few studies discuss systematically the relationship between the ES framework(s) and the ecosystem approach (to fisheries or in general), which is a broader concept than ecosystem services and appears to be better equipped to address questions of fairness and benefit-sharing more holistically. Under the Convention on Biological Diversity, the ecosystem approach incorporates a number of important principles (such as the precautionary approach and equity), and applies within natural ecosystem boundaries defined by biogeographic classification. With respect to fisheries, more specifically, the ecosystem approach also makes use of conservation and management tools, including impact assessments, habitat protection, selective methods to avoid bycatch, multi-species modelling, productivity capacity, as well as procedural participation mechanisms, and valuation of ecosystem services.

The Marine Benefits project, therefore, will further explore how and to what extent international standards on the the ecosystem approach can provide for the respect the production limit of the ecosystem in question to avoid its depletion, hence maintaining the integrity of natural capital so ‘ecological interest’ can be accrued, while taking into account relevant international human rights. The project will then bring this understanding into conversation with the ES framework(s).

This blog originally appeared on the Benelex Project website