- How can Ecosystem Service Valuation contribute to sustainability?
- What are the main steps in Ecosystem Service Valuation?
- What are the strengths and limits of Ecosystem Service Valuation in a sustainability context?
- How is Ecosystem Service Valuation used to support EPA Decision-making?
- Where to Find More Information about Ecosystem Service Valuation
- Illustrative Approaches Applying Ecosystem Service Valuation
Ecosystem Service Valuation
EPA defines the term ecosystem as the “dynamic complex of plant, animal, and microorganism communities and their non-living environment.” The contributions of ecosystems to human well-being—or ecosystem services—are measured in terms of human values, and can be thought of as the direct and indirect economic, social, and environmental services provided to human populations and reflects the complex interactions between and among living organisms and their natural environment.
Ecosystem services may be divided into four categories: provisioning services (e.g., food, fibers, drinking water); regulating services (e.g., flood protection, pest control); cultural services (e.g., cultural, spiritual, aesthetic); and, supporting services (e.g., soil formation, primary productivity). The objective of ecosystem service valuation is to assess the consequences of altering ecosystems or using ecosystem services for human well-being.
For example, one third of our food comes from plants pollinated by birds, bats and insects. The value of these pollination services in the United States is estimated at $6 billion a year. If we destroy populations of pollinators with pesticides, loss of habitat, or other stressors we would be forced to either forgo many fruits, vegetables, and grains we enjoy or replace pollination services with potentially costly alternatives. Thus, pollination is an essential and valuable service provided free in natural functioning ecosystems, and its loss has obvious and direct implications on the economic, social, and environmental systems.
Ecosystem service valuation is a tool that is continuously developing in response to the growing need to identify and communicate complete and accurate information on values delivered by ecosystems. As part of a suite of sustainability tools, ecosystem service valuation is one method used to quantify environmental services, a measure that is used in benefit-cost analysis and other value-based assessments. Ecosystem service valuation may also help identify sustainable solutions for specific environmental problems. For example, by understanding the value of ecosystem services, a local surface water utility for the Tualatin Basin in Oregon used an innovative approach to meet EPA requirements for water temperature. Instead of investing $60 million in refrigeration systems, the utility and the community cooperated in planting 35 miles of shade trees along the river to cool the water, at one-tenth the cost of the mechanical system.
EPA’s Science Advisory Board recommends the following steps for conducting ecosystem service valuation:
- Step 1—formulate the valuation problem and choose policy options to be considered, given the context within which the tool will be applied;
- Step 2—identify the significant biophysical responses that could result from the different options;
- Step 3—identify the responses in the ecosystem and its services that are socially important (have social value);
- Step 4—predict the responses in the ecosystem and relevant ecosystem services in biophysical terms that link to human/social impacts and hence to values; and,
- Step 5—characterize, represent, or measure the value of responses in the ecosystem and its relevant services in monetary or non-monetary terms. As with benefit cost analysis, non-market valuation of ecosystem services is an important and critical step.
Environmental and resource economics have historically focused on establishing quantitative values by assessing services (e.g., recreational fishing opportunity) for which data and methods exist (e.g., by either referencing market data or observed behaviors). Over the last 15 years, regulators and resource managers have placed increasing importance on valuing ecosystem services holistically to capture a more complete accounting of ecosystem service values. Failure to understand and account for ecosystem services “in decisions about land, water, and resource management and use… has resulted in underinvestment in environmental protection and corresponding losses of natural system functions and their benefits to human communities.”
Ecosystem service valuation allows for a better understanding of the complex relationships between the economic, social, and environmental realms, and helps decision-makers avoid unintended impacts that result from incomplete knowledge. Several efforts have proposed frameworks for incorporating ecosystem service values into land and resource programs and policies.[60, 61] A seminal 1997 study generated substantial debate over the appropriate way to apply economic information ecosystem service valuation. The study applied a hectare-based, unit value transfer and extrapolated values from existing studies to establish a total value of services provided by ecosystems across the globe. Multiple responses to this approach have argued the theoretical and practical problems associated with scaling up estimates of values taken from other studies of ecosystem services.
In recent years, several efforts have contemplated the appropriate framework for incorporating ecosystem service values in land and resource programs and policies and identified the need for ecologists and economists to work together to develop new models that can incorporate site-specific biophysical and economic data in order to best evaluate how land use and resource management affect the values provided by ecosystems.[60, 61] However, a standard framework does not yet exist.
EPA uses ecosystem service valuation as a BCA input. For example, in assessing the benefits of the 1990 Clean Air Act Amendments, EPA conducted a qualitative assessment of ecological effects of reduced acid deposition, nitrogen deposition, mercury and dioxins, and ozone. EPA also quantitatively estimated economic benefits resulting from reductions in ozone (specifically, benefits to commercial agriculture and commercial forestry) and benefits to recreational anglers in the Adirondacks lake region due to reductions in acid deposition. The EPA’s Science Advisory Board (SAB) characterized this assessment as “generat[ing] defensible estimates of economic benefits at the national level for a limited set of ecosystem services.”
In addition to informing the rule-making process, EPA has used ecosystem service valuation to assist in site-specific decisions (e.g., prioritizing remediation, restoration, and redevelopment of contaminated sites) and to identify critical ecosystems or ecological resources.
- The National Ecosystem Services Partnership (PDF) (2 pp, 2.6MB) engages both public and private individuals and organizations to enhance collaboration within the ecosystem services community and to strengthen coordination of policy and market implementation and research at the national level.
- The Millennium Ecosystem Assessment evaluated the consequences of ecosystem change for human well-being. The assessment provides a scientific appraisal of the condition of, and trends in, the world’s ecosystems and the services they provide.
- In 2009 the SAB submitted a report to the EPA Administrator with recommendations (PDF) (138 pp, 1.6MB) on improving the Agency’s ecological valuation.
- In 2011, Resources for the Future published a report describing existing federal policies that permit or promote ecosystem services analysis.
- Report to the President, Sustaining Environmental Capital: Protecting Society and the Environment (PDF) (145 pp, 1.7MB), Executive Office of the President, President’s Council of Advisors on Science and Technology, July 2011.
- Sissel Waage, Emma Stewart and Kit Armstrong, Measuring Corporate Impact on Ecosystems: A Comprehensive Review of New Tools (PDF) (18 pp, 259K) Synthesis Report, Businesses for Social Responsibility’s Environmental Services, Business for Social Responsibility’s Environmental Services, Tools and Markets Corporate Working Group, December 2008.
- World Business Council for Sustainable Development, Guide to Corporate Ecosystem Valuation .
- The Nature Conservancy completed an ecosystem service valuation of the Colorado River Basin. The results of this effort , including a literature review and an assessment of the total economic value of the Colorado River Basin is publicly available.
- New Jersey conducted a state-wide Natural Capital Assessment .
- Down the Drain: Wetlands as Sinks for Absorbing Reactive Nitrogen
Source: EPA Office of Research and Development 
Suite of sustainability tools: ecosystem service valuation
Duck hunters and those who fish, both recreationally and commercially, are already well acquainted with the value of wetlands. The economic benefits alone include providing essential habitat to some 75 percent of the fish and shellfish that are commercially harvested in the US. On top of that, wetlands absorb storm runoff, help prevent flooding, and naturally filter water.
EPA researchers are working to quantify another important value of wetlands: the ability to act as natural sinks that absorb “reactive” nitrogen. While perhaps not as obvious as providing sought-after recreational destinations or habitat for valuable fisheries, wetlands’ natural ability to absorb nitrogen released into the environment can be just as important.
As one of life’s “essential elements,” nitrogen is required for the normal growth and maintenance of all biological tissue. The development and widespread use of nitrogen-based fertilizers helped revolutionize agriculture, dramatically increasing crop yields and food production.
But too much nitrogen can mean trouble.
Released into the environment through agricultural practices and as a byproduct from sewage treatment and the combustion of fossil fuels, reactive nitrogen can lead to complex and far-reaching environmental and human health problems. Nitrogen carried off croplands by storm water runoff can harm aquatic systems even far downstream, sparking the growth of oxygen-depleting algae and leading to harmful algal blooms and hypoxia (low oxygen). Excess nitrogen in the form of nitrate is a drinking water contaminant and an increasing health concern.
As hotspots of biological productivity, especially for plants, algae, and microorganisms that absorb nitrogen as they grow, wetlands serve as natural “sinks” for removing and storing reactive nitrogen as it cycles through the environment in one form or another.
EPA researchers are exploring innovative ways to better quantify the benefits—what they refer to as “ecosystem services”—that wetlands and other natural systems provide to society. As part of that effort, Agency scientist Stephen J. Jordan, PhD and his partners recently compiled a comprehensive database on nitrogen removal from the scientific literature on wetland studies. He and his colleagues conducted an extensive search across a host of scientific publications, and then added supplemental data through strategic internet-based queries reaching as far back as 1970. “Looking at nitrogen removal across such a large geographic scale had never been done before,” says Jordan.
After identifying between 400 to 500 journal articles, Jordan and his team analyzed the data through statistical and quality assurance methods, building a robust dataset based built from 190 separate studies. Using latitudes and other environmental data recorded in the studies, along with the extent of major wetland classifications from the National Wetlands Inventory, the researchers were able to base their overall analysis across the entire contiguous US.
Finally, the team was able to use statistical analyses to calculate the estimated total amount of reactive nitrogen removed by wetlands across the continent. “Having such a large set of data made a huge difference, allowing us to tease out differences that emerged from looking at nitrogen removal across a broad scale,” explains Jordan.
The researchers estimated that the major classes of wetlands found across the contiguous US removed approximately 20-21% of the total amount of reactive nitrogen added to the environment by human activities. That adds up to some 5,803,140 metric tons of nitrogen removed before it could taint drinking water or contribute “dead zones” off the coast by sparking algal blooms.
Extrapolating further, the researchers found that wetlands remove roughly 17% of worldwide human-caused nitrogen releases, at least 26 metric tons.
The team’s findings were recently presented in the scientific journal Ecosystems.
The results of the research add considerable data that can be added to the “balance sheet” of ecosystem services provided by wetlands. And as some 50% of the worlds’ historic wetlands have been lost to human activities, there is a growing need to quantify and understand their true value so that decision-makers, land use planners, and water quality managers can better protect human health and the environment.
- Toward Sustainability: Building a Better Understanding of Ecosystem Services
Source: EPA Office of Research and Development 
Suite of sustainability tools: ecosystem service valuation
If a major credit card company were to highlight the benefits of Tampa Bay’s natural ecosystems in one of its now-famous television commercials, it might feature an opening shot of a retired couple decked out in waders, sun hats, and khaki vests. As they lift binoculars to their eyes to spy on a squadron of pelicans gliding over flat, golden-hued open water, an announcer would deadpan: “Brand new, eight by forty binoculars for a day of adding to your life list: seventy-four dollars.” Images of a mom straining to lift a fishing rod to land a tarpon while her excited family cheers her on: “Charter boat and crew for a day of fun on the water: six hundred and fifty dollars.”
The kicker for such a commercial would feature a fast-paced series of images showing a diversity of wildlife and wetlands, people enjoying the great outdoors, and a dramatic thunderstorm sending cascades of runoff flowing through wetlands toward the Bay, all interspersed with scenes of everyday life. The voiceover: “Having healthy, functioning wetlands and other Tampa Bay region ecosystems supporting a vibrant economy, public well being, and a sustainable future: priceless.”
But while many do consider natural ecosystems and the benefits they provide to be priceless when they stop to recognize them, more often than not these benefits are so abundant and free-flowing that, paradoxically, they are easy to overlook. What’s worse, because they are difficult to quantify, such benefits are often left out or undervalued in risk assessments and other analysis that decision-makers use to set environmental policies.
EPA scientists have embarked on a research program to help change that. They are developing a better scientific understanding of the benefits people derive from nature.
The research is advancing the science of sustainability by focusing on the aspects of the natural environment that form the foundation of our own ecology, economy, and overall well-being. These aspects of ecosystems that humans derive benefits from are what biologists and others refer to as ecosystem services—such as flood control, fertile soils, biological diversity, and the natural cycles that cleanse our air and water.
Tampa Bay, home to Florida’s largest open-water estuary and a large and growing urban center, is the focus of one such study. EPA scientists Dr. Marc Russell and Dr. Janet Nestlerode are helping lead a broad coalition of researchers and stakeholders in a comprehensive study to identify and assess the ecosystem services provided by the bay and surrounding region.
“We and our partners are working to estimate the ecosystem services that Tampa Bay estuary and other ecosystems provide on a broad scale,” says Russell.
One example: usable water. Human activities can produce water pollutants such as nitrogen. Excess nitrogen reaching water bodies can lead to decreased water clarity, algal blooms, sea-grass death, and reduced fish populations. But natural areas can act as a kind of natural filter. As water flows through wetlands, forests, and other natural areas within a watershed, levels of nitrogen and some other pollutants decrease. The cleaner water produced is useable and valued by people—for drinking, farming, and recreational activities.
If too much of a watershed’s natural areas are replaced with developed areas (housing complexes, parking lots, etc.), communities are faced with the need to build water treatment facilities to maintain useable water, a costly proposition. The maintenance of useable water is just one of many examples of what ecosystems do for us.
And useable water is just one of many examples. “The extensive fieldwork and analysis conducted will give us the information we need to build models that we can then use to predict the functionality of natural habitats such as wetlands, quantifying the role they play in things such as removing nitrogen, providing habitat, storing carbon, and preventing floods. All of the results can then be incorporated into more dynamic models as we proceed,” explains Russell.
The scientists are partnering with local governments, other research entities, planning organizations, and citizen and business groups to identify and assess the values a productive ecosystem provides to the community. “We consider everyone who lives, works, or benefits from the Tampa Bay region ecosystem to be stakeholders,” says Nestlerode.
The project’s current stage involves intensive fieldwork to gather baseline information and begin to build a database collected from environmental observation and monitoring that will continue to grow over the long term. A stakeholder and collaborator meeting is scheduled for May 3, 2012 to discuss project progress, urban forest assessments, model development, phase two website development, and how upcoming research efforts can be refined to best meet the Tampa Bay region’s needs.
“I remind myself of the big picture when I’m out in the field conducting wetland surveys while also trying not to get eaten by alligators and mosquitoes,” says Nestlerode, who, along with other project scientists is conducting fieldwork and research investigating the functionality of wetlands in urban, agriculture, and natural watersheds and the differences between ecologically younger habitats such as restored salt marshes and older, more established mangrove stands. “Doing this kind of work gives us insight into how long it takes a disturbed or restored ecosystem to recover so that the diversity of habitats across the landscape is providing a full suite of services. It gives us the opportunity to address return-on-investment-type of questions about the environment.”
Because of the comprehensive nature of the study, a diverse group of experts are working together, including ecologists, biologists, wetland experts, geographers, modelers, and environmental economists.
All those experts will help paint a more complete picture of Tampa Bay that decision-makers can use when establishing development and environmental plans. “Our science will help stakeholders balance the costs of human-caused stresses to the landscape while sustaining valuable ecosystem services. By focusing on specific questions and real-world, on-the-ground situations we can provide information that everyone can relate to, such as how losing wetlands could require building expensive water treatment plants to maintain water quality, and how our actions might unintentionally result in diminished bird watching and fishing opportunities,” says Russell.
Ultimately, the science EPA researchers and their partners are developing will enable resource managers, planners, governments, and others to more accurately value and be conscious of the benefits we derive from “healthy” ecosystems. This information should help decision decision-makers lead us and future generations toward a sustainable future. Now that would truly be “priceless.”