Practical Measurement of Ecosystem Services: Can We Standardize the Way We Count Nature's Benefits?

An RFF Workshop
May 25 & 26, 2006

Overview and Objectives

Nature's benefits should be counted. However-- counting and accounting -- requires precision, uniformity, and discipline. Ecology and environmental economics have to date failed to provide adequate guidance on what it is in nature that should be counted if we want defensible measures of value. Recent work at RFF advocates a way to precisely define the units of account necessary to make ecological accounting a reality.

This workshop debated these units of account by bringing together practitioners from government and the conservation community and academic experts on the underlying ecology and economics.

The workshop also assessed an important benefit of defined units of account: the ability to standardize environmental measurement. The organizers put forward the following (perhaps controversial) thesis: Green GDP, conservation priorities, benefit transfer in cost-benefit analysis, and trade in ecosystem services should all rely on the same units. While RFF's work on ecosystem services was used to concretely motivate discussion, we invited participants guaranteed to provide active discussion and debate.

Background

Colloquially, the term ecosystem services encompasses "the benefits of nature to households, communities, and economies." The term is gaining attention because it conveys an important idea: that ecosystems are socially valuable -- in many ways. Conservancies link their missions to the protection of ecosystem services; the Millennium Ecosystem Assessment relies on ecosystem services as a framework concept for its measurement of global ecological conditions; and numerous government agencies are trying to figure out how to measure, manage, and communicate the ecosystem services protected or enhanced by their programs.

This idea has great potential to unite the fields of ecology and economics, form the basis of a unified approach to environmental performance measurement, and foster clear public communication on environmental issues. Some analysts even talk about a trading system for ecosystem services.

However, the term lacks a consensus definition, undermining its promise. Today, if you ask different environmental practitioners what ecosystem services are, you get a disturbingly large -- and often competing -- set of answers. Numerous competing measurement systems have emerged in the last decade from both the natural and social sciences. These metrics are associated with initiatives in sustainability, government performance assessment, ecosystem services, and national welfare accounting.

What is needed is a common understanding that is scientifically defensible on both ecological and economic grounds. To date, no single set of metrics has emerged to unify the field and foster the transferability of results between applications and across the natural and social sciences. This is understandable. It is worth remembering that our "conventional" economic accounts, such as GDP, have taken literally a hundred years to develop (and are still far from perfect). Moreover, accounting for nature's benefits will always be a far more daunting task. First, nature is more complex than the human economy. Second, the lack of markets for nature's benefits means that there is no mechanism to define prices and quantities for us. 

Audience

Our ultimate goal is to provide standardized definitions and measures of ecosystem services that are useful to governments, conservancies, international organizations, and NGOs. There was an emphasis on practicality. The ecosystem services concept will achieve its potential only if people who aren't ecologists and economists can measure and interpret ecosystem services.

To be useful, ecosystem service measures also need to pass muster in both ecology and economics. This means that both users of ecosystem measurement (decision-makers) and suppliers (scientists) need to converge on a consensus. Workshop attendees will include representatives from the conservation community, government agencies, NGOs advocating environmental performance metrics, and scholars. In particular, our hope was that the workshop improved communication across the ecologist-economist and the academic-practitioner divides. 

Applications and Relevance

The measurement of ecosystem service units is an issue central to various issues in environmental policy. These include: government performance assessment, non-market or "green" welfare accounting, natural resource valuation, conservation planning and priorities, and trade in ecosystem services. Advance in all of these areas (both scientific and public policy) is slowed by a lack of consistent, defensible protocols.

Standardized units of account will advance the following policy and scientific objectives:

Green Welfare Accounts -- Conventional welfare accounts, such as GDP, do not measure nature's contribution to wellbeing. The measurement of non-market benefits in these accounts is thwarted by a lack of units consistent with those used to measure conventional economic outputs.

Environmental Valuation -- Ecosystem valuations have been conducted for decades. The comparability of these analyses, and the ability to transfer benefit estimates from one location to another, is limited, however. A part of the problem is that valuations do not employ standard units to foster comparison and meta-analysis.

Ecosystem Markets -- Systems for trading habitats, ecosystem services, water quality, and other heterogeneous environmental goods have been slow to develop. This is largely due to the difficulty of judging, and monitoring, the qualities of what is traded. Standardization will foster more transparent and defensible rules for such environmental markets.

Conservation Planning and Priorities -- Conservancies increasingly look beyond biodiversity as their sole reason for protecting habitat and other natural resources. Protection of ecosystem services, for example, requires conservancies to account for and communicate a much broader set of objectives. Standard units of account will make this task easier.

Government Performance -- Agencies are increasingly being asked (by Congress, OMB, and others) to demonstrate the public benefits of environmental regulations, programs, and expenditures. Since ecosystem services are about the benefits of nature to the public, measuring and communicating service outcomes could support important trustee and regulatory activities.

Practitioners in each of these areas were involved in the workshop, and were asked to debate the merits of standardization, and alternatives, as applied to their area of expertise.