1. Ecosystem Services for Economic Analysis : Conceptual Issues
Dr Pushpam Kumar
Institute for Sustainable Water, Integrated Management and Ecosystems Research ( SWIMMER),
University of Liverpool, UK

2. What are Ecosystem Services?
Answer depends on the purpose!
If the purpose is mass awareness and education, MA’s classification and purpose are most relevant .
If the purpose is valuation, accounting, executing PES Scheme etc, then a different approach would be needed

3. Regulating Ecosystem Services Provisioning Cultural
Goods produced or provided by ecosystems
Regulating
Benefits obtained from regulation of ecosystem processes
Cultural
Non-material benefits from ecosystems
The assessment focuses on the linkages between ecosystems and human well-being and, in particular, on “ecosystem
services.” An ecosystem is a dynamic complex of plant, animal, and microorganism communities and the nonliving
environment interacting as a functional unit. The MA deals with the full range of ecosystems—from those relatively
undisturbed, such as natural forests, to landscapes with mixed patterns of human use, to ecosystems intensively managed
and modified by humans, such as agricultural land and urban areas. Ecosystem services are the benefits people
obtain from ecosystems. These include 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. The
human species, while buffered against environmental changes by culture and technology, is fundamentally dependent
on the flow of ecosystem services.
Original version of this slide was prepared by Karen Bennett, WRI.
Photo credits (left to right, top to bottom): Purdue University, WomenAid.org, LSUP, NASA, unknown, CEH Wallingford, unknown, W. Reid, Staffan Widstrand

4. Established Fact-Ecosystem Services are like any other Capital Assets!
fodder production
tourist attraction
pollination
carbon sequestration
flood protection
water purification
slope stability
Beauty
recreation
Biodiversity
fibre production
food production
stabilising micro-climate
shelter for life stock
game reserve

5. Economics of Ecosystem Services
Conceptual Lenses of Economics
Benefits people obtain from ecosystems
Stock Vs Flow
Metrics of ES- Stocks (ecological) and flow (ecosystem services)
ES are flow on DD and SS side and imbalance would affect the stock!

6. Contd.. Ecosystem Services Lenses of Economics Timber, water, fodder
The equivalent economic value of a stock that underlies a flow can be estimated from the present and assumed time course of ecosystem services flows by applying appropriate discount rate (natural capital)

7. Contd Ecosystem Services Lenses of Economics Charachteristics
ES can have consumptive vs productive
ES can have private good or public good features

8. Many BENEFITS of ES are public goods (Rivalness and Excludability, Spatial and Temporal Dynamics
Joint Production, Complexity, Resilience and Interdependence of the Benefit )
Private Benefit Capture
Difficult
Easy
Economic Valuation
Difficult or impossible
Easy
Spiritual & religious
Insurance Value ?
Aesthetic ?
Freshwater ?
Genetic Resources ?
Recreation & tourism ?
Fiber ?
Food ?
Economic Value ($)

9. Contd. Ecosystem Services Lenses of Economics
vector of services produced by a vector of inputs
intermediate / final goods
externalities over space and time (soil erosion and flooding)

10. Water Recharge Function in a wetland as ‘Outputs’
I=O+ESM
Evapotranspiration(E)
Inputs(I)
Wetland Area (e.g. Floodplain)
Outputs(O)
Soil Moisture(SM)
The semantics of ‘intermediate / final’ good differs for ecologist and economist !

11. Ecosystem Accounting: Basic Structure

12. Resilience and Thresholds of Ecosystems: Possible Approach of Valuation
The biggest perturbation, the ecosystem can absorb without being in another state is RESILIENCE
the system Resilience in several contexts may be treated as CAPITAL stock
Estimate the accounting price (Maler, 2008)
Accounting price here is changes in the expected change in net present value of expected future ecosystem services resulting from a marginal change in the resilience

13. Ecosystem Services require Indicators
Indicators about the physical extent, condition and productivity of resources (e.g. size of fish stocks, soil organic matter levels, etc)
rate of resource degradation (e.g. rate of forest land conversion)
level of vulnerability to natural disasters
Variables should not be automatically used as
Indicators!!

14. Valuation of Ecosystem Services
Agreements already on
Joint effort (ecology and economics)
Need to know initial condition of Ecosystems
Need to know the flow of ES (ecological production function) etc. etc.
But
Valuation must have a Purpose (resolving trade off, sectoral accounting, CBA, etc.)