In this subsection:

Difficulties with Environmental Valuation

This Section also includes:

  Relative Value Home

Part I

Introduction to Relative Ecosystem Valuation


Steps in Developing Relative Value Indicators


Three Illustrations of Relative Ecosystem Value

Part II

Types of Indicators


Food for Thought

Definition of Terms


Consideration of benefits indicators is simplified by using common terms. These definitions distinguish clearly between four attributes of a natural resource systems including features, functions, services, and values. These terms are related to one another and, in some cases, may be used to represent one another. However, there are strong reasons why maintaining a clear distinction between them is important for purposes of assessing the benefits of conservation practices. Site and landscape factors strongly influence whether a given environmental feature (e.g., a riparian buffer) will provide a particular function (e.g., trap nutrients) and whether that function will generate a service (e.g., improved water quality, improved fishing) and how much economic value that service will have (e.g., willingness to pay for more fishing opportunities). This is important because the measurable outcome of conservation practices involve changes in environmental features (e.g., wetland acres restored or miles of forested buffer created).


Features-site-specific characteristics of a natural resource system (e.g., soil, ground cover, hydrology) that establish its capacity to support various ecosystem functions. A farm is one form of a natural resource system that provides agricultural output in addition to ecosystem services.  Onsite farm features are the target of conservation practices.

Functions-the biophysical processes that take place within an ecosystem. These can be characterized apart from any human context (e.g., fish and waterfowl habitat, cycling carbon, trapping nutrients). The level of function depends on the capacity of the ecosystem (onsite features) and certain aspects of its landscape context (e.g., connectedness to other natural/human features, accessibility to birds, fish). 

Services-the beneficial outcomes that result from ecosystem functions (e.g., better fishing and hunting, cleaner water, better views, reduced human health and ecosystem risks). These require some interaction with, or at least some appreciation by, humans, but can be measured in physical terms (e.g., catch rates, water quality, property damage avoided). These depend on ecosystem functions and certain aspects of landscape context (e.g., proximity to floodwaters, people, and property; accessibility to hunters, birders, fishermen). 

Value-defined by Webster to be the quality of a thing according to which it is thought of as being more or less desirable, useful, estimable or important. Using this definition the value of an ecosystem might be defined in terms of its beauty, its uniqueness, its irreplacability, its contribution to life support functions or commercial or recreational opportunities, or its role in supporting wildlife or reducing environmental or human health risks, or providing many other services that benefit humans. 

Economic Value-defined in strict economic terms as aggregate willingness-to-pay in dollars for the stream of services expected from a ecosystem. The full economic value of a ecosystem expressed in absolute (dollar) terms would be the sum of each person's willingness to pay for each service generated by each ecosystem function. In most cases this is impossible or impractical to measure. As a second-best alternative, the economic values of ecosystem services can be expressed in relative terms using indicators of willingness to pay. These indicators can be used to prioritize and compare ecosystems on the basis of their relative economic value and are based on the six factors that determine aggregate willingness to pay. These are: 1) the expected mix and level of services provided by the ecosystem; 2) the number of people who benefit from these service; 3) their incomes; 4) their preferences; 5) the cost of gaining/keeping access to the service; and 6) the availability and cost of substitutes. Preferences ö are subjective values expressed in relative terms such that one thing is deemed to be more desirable or important than another. 

Preferences-can be revealed (e.g., in purchasing decisions), expressed (e.g., through surveys) or imputed (e.g., cost of replacement). In the case of ecosystems individual and community preferences are usually associated with specific ecosystem services, not with ecosystems themselves or biophysical measures of ecosystem functions. Ranked preferences for various ecosystem services are much easier to determine than their absolute dollar value. For purposes of comparing ecosystems on the basis of their relative value indicators of ranked preferences are often as useful as estimates of absolute dollar values. 

Risk-can be defined generally as the volatility of potential outcomes. In the case of ecosystem values the important components of risk are those raise the possibility of disruptions in the level of ecosystem services provided. These are associated with the likelihood of changes in onsite features (e.g., invasive plants, overuse, restoration failure) or of changes in landscape context ( e.g., changes in adjacent land uses, water diversions). In most watersheds biophysical and demographic conditions are not static and the impacts of controllable and uncontrollable risks are not uniformly distributed among ecosystem areas. Differences in risk factors assigned to ecosystems in different areas can cause significant differences in their economic values even if they are identical and are in are in landscape contexts that are identical now. Risks can be factored into the consideration of ecosystem values (and indicators of ranked preferences) by adjusting the expected flow of future services, or by adjusting the expected value per unit service. Note that the expected value of services from a ecosystem may be affected by the vulnerability of expected service flows from other ecosystems. 

Ecosystem Features-onsite characteristics which determine if the ecosystem: a) has the capacity to contribute to certain ecosystem functions, and b) has linkages with the surrounding landscape that are likely to affect offsite ecosystem functions.

Examples of Ecosystem Features include:
Characteristics of vegetative cover
Characteristics of Soil and Topography
Characteristics of Hydrology

Landscape Context-offsite features which determine: a) if an ecosystem with the capacity to provide certain functions will have the opportunity to provide them; b) what services those functions will provide; and, to some extent, c) what value people will place on those services. 

Difficulties with Environmental Valuation

Non-Market Goods  Most environmental goods, such as clean air and water, and healthy fish and wildlife populations, are not traded in markets. Their economic value - how much people would be willing to pay for them in dollars ö is not revealed in market prices. The only option for assigning dollar values to them is to rely on non-market valuation methods.
Non-Rival Goods  One person's consumption of most goods (apples or housing) reduces the amount available for everyone else. Environmental goods are different. Clean water and air, beautiful views, and to some extent outdoor recreation, can be enjoyed by everyone in the same way as radio and television. The economic value of non-rival or public goods is the sum of all people's willingness to pay.
Non-exclusive Goods  People cannot be excluded from enjoying most environmental goods and the cost of trying to exclude them is prohibitive. Other than increases in onsite hunting and fishing opportunities, which may be a source of economic benefit to farmers, the environmental benefits of most conservation practices are non-exclusive. The free rider problem makes it impractical for farmers to recoup the cost of on-farm conservation investments from those who benefit from off-farm environmental improvements. 
Inseparable Goods  Conservation practices at a given site contribute in many roundabout ways to environmental goods and result in environmental and economic benefits that accrue over great distances in time and space. It may be impossible to separate the economic benefits that result from one conservation practice undertaken at one site from another undertaken at another site. Worse, it may be impossible to separate the aggregate benefits of those practices from those of other environmental investments.


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