Economic and ecological concepts for valuing ecosy

EcologicalEconomics41(2002)375–392SPECIALISSUE:TheDynamicsandValueofEcosystemServices:IntegratingEconomicandEcologicalPerspectivesEconomicandecologicalconceptsforvaluingecosystemservicesStephenC.Farbera,*,RobertCostanzab,1,3,MatthewA.Wilsonc,2,3aGraduateSchoolofPublicandInternationalAffaris,Uni
ersityofPittsburgh,Pittsburgh,PA15260,USAbCenterforEn
ironmentalScienceandDepartmentofBiology,InstituteforEcologicalEconomics,Uni
ersityofMaryland,Box38,1WilliamsSt.,Solomons,MD20688-0038,USAcInstituteForEcologicalEconomics,Uni
ersityofMaryland,0216SymonsHall,CollegePark,MD20742-5585,USAAbstractThepurposeofthisspecialissueistoelucidateconceptsofvalueandmethodsofvaluationthatwillassistinguidinghumandecisionsvis-a`-visecosystems.Theconceptofecosystemservicevaluecanbeausefulguidewhendistinguishingandmeasuringwheretrade-offsbetweensocietyandtherestofnaturearepossibleandwheretheycanbemadetoenhancehumanwelfareinasustainablemanner.Whilewin-winopportunitiesforhumanactivitieswithintheenvironmentmayexist,theyalsoappeartobeincreasinglyscarceina‘full’globalecological–economicsystem.Thismakesvaluationallthemoreessentialforguidingfuturehumanactivity.Thispaperprovidessomehistory,background,andcontextformanyoftheissuesaddressedbytheremainingpapersinthisspecialissue.Itspurposeistoplacebotheconomicandecologicalmeaningsofvalue,andtheirrespectivevaluationmethods,inacomparativecontext,highlightingstrengths,weaknessandaddressingquestionsthatarisefromtheirintegration.©2002ElsevierScienceB.V.Allrightsreserved.Keywords:Economicvaluation;ecologicalvaluation;ecologicalservices;valuationThisarticleisalsoavailableonlineat:finitionsTheterms‘valuesystem,’‘value’,and‘valua-tion’havearangeofmeaningsindifferentdisci-plines.Inthispaper,weprovideapracticalsynthesisoftheseconceptsinordertoaddresstheissueofvaluationofecosystemservices.Wewanttobeclearabouthowweusethesetermsthrough-outouranalysis.‘Valuesystems’refertointrapsy-chicconstellationsofnormsandpreceptsthatguidehumanjudgmentandaction.Theyrefertothenormativeandmoralframeworkspeopleusetoassignimportanceandnecessitytotheirbeliefsandactions.Because‘valuesystems’framehowpeopleassignrightstothingsandactivities,theyalsoimplypracticalobjectivesandactions.Weusetheterm‘value’tomeanthecontributionofanactionorobjecttouser-specifiedgoals,objec-tivesorconditions(Costanza,2000).Aspecificvalueofthatactionorobjectistightlycoupled*Correspondingauthor.Tel.:[phone]E-mailaddresses:[e-mail](S.C.Farber),[e-mail](R.Costanza),[e-mail](M.A.Wilson).1Tel.:[phone]Tel.:[phone]Asof09/01/2002,thisauthorcanbereachedattheGundInstituteforEcologicalEconomics,UniversityofVermont,SchoolofNaturalResources,GeorgeD.AikenCenter,BurlingtonVT05405–0088,USA.0921-8009/02/$-seefrontmatter©2002ElsevierScienceB.V.Allrightsreserved.PII:S0921-8009(02)00088-5S.C.Farberetal./EcologicalEconomics41(2002)375–392376withauser’svaluesystembecausethelatterdeter-minestherelativeimportanceofanactionorobjecttootherswithintheperceivedworld.Wedefine‘valuation’astheprocessofexpressingavalueforaparticularactionorobject.Inthecurrentcontext,ecosystemvaluationrepresentstheprocessofexpressingavalueforecosystemgoodsorservices(i.e.biodiversity,floodprotec-tion,recreationalopportunity),therebyprovidingtheopportunityforscientificobservationandmeasurement.Thedistinctionbetweenintrinsicandinstru-mentalvalueisanimportantone(Goulderetal.,1997).Ontheonehand,someindividualsmightmaintainavaluesysteminwhichecosystemsorspecieshaveintrinsicrightstoahealthful,sustain-ingconditionthatisonaparwithhumanrightstosatisfaction.Thevalueofanyactionorobjectismeasuredbyitscontributiontomaintainingthehealthandintegrityofanecosystemorspecies,perse,irrespectiveofhumansatisfaction.SomeinterpretLeopoldandAldo(1949)landethicasconstitutinganintrinsicvaluesystem,wheresomethingis‘rightwhenittendstopreservetheintegrity,stabilityandbeautyofthebioticcom-munity.Itiswrongwhenittendsotherwise.’Ontheotherhand,instrumentalvaluesreflectthedifferencethatsomethingmakestosatisfactionofhumanpreferences.Instrumentalvalues,suchaseconomicvalues,arefundamentallyanthropocen-tricinnature.Policiestowardtheenvironmentwillalwaystendtobebasedonamixofintrinsicandinstrumentalvaluesystems.Inthispaper,wedealwithboth.2.EconomicconceptsofvalueThehistoryofeconomicthoughtisrepletewithstrugglestoestablishthemeaningofvalue;whatisitandhowisitmeasured.Aristotlefirstdistin-guishedbetweenvalueinuseandvalueinex-change.Theparadoxofuseversusexchangevalueremainedunresolveduntilthe16thcentury(SchumpeterandJoseph,1978).Thediamond–waterparadoxobservedthatwhilewaterhasinfi-niteorindefinitevalue,beingnecessaryforlife,itsexchangevalueislow;yetunessentialdiamondsbearahighexchangevalue.Followingthisobser-vation,therewaswidespreadrecognitionofthedistinctionbetweenexchangevalueandusevalueofgoods.Galianidefinedvaluetomeanarelationofsubjectiveequivalencebetweenaquantityofonecommodityandaquantityofanother.HenotedthatthisvaluedependsonUtilityandScarcity(utilitaetr