The ethical and practical quandaries of ecosystem service valuation

Dear Reader,

This is part of an assignment on 'Payment for Ecosystem Services'. It was written for an MSc module so is 'academic' writing. I will follow it up with a more personal blog on the same subject..

Ecosystems permit life, yet through the activities of humans they are being destroyed at an unprecedented rate. Climate change, biodiversity loss and ocean acidification are examples of such damage occurring on a planetary scale. We face a true threat to the continuing function of many finely balanced life systems. This is an existential crisis, threatening all life on Earth. The benefits we receive from ecosystem services are myriad, yet many do not pass through the monetary system at any point (Costanza et al, 1997). Indeed, we may not even be aware of the benefits we receive through these natural processes. Ecosystem services provide us with clean air and water, nutrient cycling, pollination, soil development, climate regulation and waste treatment (ibid), to name just a few. Payment for Ecosystem Services (PES) aims to quantify the economic worth accrued from these gifts of nature, estimated to have a yearly economic value of US$33 trillion per year, most of which is currently outside of market economics (ibid).

Many efforts have been made to place valuation on ecosystem services, leading to the publication of valuable reports (for example: Stern, 2006; TEEB, 2010). The Millennium Ecosystem Assessment (MA) (2005) implicitly linked biodiversity loss, ecosystem services and human well-being and was followed by the highly influential Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES, 2019) which aimed to build on the work of the MA, utilizing a more holistic framework. IPBES incorporated into its model the complex diversity of value systems across cultures, and an assessment of the intrinsic value of nature. Ecosystem Services can be broadly categorized into the following groups; provisioning (such as agriculture and fishing), regulating (such as climate regulation, water quality and soil formation), and cultural services (such as ecotourism, spiritual value and environmental education) (Martín-López et al, 2014). Despite this vast body of research attempting to ascertain an economic value of ecosystem services, many questions relating to efficacy, ethics and market limitations remain unanswered. Should we even consider the commodification of nature in order to preserve it? This report draws on current literature to highlight some of the key ethical and practical challenges in determining the value of nature.

The Distinct Realms of Ecosystem Service Valuation

To maintain the earth's life systems, we must undeniably find a way to preserve the integrity of ecosystems. Valuation of ecosystem services has predominantly been an environmental conservation effort, developed to speak the language of economics in order to fulfil three promises (or hopes) of ecosystem service valuation; raising awareness in polity, saving biodiversity by internalising currently external costs, and contributing to better decision making (Spangenberg & Settele, 2016). In this sense, PES shows great aptitude for pro-green transformations when utilised, as Norgaard (2010) elicits, as an ‘eye-opening metaphor intended to awaken society to think more deeply about the importance of nature and its destruction.’ Elements of PES have indeed demonstrated great potential in protecting the natural world. Emissions trading schemes can produce a relatively simple calculation of economic value (as they focus on a specific substance, such as methane) with global impact. The Acid Rain programme, for example, had great success (United States Environmental Protection Agency, 2013) in reducing sulphur dioxide (SO2) and nitrogen oxides (NOx). Similar emissions based programmes could translate on a broader scale by utilising measurements and trade of carbon dioxide equivalent. Biodiversity or cultural service valuation is, however, far more nuanced, as we shall discuss later. The IPBES report emphasised the potential for PES in the following statement:

“evaluating and communicating economic values using a monetary metric can help spread awareness to policy makers and laypeople, and help identify social welfare-enhancing decisions and actions regarding conservation of nature and its benefits to people” (Díaz et al, 2015).

Yet it also noted the marked difference in economic valuation between distinct realms of ecosystem services, highlighting that such benefits are predominantly ascertained via certain services (namely the provisioning services), whilst for other services (namely cultural), PES ‘may neither be appropriate nor necessary nor sufficient nor practical.’ (ibid), a stark admonition of the limitations of such a framework at an early stage.

Diversity of Values: Measuring Worth

One risk PES faces is that it seeks to reduce what is a complex diversity of value systems (Schwartz, 2004) into a purely financial measurement. It requires that decision making be based predominantly on the cost-benefit analysis, disregarding or understating the diverse values provided by ecosystem services (Martín-López et al, 2014). Axiology (the study of values) is a vast field and cannot be addressed fully in this report, but acknowledgement of the complexity of value measurement is vital in building an ethical PES framework. PES must therefore incorporate measurements of value-pluralism and recognise the ‘need to explore multiple value-domains of ecosystem services’ (De Groot et al, 2010), which quickly leads to a depth of engagement that renders the framework exponentially more complex to enact. Due to the complexity of measuring worth, Chan et al (2012a) stressed the imperative of participatory approaches throughout each stage of the valuation process.

Gómez-Baggethun and Ruiz-Perez (2011) noted a further risk, in that ecosystem service assessment can actually determine value, rather than measure it. This supports older claims by Vatn and Bromley (1994) that valuation methods do not simply ‘uncover’ but also ‘construct’ values. For example, in subsistence societies, monetary incomes are low compared to the high global economic impact of ecosystem services, meaning that valuation requires income constraints to be taken into account (Arrow et al., 1993 cited in Christie, 2012), since appreciation for ecosystem services and willingness to pay should be partially understood as an indicator of socio-cultural preferences rather than exclusively an objective market value per se (Chan et al, 2012b). Norgaard (2010) suggests that we can use the richness of nature’s ways to “help us see the poverty of thinking predominantly in stock-flow terms.” Any attempt to calculate economic values of ecosystems must recognise and respect the complexity and diversity of how they are valued across cultures (will spiritual value be eroded under cost-benefit analysis?) and time (how do we value the concept of sense-of-place and integrate yet-unknown values that may later derive from pristine ecosystems?).

Intrinsic Value

Ecosystem service valuation faces many moral questions as well as practical. Does nature have intrinsic value? Is the value of conservation derived from the benefits that nature gives to us? Philosophers have long pondered the essential value of nature. The esteemed 20th century writer and conservationist Aldo Leopold highlighted the need to transform our self-image, ‘from conqueror of the land community to plain member and citizen of it’ (Leopold, 1970 p.240) through the construction of a ‘land ethic’ (ibid). Yet as the growth economy has increasingly become the value system, the natural world has become increasingly commodified. Ecosystem service valuation may further threaten natures intrinsic values previously external to the market system, as they are absorbed into the economy. Raworth (2018) notes that this also occurs with human intrinsic values; they can be eroded and modified depending on ones motivations. As measurements of GDP are increasingly coupled with concepts of success and progress, finance begins to supersede all other values as the universal measurement of all value. The danger here is one of subtle yet profound significance and it becomes clear that the difference between priceless and worthless (Reid, 2013) is one of social agreement that can be flipped in an instant if economic worth further defines values and the ecosystem services that make life on earth possible become traded commodities. Such truths do not eradicate the prospective benefits of ecosystem service valuation as a tool for conservation, only highlight the need to mark a boundary of reasonable limits of what can be priced and what cannot.

Limits to The Market

Market environmentalism seeks to find economic solutions to the climate crisis that uphold or grow the economy, but in doing so may be overstating the market’s abilities. The broader socio-political discourse shapes such thinking and, despite huge unknowns regarding long-term affects, could be considered the crowning moment for neoliberal market economics, in what the philosopher Michael Sandel (2012) calls ‘market triumphalism’: the commodification of everything. Thus, in aiming to speak the language of economics, the PES framework risks instilling the already dominant mindset that Evernden (1985, p. 23) calls Resourcism:

“a kind of modern religion which casts all of creation into categories of utility to humans, whereby there is literally nothing in the natural and human world which cannot be transformed into a resource. It is the ideology par excellence of modernity, and thus of ecocrisis.”

That everything has a price only becomes true as everyone begins to believe it. Price is not an objective truth and thus economic value and ethics must work in unison, as it is possible that what we end up trading when we sell nature (as when we sell humans) is in fact our morality. Sandel (2012, p. 89) notes that outside of material goods, the market must “‘traffic in morality’, unless it wants blindly to maximise social utility without regard for the moral worth of the preferences it satisfies”. Any morally founded law is surely based on an inception of the value of dignity, with necessarily little consideration of utilitarian value. Kant (1785 cited in Jax et al, 2013 p. 53) distinguished between the two, stating that:

“everything has either a price or a dignity. Whatever has a price can be replaced by something else as its equivalent; on the other hand, whatever is above all price, and therefore admits of no equivalent, has a dignity.”

As price tags are attached to nature, we risk transforming the living world into a human asset and thus risk that in time our perception of nature will transform from one of Kant’s dignified realm of existence to a commodity of strictly economic worth.

Complexity Blinder

Norgaard (2010) notes that ecosystem service valuation was intended as a metaphor to aid the recognition of the immense and diverse values derived from nature, yet Gómez-Baggethun and Muradian (2015) show that it appears to have quickly distorted into a reductionist market approach to conservation that will inevitably encounter limited success due to the interconnectedness (complexity) in ecosystems and thus the difficulty in determining their ‘true’ value. Norgaard (2010) further elicits that “its [PES’s] dominance in our characterization of our situation and the solution is blinding us to the ecological, economic, and political complexities of the challenges we actually face”. To accept PES as a model for conservation is to objectively state that we fully know and understand nature’s value and can thus translate it into a single value system. To simplify ecosystems in this way disregards the significant gaps in contemporary bioscience knowledge (Adams, 2014) and necessarily ignores the as-of-yet unknowns; might we destroy a forest in which inhabited a fungus that held the cure for cancer? The long-term impact of blinding the world to the truth of nature’s complexity cannot be predicted. A literature review by Hooper et al (2005) found with absolute certainty that “[d]iversity becomes increasingly important as a management goal, from both economic and ecological perspectives, with increasing temporal and spatial scales and for providing a broader array of ecosystem service,” suggesting that we should be developing appreciation and understanding that diversity matters, rather than aiming to simplify the biosphere into tick-boxes of anthropometric value.

How PES Could Help Protect Nature

Ecosystem service valuation could highlight the benefits we receive from nature by explicitly linking science and society. Carefully regulated, PES could therefore mean a win-win of co-occurring environmental conservation and market growth. Given current climate trends, finding effective and efficient means of preservation is of utmost importance. Ethical dilemmas regarding the ‘how’ of conservation may need to be considered medium to long-term discussions. Perhaps our present moral imperative is to act quickly in the context in which we find ourselves, where speaking the language of neoliberal economics may have the greatest positive impact. Yet it is likely that the greatest benefit efficacy will surely be derived when discussions of morality and economic progress go in parallel (Costanza et al, 1997). Transparency as to the complexities and limitations of PES go a long way in rendering the framework morally justifiable (Jax et al, 2013) and likely more effective over a longer period, with added security of social accountability over decisions and actions and their consequences.

A Holistic approach with a diversity of safeguards for the environment further bolsters the legitimacy of Ecosystem Service Valuation. Such an approach must appreciate and respect diverse values of nature, including the intrinsic value that cannot be easily measured, alongside methods that tap into and perpetuate our deeper values (for example those of community, reverence for nature and compassion), not through financial reward but for the good of the acts themselves, whilst understanding and recognition of planetary boundaries (Rockström, 2009) could act as a guide to determine the limits of commodification.

Conclusion

Absent of profound changes in our conceptualisation of nature, value and progress, action to mitigate climate catastrophe must work in parallel with the present socio-economic context. Recognition of value-pluralism and a holistic approach to value measurement are imperative in a moral PES model, yet these make make for a complex framework, potentially limiting the implementation of PES as a conservation strategy.

This report is written as an overview of an extensive topic and does not contain a full review of the literature relating to the subject. Further research into the efficacy of PES and its benefits and limitations is of utmost importance. Research into alternate economic models that build ecosystem service value into their foundation are a crucial intersection of conservation and market economics.

As a framework for building more environmentally sustainable societies, PES deserves consideration, yet it faces both moral and practical challenges that may prove difficult to overcome; placing an inter-culturally agreed value on nature is an immensely complex endeavour. The PES framework highlights some limitations to market economics and may provide an opportunity to construct boundaries, confining financial dominion to its appropriate arena, with recognition of the dangers and limits of unremitting commodification.

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