Framing Sustainability Innovation and Entrepreneurship

Nature's Services

Nature's services emerged in the late 1990s as a practical framework to put a monetary value on the services that ecosystems provide to humans to better weigh the trade-offs involved with preserving an ecosystem or converting it to a different use. The nature's services outlook posits two things. First, "the goods and services flowing from natural ecosystems are greatly undervalued by society…[and] the benefits of those ecosystems are not traded in formal markets and do not send price signals". Second, we are rapidly reaching a point of no return, where we will have despoiled or destroyed so many ecosystems that the earth can no longer sustain the burgeoning human population. Nature's systems are too complex for humans to understand entirely, let alone replace if the systems fail. Indeed, Stanford biology professor Gretchen Daily was inspired to edit the book Nature's Services, published in 1997, after "a small group of us [scientists] gathered to lament the near total lack of public appreciation of societal dependence upon natural ecosystems". Daily expanded on these concepts in the 2002 book The New Economy of Nature.

Ecosystem Survival Is Human Survival

Nature's services consist primarily of "ecosystem goods" and "ecosystem services". Natural systems have developed synergistic and tightly intertwined structures and processes within which species thrive, wastes are converted to useful inputs, and the entire system sustains itself, sustaining human life and activity as a subset. For instance, ecosystems services include the carbon and nitrogen cycles, pollination of crops, or the safe decomposition of wastes, all of which can involve species from bacteria to trees to bees. Healthy ecosystems also provide "ecosystem goods, such as seafood, forage, timber, biomass fuels, natural fibers, and many pharmaceuticals, industrial products, and their precursors". In short, ecosystems provide raw materials for the human economy or provide the conditions that allow humans to have an economy in the first place.

Although these natural goods and services can be valued "biocentrically" (i.e., for their intrinsic worth) or "anthropocentrically" (i.e., for their value to humans), the nature's services framework focuses on the latter because its audience needs a way to incorporate ecosystems into conventional, cost-benefit calculations for human projects. For instance, if a field is "just there," the conventional calculation of the cost of converting it to a parking lot will focus much more on the price of asphalt and contractors than on the value lost when the field can no longer filter water, support plants and wildlife, grow food, or provide aesthetic pleasure. A nature's services outlook instead captures the value of the functioning field so that it can be directly compared to the value of a parking lot.

Anthropocentric valuation schemes can take numerous forms. They can consider how ecosystems contribute to broad goals of sustainability, fairness, and efficiency or more direct economic activity. For instance, a farmer could calculate the avoided cost of applying pesticides whenever a sound ecosystem or biological method instead controls pests. A state forestry agency could calculate the direct value of consuming ecosystem products, such as the value of trees cut and ultimately sold as lumber, or it could calculate the indirect value of using the same forest for recreation and tourism, perhaps by calculating travel costs and other fees people are willing to bear to use that forest.

Estimating the value of nature can be difficult, especially because we are not used to thinking about buying and selling its services, such as clean air and clean water, or we see them as so basic that we want them to be free to all. Moreover, most people do not even know the services nature provides or how those services interact. Nonetheless, in addition to the aforementioned methods, economists and others trying to use nature's services often survey people's willingness to pay for nature, such as using their willingness to protect an endangered animal as a proxy for their attitude toward that animal's ecosystem as a whole. One spectrum of approaches to valuation is illustrated in Figure 3.7 "Ways to Value Nature's Services", where use value reflects present anthropocentric value and nonuse value encompasses biocentric value as well as anthropocentric value for future generations.

In addition to the uncertainty of ascertaining values for everything an ecosystem can do, nature's services face the issues of whether some people's needs should be valued more than others' and of how present choices will constrain future options. Nature's services practitioners also must be able to calculate changes in value from incremental damage, not just the total value of an ecosystem. For example, clear-cutting one hundred acres of rainforest to plant palm trees is one problem; eradicating the entire Amazon rain forest is quite another. Destroying the first hundred acres might have a very different cost than destroying the last hundred. Hence, the nature's services approach attempts to characterize with ever greater resolution ecosystems, their goods and services, and the systems interdependence to include the results in economic calculations. Finally, once those values are quantified, their corresponding ecosystems need to be protected as would any other asset. Systems for monitoring and safeguarding nature's services must emerge concurrently with estimates of their worth.

Robert Costanza and collaborating scientists and economists wrote one of the first papers on the financial value of ecosystems, "The Value of Ecosystem Services: Putting the Issues in Perspective," published in Ecological Economics in 1998. It and the review article "The Nature and Value of Ecosystem Services" by Kate Brauman, Gretchen Daily, T. Ka'eo Duarte, and Harold Mooney are worth reading for an accessible discussion of ecosystem services.