Environmental Economics: A Short Evaluation Of The Monetary Valuation Of Ecosystem Goods And Services

885 words - 4 pages

“Ecosystem service valuation” is the administration of monetary worth, relative worth, utility or importance to the benefits that people obtain from ecosystems. In 2005, the Millennium Ecosystem Assessment Report (MEA) grouped ecosystem services into four broad categories: (i) “provisioning services” - production of food and water; (ii) “regulating services” - control of climate and disease; (iii) “supporting services” - nutrient cycles and crop pollination; and (iv) “cultural services” - spiritual and recreational benefits. Examples of these services have been articulated by mass media as the way rainforests and wetlands affect global climate systems, or the devastation of codfish populations by overfishing. As human populations grow, so do the resource demands imposed on ecosystems and the impact of our global footprints. We know for certain that without the services provided by the ecosystem, the Earth would be uninhabitable for humanity. In this paper I will discuss the positives and negatives of the monetary valuation of ecosystem goods and services to demonstrate that without a doubt, assigning such a system to these services will aid in the creation of more sustainable development outcomes.
Sustainable development is understood as an organizing principle for human life on a finite planet, which works toward the preservation and endurance of diverse biological systems. Throughout history we have seen interdependence between economic growth and environmental degradation, denoting a trend in human population growth simultaneous to ecosystem decline. Studies have shown that over the last fifty years, humans have changed ecosystems more rapidly and extensively than any comparable period in human history. This has largely been due to the exponentially growing demands for resources such as food, fresh water, timber and fuel, associated with population growth. For these reasons, and more, it is reasonable to quantify the economic losses suffered from the destruction of natural capital and environmental services.
The MEA implies that ecosystem services have value to people, which in turn implies that ecosystem services have an economic value. In theory, these values can be incorporated in economic policy, pricing structure and the current market system. Because monetary units are widely recognized, ecosystem services may become comparable to other services, thus allowing incorporation into traditional economic decision-making processes. However, the creation of a monetary value system has been criticized for its challenges in policy implementation and management. Some values and services, such as spiritual, are largely outside the market making them difficult to measure, often resulting in concern that valuation may be incomplete, biased or uncertain, or causing them to be ignored or undervalued by traditional economists. Furthermore, global transactions make irresponsible environmental actions difficult to...

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