Transcript A market for ecosystem services

Towards defining and accounting
for ecosystem services
James Boyd
Spencer Banzhaf
Senior Fellow/Director – Resources
for the Future
Professor – Dept of Economics at
Georgia State University
Ph.D. University of Pennsylvania
Ph.D. Duke University
Ecosystem Services, Ecological
Benefit Assessment
Environmental Economics
Ecosystem Services are the benefits
of nature to households
Woodland Trust 2014
Problem Statement: “The development and
acceptance of welfare accounting and environmental
assessment are hobbled by lack of standardized
ecosystem units.”
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Green GDP vs. ESI (Ecological Services Index)
ESI is the market and nonmarket ecosystem service
values
GDP is the market value of all
officially recognized final goods
and services produced within a
country in a year.
“Green GDP” = GDP + nonmarket ecosystem values
Public policy demand for standardized
units of ecosystem measurement
Rival
Non-rival
Excludable
Non-excludable
Private Good
Common Pool
Club Good
Public Good
Final Ecosystem Services: components
of nature, directly enjoyed, consumed,
or used to yield human well-being
Ecosystem Service
(Definable Unit)
Quantity
Value or Price
** Key assumption: social policy goal is to maximize human well being
A = A(M,N)
A = commodity
M = marketed good
N = Non-market Ecological input
Production Theory Perspectives
The value can be derived from the input’s productivity
times the value of the final commodity:
PN = (∂A/∂N)PA
Non-market input’s value can be derived from the value
of the market input and the substitutability of the
market and non-market inputs:
PN = (∂A/∂N)/(∂A/∂M)*PM
3 definitions of the measure of nonmarket service are referenced:
• dN (the change in non-market input)
• (dA/dN)dN (change in the final commodity)
• pNdN (the shadow value of the change)
Inventory of services
Critiques
• TFP on the market goods side- is there an
equivalent on the non-market goods side?
• Services vs. goods; pg 620 capital stock as a
proxy?
• Based on human well-being rather than the
intrinsic values of ecosystem integrity
• Does this fully motivate society to protect the
necessary components of the ecosystem?
Measurement should be focused on
the flow of final current services as
well as capital depreciation
• q = quantity
• p = price