Ecosystem Valuation & Services | Meaning, History & Example

What is Ecosystem Valuation?

Ecosystem Valuation is the economic process that assigns the value to the ecosystem or its ecosystem services/resources that might be in the form of monetary, biophysical, or any other benefit. For example, wetland prevents flooding as well as provide necessary food products in and around. Ecosystem Valuation plays a wider role as it helps to understand the benefits and significance of a particular ecosystem in the specific area while providing the tool for comparison in terms of cost-benefit analysis. These valuations are generally estimates calculated through the proxy attributes of ecosystem service and it may help to answer whether the proposed project is adding the cost to the environment and society or the benefit to them.

Ecosystem Services defined

Ecosystem goods and services are the utility human populations derive, indirectly, or can be direct, from different ecosystem functions. It is these ecosystem goods and services that we must find balance in order to maintain the future liveability and sustainability of our planet. Ecosystem services have been defined differently by researchers and organizations, but any benefit that humanity gains from an ecosystem can be considered an ecosystem service. These services can be categorized in various ways with The Millennium Ecosystem Assessment separating them into provisioning, regulating, cultural, and supporting services. Each category provides tangible or intangible goods to society. Provisioning services are the products obtained from the ecosystems while regulating services are environmental processes that can evaluate the health of an ecosystem, supporting services supports ecosystem functioning, and cultural services often provide non-material benefits.

Related: Strategic Environmental Assessment (SEA),  Environmental SustainabilitySustainable Development Goals United Nations

Ecosystem Valuation

Historical Developments and Context

The Convention on Biological Diversity

CBD was the first-ever initiative taken at the global level to conserve the biodiversity and emphasized on taking actions against the loss of Biodiversity. The Convention on Biological Diversity (CBD) has been signed in 1992 at the Earth Summit, Rio de Janeiro, and came into force in December 1993. The CBD has 3 main goals and it is an international legally-binding: conservation of biodiversity; sustainable use of biodiversity; fair and equitable sharing of the benefits arising from the use of genetic resources. To encourage actions, which will lead to a sustainable future is its major objective. CBD mission states:

take effective and urgent action to halt the loss of biodiversity in order to ensure that by 2020 ecosystems are resilient and continue to provide essential services, thereby securing the planet’s variety of life, and contributing to human well-being, and poverty eradication. To ensure this, pressures on biodiversity are reduced, ecosystems are restored, biological resources are sustainably used and benefits arising out of utilization of genetic resources are shared in a fair and equitable manner; adequate financial resources are provided, capacities are enhanced, biodiversity issues and values mainstreamed, appropriate policies are effectively implemented, and decision-making is based on sound science and the precautionary approach.

Under CBD, several Strategic Goals were framed and Aichi Biodiversity targets were set to meet at the end of 2020 for the countries who are part of its treaty. Till now, there are 193 member countries which are part of CBD.  

The Economics of Ecosystem and Biodiversity (TEEB)

TEEB’s major vision is “making nature’s values visible”. It is proposed “to initiate the process of analyzing the global economic benefit of biological diversity, the costs of the loss of biodiversity and the failure to take protective measures versus the costs of effective conservation”. Its principal objective is “to mainstream the values of biodiversity and ecosystem services into decision-making at all levels”.

It states that a structured approach has to be followed for the valuation which will help decision-makers recognize the benefits provided by ecosystems and by demonstrating their values in economic terms and, where appropriate, suggest how to capture those values in decision-making.

It has three core principles:

  1. Recognizing value
  2. Demonstrating value
  3. Capturing value

TEEB has proved to make a significant change with these core principles. After TEEB at the Global level, in 2012 TEEB India has initiated while focusing on Forest Ecosystem, Inland Wetlands, and Coastal and marine ecosystems.

Related: Importance of Environmental Impact Assessment (EIA)

Millennium Ecosystem Assessment (MEA), 2001

The Millennium Ecosystem Assessment was a major review of the effects of human activity has on the environment. The MEA has found that over the last 50 years, human beings have altered the ecosystems more extensively and rapidly. This is done mainly to meet growing demands of basic necessities such as food, fresh water, timber, fiber etc. The degradation of ecosystems and its services have increased by the first half of this century due to significant rise in urbanization and how land is getting utilized. Despite their greater significance, the ecosystem services, have been underappreciated, as they are harder to quantify. MEA inspected 24 ecosystem services, out of 24 ecosystem services the MEA found 15 of them are being degraded or used unsustainably. It has brought up evidence of economic benefits of sustainably managed ecosystems is much more than converted ecosystems.

MEA aims “to promote a better understanding of the true economic value of ecosystem services and to offer economic tools that take proper account of this value”. The Millennium Ecosystem Assessment defined four categories of ecosystem services. They are:

  • Provisioning services – for example, wild foods, crops, freshwater, and plant-derived medicines;
  • Regulating services – for example, filtration of pollutants by wetlands, climate regulation through carbon storage and water cycling, pollination and protection from disasters;
  • Cultural services– for example, recreation, spiritual and aesthetic values, education;
  • Supporting services – for example, soil formation, photosynthesis and nutrient cycling. 

Natural Capital Accounting and Valuation of Ecosystem Services (NCAVES) project

The project is working in 5 countries Brazil, China, Mexico and South Africa including India and will end in 2020. The objective in the partner countries is to “mainstream natural capital accounting and valuation of ecosystem services in the data-driven decision and policymaking and is expected to influence policy-makers at the national, regional and local level”.  It emphasizes on measuring and mainstreaming the ecosystem services at the policy level and the implementation level so as to contribute to the development at the national level.

Project activities in India include the development of pilot ecosystem accounts. This includes experiments at different scales with different types of accounts. At the national level, several ecosystem services will be modeled in physical and monetary terms, including nature-based recreation and crops provisioning service. Also, the feasibility of compiling a biodiversity accounts will be examined.


With the passage of time, as the benefits of ecosystem services and resources are recognized to health and well-being of the society, the significance is given to Ecosystem Valuation. Though the concept is not new, numerous technical experts and Planners are not aware of the Ecosystem Valuation and the tools used to carry out the same. Developing Countries like India are still struggling in mainstreaming the value of its natural resources and ecosystem services, and not much work has been done on it. Hence, it comes as an emerging area for the scope of Environmental Planners, economists and other technical experts to explore the same.

Related: Various types of pollution, What is Environmental Planning?