Economic valuation of forest ecosystem services.
Forests can provide multiple benefi ts to society other than wood, with the whole
array of benefi ts depending on the characteristics of the forest and the prevailing
management strategies (Duncker et al. 2012 ). This understanding is a prominent
feature of the current literature and is usually associated with the concept of
multifunctional forests (e.g., Carvalho-Ribeiro et al. 2010 , Gustafsson et al. 2012 ).
One possible approach to capture the contribution of forest ecosystems to humans
is through an improved understanding of the linkage between the functioning of the
ecological system, which is perceived as a composite of processes and structures,
and the functioning of the socioeconomic system. The crucial role that natural
systems play in underpinning economic activity and human well-being is of growing
concern (Bateman et al. 2010 ). Thus, economic valuation of ecosystems and
their services has been receiving increasing attention in the literature.
Economic valuation is not the only approach to assigning a value to nature, nor
is it necessarily the best approach; for examples of other forms of valuation, see
Oksanen ( 1997 ), Martín López et al. ( 2012 ), and TEEB ( 2010 ). As Kareiva et al.
( 2011 ) pointed out, it is important to emphasize that an economic valuation does
not replace or ignore the intrinsic value of nature, nor does it reduce the moral
imperative to conserve nature. Following the logic of Martín-López et al. ( 2009 )
and Mace and Bateman ( 2011 ), we note the importance of combining economic
and other valuation approaches to provide a more holistic picture of the value of
forests. Nonetheless, in this chapter we will focus on the economic valuation
approach. The primary role of economic analysis is to assist decision-making
(Daily et al. 2000 , Pearce et al. 1989 , Tietenberg 1996 ). In the context of forest
management, the high rate of deforestation we are facing globally—13 × 10 6 ha per
year (FAO 2007 )—and the rise of international concern about the consequences of
deforestation together mean that economic valuation of forest ecosystem services
has an important role to play.
Before jumping into the principles and methodological details of economic
valuation, we will briefl y illustrate how economic valuation of a forest ecosystem
can restrain deforestation. As we noted earlier, forests provide many non-market
goods, such as watershed protection. Landowners seek profi t maximization, and in
the absence of other mechanisms, they rely on existing markets to pursue this goal.
Existing markets defi ne their costs and revenues. Hence, even though we know that
clearing the forest would increase problems such as downstream fl ooding and sedimentation,
these costs do not accrue to the landowner who will decide whether to
harvest the forest; thus, these costs are not factored into the landowner’s decision.
This is clearly a market failure from a larger perspective. Economic valuation can
mitigate this problem if the analysis allows for an extended accounting of benefi ts
and costs and, based on this more complete picture, fosters mechanisms such as
subsidies, taxes, direct payments, and payments for ecosystem services that can
prevent the market failure and reduce the likelihood of deforestation. For a concise
review of market-based mechanisms, see Pagiola et al. ( 2002 ). These mechanisms
aim to fully internalize the benefi ts and costs that do not accrue directly to landowners
but rather that affect other groups in society. In Sect. 4.1 , we further explain the
occurrence of externalities and market failure from a conceptual point of view.
At this point, and before we begin discussing the principles of economic valuation,
we want to emphasize that the value of forest ecosystem services refl ects
the different ways in which they satisfy human needs. This can be considered
from the perspective of the total economic value (TEV) taxonomy (Pearce 1993 ).
This taxonomy defi nes the different sources of values that people may attach to
the different services provided by a given ecosystem. Note that this taxonomy
relies on whether ecosystem services satisfy human needs directly or indirectly.
Economic value, then, is a measure of the degree of satisfaction provided by these
services. The TEV approach and terminology are not uniform across the literature,
but TEV generally includes the following value components: direct use,
indirect use, option, and non-use. The fi rst three categories are generally referred
to together as use values, and the non-use values often aggregate values such as
bequest and existence values.
Among the use values, direct use values include services that are used directly,
and include provisioning services (e.g., forest goods) and cultural services (e.g.,
recreation opportunities). Indirect use values include services that are indirectly
used, such as the benefi ts derived from regulating services (e.g., climate regulation).
Non-use values are divided into bequest and existence values, and are almost
entirely associated with cultural services. Bequest values represent the value that an
individual assigns to an ecosystem or species due to its relevance to the well-being
of future generations. Existence value, on the other hand, represents the value that
an individual assigns to an ecosystem or species due to its personal relevance at the
present time. In other words, it is the satisfaction this individual derives from knowing
that a certain species or ecosystem exists.
Option values include all values (both use and non-use) that are expected to be
enjoyed in the future (e.g., provision of genetic resources, maintenance of a gene
pool for bioprospecting, cultural heritage). Note that the option and bequest values
both refl ect the importance that people give to maintaining or restoring ecosystems
in order to ensure the delivery of ecosystem services in the future.
Marta-Pedroso, C., et al. (2014) Changes in the ecosystem services provided by forests and their economic valuation: a review. In: Azevedo, J.A., Perera A., Pinto, A. (Editors). Forest landscapes and global change: challenges for research and management. Springer, New York. ISBN 978-1-4939-0953-7.