Photo by Linda HeronPhoto Credit

The Ecosystem Approach to Valuing Economic Resources

The physical environment has a profound effect on the way in which we live our daily lives. Environmental resources have huge value both in and of their own right, and because of the direct benefits that they provide humans. Often the need for economic development and the preservation of environmental quality appear to be in competition with each other, particular when ‘economic’ development is narrowly defined as ‘financial’ development. There is growing recognition in global governance that when the full value of the environment is considered, rather than just the part that can easily be measured in monetary terms, governments tend to approve different types of development projects. In 2001 the United Nations began a comprehensive assessment of the consequence of ecosystem change on human well-being. They concluded that governments should work to ensure that the negative trade-offs between economic development and environmental degradation were minimized and that governments actively seek synergies between environmental and economic outcomes.

One tangible way to implement these recommendations in policy making is by using an ecosystem services approach to environmental valuation. This allows you to explicitly recognize and value the broad range of benefits that we and future generations receive from the environment. Traditional assessments of environmental value are often restricted to a consideration of the ‘use value’ of an environmental asset – for example how much hydroelectric revenue could be generated by damming a river – whilst ignoring the broad range of benefits that would result from leaving the river undammed. These benefits include the opportunity to undertake alternative development projects in the future (‘option value’), and a wide range of ‘non-use values’ including the importance of bequeathing a good quality environment to future generations, explicitly recognizing the cultural importance of the natural environment, particularly in our Aboriginal communities, and also the important role played by healthy and resilient ecosystem in mediating severe weather events.

Source: An Introductory Guide to Valuing Ecosystem Services, Defra 2007.

Using this holistic approach the United Kingdom built a compelling case for environmental protection. The UK is introducing a network of Marine Conservation Zones around the UK coast and has estimated that this will result in annual benefits to the UK economy of between £750 million and £1.6 billion per year[1] (approximately $1.2-1.9 billion Canadian). UK industries, as well as scientists, environmentalists and local communities, were heavily involved in identifying which sites should be designated as Conservation Zones and much effort was expended on building a consensus in favor of protection. This was driven, in part, by permitting compatible use of Conservation Zones by industry – allowing them to continue their activities with the Zones as long as they did not cause damage to the ecosystem.

The Ontario Rivers Alliance supports responsible environmental management as part of a holistic approach to economic development. We encourage the provincial and federal governments to explicitly incorporate the valuation of ecosystem services into their policy development processes.

Kirsty Inglis, BSc, MA,
Environmental Economist,
Ontario Rivers Alliance

For more information on the UN’s Millennium Ecosystem Assessment.
For more information on the economics of environmental valuation see An Introductory Guide to Valuing Ecosystem Services, Defra, 2007.
For more information on the UK’s Marine Conservation Zones.