16
Measuring Ecosystem Values
Kimberly Rollins
16.1 Introduction
Campbell (Chapter 28) provides an overview of
models that characterize societal and ecosystem interactions and dynamics. He emphasizes the advantages of using a variety of different models to
characterize these interactions in order to gain a
better understanding of their nature. In his overview, he provides a brief introduction to economic
models. This chapter describes an economic approach to defining and quantifying ecosystem values. An important reason for quantification of
ecosystem values is to provide input to social
decision-making processes intended to address
some of the negative and unintended side effects
that have developed between the economy and the
ecosystem. The measurement of ecosystem values
is not an end in itself, but rather a means in a
process to develop policies that would benefit both
society and the environment. This larger context
for valuation complements Campbell's focus on interactions that affect dynamic processes.
Chappelle (Chapter 21) provides a description of
economic impact analysis. Economic impact analysis is useful in public policy situations when specific geographic regions are targeted for economic
development attention due to poor employment
conditions, sluggish economic growth, and other
indications of underdevelopment relative to the rest
of the economy. Natural resource development issues are often closely tied to local community development and economic stability. However, economic impact analysis is not intended to measure
the value of the ecosystem itself to society, and its
use for this purpose can have serious and potentially irreversible consequences.
It is sometimes mistakenly believed that the results of an economic impact analysis of a change
in ecosystem use are equivalent to the value of the
change in use. Strictly speaking, impact assessment
quantifies the changes in indicators of economic
activity within the boundaries of a well-defined region, as a result of a specific change in economic
activity in one sector. The economic impacts from
a given change in a specific resource sector are related to the complexity of the local economy, the
linkages within the economy, the dependence of the
economy on the resource sector, and other elements
that are dependent on the structure of the local
economy. While the resulting indicators may be
measurable in dollar units, they are not equivalent
to measures of the economic value of ecosystem
services to society. Rollins and Wistowsky (1997)
give an example of how using impact analysis estimates as a proxy for economic value could seriously underestimate the value of a wilderness area
and bias policy decisions in favor of development
rather than preservation.
The problem is that economic impact analysis
measures expenditures associated with an economic activity, rather than the value of the good or
service that is supplied. In reality, many ecosystems provide great economic value to society without requiring expenditures in a marketplace. In its
focus on expenditures, impact analysis measures
the costs associated with use of environmental resources. Using expenditures as a proxy for ecosystem benefits is not justifiable in economic terms
and, in practice, can lead to a bias in favor of extractive high-cost uses of an ecosystem over lowimpact ecosystem benefits. The key to a correct approach is to measure the benefits generated by
ecosystems, not the cost of maintaining and using
ecosystems.
Numerous published works define economic
value in the context of ecosystem values (Randall
and Stoll, 1983; Randall and Peterson, 1984; Cummings et aI., 1986; Randall, 1987; Mitchell and
221
Measuring Ecosystem Values
Kimberly Rollins
16.1 Introduction
Campbell (Chapter 28) provides an overview of
models that characterize societal and ecosystem interactions and dynamics. He emphasizes the advantages of using a variety of different models to
characterize these interactions in order to gain a
better understanding of their nature. In his overview, he provides a brief introduction to economic
models. This chapter describes an economic approach to defining and quantifying ecosystem values. An important reason for quantification of
ecosystem values is to provide input to social
decision-making processes intended to address
some of the negative and unintended side effects
that have developed between the economy and the
ecosystem. The measurement of ecosystem values
is not an end in itself, but rather a means in a
process to develop policies that would benefit both
society and the environment. This larger context
for valuation complements Campbell's focus on interactions that affect dynamic processes.
Chappelle (Chapter 21) provides a description of
economic impact analysis. Economic impact analysis is useful in public policy situations when specific geographic regions are targeted for economic
development attention due to poor employment
conditions, sluggish economic growth, and other
indications of underdevelopment relative to the rest
of the economy. Natural resource development issues are often closely tied to local community development and economic stability. However, economic impact analysis is not intended to measure
the value of the ecosystem itself to society, and its
use for this purpose can have serious and potentially irreversible consequences.
It is sometimes mistakenly believed that the results of an economic impact analysis of a change
in ecosystem use are equivalent to the value of the
change in use. Strictly speaking, impact assessment
quantifies the changes in indicators of economic
activity within the boundaries of a well-defined region, as a result of a specific change in economic
activity in one sector. The economic impacts from
a given change in a specific resource sector are related to the complexity of the local economy, the
linkages within the economy, the dependence of the
economy on the resource sector, and other elements
that are dependent on the structure of the local
economy. While the resulting indicators may be
measurable in dollar units, they are not equivalent
to measures of the economic value of ecosystem
services to society. Rollins and Wistowsky (1997)
give an example of how using impact analysis estimates as a proxy for economic value could seriously underestimate the value of a wilderness area
and bias policy decisions in favor of development
rather than preservation.
The problem is that economic impact analysis
measures expenditures associated with an economic activity, rather than the value of the good or
service that is supplied. In reality, many ecosystems provide great economic value to society without requiring expenditures in a marketplace. In its
focus on expenditures, impact analysis measures
the costs associated with use of environmental resources. Using expenditures as a proxy for ecosystem benefits is not justifiable in economic terms
and, in practice, can lead to a bias in favor of extractive high-cost uses of an ecosystem over lowimpact ecosystem benefits. The key to a correct approach is to measure the benefits generated by
ecosystems, not the cost of maintaining and using
ecosystems.
Numerous published works define economic
value in the context of ecosystem values (Randall
and Stoll, 1983; Randall and Peterson, 1984; Cummings et aI., 1986; Randall, 1987; Mitchell and
221