Fact Sheet Ecosystem Services by 08SJM9E


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                                                 Fact Sheet: Ecosystem Services

Ecosystem means a ‘dynamic complex of plant, animal and micro-organism communities and their non-living
environment interacting as a functional unit.’1 It is a complex relationship between living and non-living components,
sunlight, air, water, minerals and nutrients. The quantity, quality and diversity of species present rely heavily on the
services provided by the ecosystem in which they live, and vice versa. According to the Millennium Ecosystem
Assessment, which assessed ecosystem changes from 2001-2005, the term ecosystem services refer to the flow of
benefits that people or animals obtain from ecosystems, which include:

       -    Provisioning services (e.g. the provision of food, water and energy)
       -    Regulating services (e.g. Climate regulation, waste decomposition etc.)
       -    Cultural services: (e.g. Spiritual, recreational, and scientific discovery.)
       -    Supporting services: (e.g. soil formation, nutrient cycling, primary production)

How do we value an ecosystem?:

Calculations published in the journal Nature in the late 90s estimate the value of all the earth's ecosystem services to be
at least $33 trillion a year According to Costanza et al, this valuation is in stark contrast with the global economy worth
about $18 trillion per year during the same time frame. In this way, the global natural product is valued to be greater
than global national product. 2.

The Stern Review3 estimates that if we continue to lose biodiversity, the costs will be equivalent to losing at least 5% of
global GDP each year based solely on climate change. If a wider range of risks and impacts is taken into account, the
estimates of damage could rise up to 20% of Global GDP. However, risks need to be analysed and valued. Unfortunately,
we only tend to notice the loss of ecosystem services when it reaches some form of tipping point. For example,
fisheries have been over utilized for many years, although financially these changes can be hidden by rising marginal
cost as the resource diminishes and the ability to switch to other geographic areas or species. Understanding the
dangers of this diminishing biodiversity may not be apparent until the collapse of fish stocks worldwide.


Ecosystem service indicators help to track and communicate how the services provided by ecosystems help support our
social, economic, and physical wellbeing. Some services, by their very nature, are less tangible than others and these
indicators can help decision makers take actions that will maintain or enhance ecosystems rather than degrade them.
Indicators can provide a link between biodiversity, economic, and social indicators. Some examples of indicators
include: area covered by fish cage in hectares, number of exploited species, number of animal used for pharmaceutical
derivates by species, etc.

Examples of managing ecosystem services:

    Sukhdev, Pavan. The Economics of Ecosystems and Biodiversity Mainstreaming the Economics of Nature: A Synthesis of the Approach,
      Conclusions and Recommendations of TEEB. [S.l.]: TEEB, 2010. Print.
 Costanza, Robert, et al. "The value of the world's ecosystem services and natural capital." Nature 387 (1997): 253 - 260. Print.
 N. Stern, 2006, Review on the Economics of Climate Change, H.M. Treasury, UK, October, 2006.
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In China the Yangtze basin was severely deforested due to the high demand for furniture industry, leading to illegal
logging. This eventually led to the displacement of 223 million people, cost $30 billion dollars, forced a logging
moratorium, and required the implementation of a $12 billion reforestation program.4

The Economics of Ecosystems and Biodiversity (TEEB) is a study hosted by the United Nations Environment Program that
works to identify the economic benefits and incentives to conserving biodiversity by bringing together experts from the
fields of science, policy, and economics to place value on ecosystem services. The first TEEB report was published in
2008 and includes a variety of examples from a global perspective of the costs associated with degrading ecosystems.
One particularly poignant example is from valuation of ecosystem benefits of a protected forest in Madagascar. The
specific services valued included medicines, erosion control, carbon storage, recreation, and forest products which were
valued at over 115 million USD.

In addition to valuations, some countries attempt to manage ecosystem services through Payments for Ecosystem
Services, or PES. These payments are incentives given, often to farmers or landowners, by the government in order to
promote conservation of natural resources. With these payments, citizens can manage their land to provide ecological
services. In Mexico, for example, the government supports one of the largest national payments for ecosystem services
programs in the world that began in 2003. Payments are made to local communities and landowners for hydrological
services, biodiversity, and agroforestry. The hydrological component of the program is supported through a fee charged
to large non-agricultural water users to pay forest owners to protect the natural forests. In 2008, the programme paid
close to $8.4 million to landowners, individuals, and communities, protecting around 324,000 ha of land5.


While putting specific monetary value on ecosystem services may appear superficial, it is essential to emphasize the
benefits and value of biodiversity and the environment. We must take into account ecosystem services that appear
invisibles such as shelter, pollination, purification of air and water, detoxification and decomposition of wastes, etc.
Applying monetary value to ecosystems is not the only way to approach understanding the importance of ecosystems,
but simply another tool to help support conservation of natural environments. We must remember that while valuation
of nature is useful, it is difficult and any value placed will most likely underestimate the true value. Additionally, there
are aspects of ecosystems that cannot be placed in monetary terms. It is important that we do not neglect this aspect
while focusing on monetary valuation. The TEEB report is very helpful in that it tries to translate ecosystems and
ecosystem services into something that can be understood by the general public, without focusing too heavily on the
complex interrelationships between different products that the ecosystem provides.

         In many cases, a small number of ecosystem services will provide the greatest economic value to the system as a
whole. While it is useful to go through and exhaustively classify the value of all services to ensure that they are not
overlooked, it is more cost effective to focus the majority of the effort on those services that provide the majority of the
value. Many times these services are overlooked, including pollinators (less charismatic species) and soil formation (not
easily visualized). Ecosystem services and valuing these services are useful tools for communicating the importance of
conservation to the general public. While complicated, these service valuations allow natural resource professionals to
communicate easily with both the general public and other professionals about the importance of safeguarding
biodiversity and thus the health of humans and animals worldwide.

For More Information:

  B. Amory. Lovins, L. Hunter Lovins, and Paul Hawken, A road map for natural capitalism, in “Harvard Business Review”, May-June
     1999, pp: 146-158
  GLOBE International, Natural Capital, the new political imperative, London, 2010
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-   The Economics of Ecosystems and Biodiversity (TEEB Reports):
-   Millenium Assessment Reports: http://www.millenniumassessment.org/en/index.aspx
-   Convention on Biological Diversity Ecosystem Services Indicators Report: http://www.medwetlands-

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