B i o d i v e r s i t y, e c o s y s t e m s e r v i c e s a n d h u m a n
w e l f a r e : a n e c o n o m i s t ’s r e s p o n s e t o t a c k l i n g
global biodiversity loss
Mike Christie
Th e c h a l l e n g e : g l o b a l b i o d i ve r s i t y l o s s
The world’s biological resources are currently being lost at
unprecedented rates. The Worldwide Fund for Nature’s
(WWF) recent ‘Living Planet Index’ suggests that global
biodiversity has declined by 27% since 1970 - most of which
has occurred in developing countries. In addition, the 2005
UN Millennium Ecosystem Assessment predicted that 60%
of the ecosystem services linked to biodiversity are being
used unsustainably or are being degraded. These figures
suggest that the world will fail to meet the targets to reduce
biodiversity loss set by the 2002 Convention on Biological
Diversity. Much of this loss in biodiversity will be the direct
consequence of human-induced pressures. The global
population is being estimated to increase from 6 billion to 9
billion by 2050. Over the same period, per capita growth of
GDP is predicted to increase between two- and four-fold.
Atmospheric global CO2 stocks are predicted to rise to
double the level of the pre-industrial era, with significant
implications for global biodiversity through alterations in
climate. In all cases, it is likely that these pressures will have a
disproportionately higher impact on those developing
countries which harbour the majority of the world’s
biodiversity and which have the least capacity to manage
the problem.
Figure 1.1: The links between ecosystem services and human welfare.
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The human impacts of biodiversity loss
Human welfare and livelihoods are inextricably linked to
b i o d i ve r s i t y a n d a s s o c i a te d e c o s y s te m s e r v i c e s,
a relationship that is now recognised within the UN
Convention on Biological Diversity. A number of frameworks
have recently been developed to categorise the ecosystem
services provided by biodiversity, the most widely recognised
being the UN Millennium Ecosystem Assessment
(http://www.millenniumassessment.org/) which sets out the
four main categories from which people benefit (Figure 1.1).
Methods to assess how people value
biodiversity
Biodiversity is clearly important to people’s well-being. In
economic terms, we can think of it as contributing to
different elements of ‘Total Economic Value’ (TEV), which
comprises both use and non-use (or passive) factors (Figure
1). Biodiversity may increase an individual’s welfare through
direct use of provisioning and cultural services (e.g., for food,
fuel or recreational use of natural areas) or indirectly through
its contribution towards the maintenance of regulating
Figure 1.2: The elements of Total Economic Value.
The‘provisioning’ecosystem services relate to products such
as food, fuel and materials for building that can be obtained
directly from biodiversity, while the ‘regulating’ services
provide benefits from the control of important ecosystem
processes such as climate regulation and water purification.
The ‘cultural’ services relate to those non-material benefits
which people obtain from ecosystems and landscapes
through spiritual enrichment, reflection, recreation and
aesthetic experience. ‘Cultural’services also include the value
that people place on the existence of plants and animals.
Finally,‘supporting’ecosystem services relate to those factors
which enable all of the other categories to take effect. They
differ from provisioning, regulating and cultural services in
that their impacts on people are often indirect or occur over
a very long time, whereas changes in the other categories
have relatively direct and short-term impacts. It is likely that
the predicted losses in the Earth’s biodiversity will have a
substantial detrimental effect on the provision of all of these
ecosystem service categories and thus on both human
welfare and livelihoods.
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services such as the water and carbon cycles. People may
also value the cultural services associated with biodiversity
through non-use benefits (e.g., the knowledge that
biodiversity is being protected for future generations to
enjoy).
Environmental economists have developed a range of
techniques to capture some or all of the economic elements
of TEV. For example, revealed preference techniques are
more suitable for capturing use values (e.g., the travel cost
method utilises information on the costs incurred in
travelling to a natural area to assess the recreational value of
that area), while stated preference techniques are more
suited to capture non-use values (e.g., contingent valuation
and choice modelling methods may be used to assess how
much people are willing to pay to protect an endangered
species or habitat). Price-based approaches may be used to
assess the market value of a provisioning service or to assess
the costs of environmental degradation of an important
habitat by assessing the monies involved in artificially
replacing the lost regulating services. Although
environmental valuation methods have been subject to
considerable debate and scrutiny concerning their validity,
they are now generally accepted within both the academic
and policy-making communities. However, biodiversity is a
complex concept and attempts to assess the value that the
public place on it have proved to be very challenging.
Why monetary valuation of biodiversity is
important to policy makers?
Many of the direct and passive values of biodiversity are left
unaccounted for in national financial statistics, leading to
regular undervaluation of ecosystem services and their
subsequent over-exploitation. This failure to value ecosystem
services effectively has been recognised in the World Bank’s
2006 report - Where is the Wealth of Nations? Assigning
monetary values to biodiversity is important since it allows
the associated benefits to be directly compared with the
economic value of alternative resource use options, thus
allowing more efficient resource allocation decisions to be
made. Furthermore, measurement of a diverse range of
biodiversity values can provide a platform for the design of
mechanisms to provide incentives for greater biodiversity
conservation, such as payments for ecological services.
Where does IBERS fit into this?
As an environmental economist within IBERS, I have spent
much of the last 12 years developing economic tools that
can capture, in monetary terms, the extent to which people
value changes in the provision of environmental goods and
services. Currently, I am working on two projects funded
under Defra’s research programme, ‘Secure a healthy natural
environment for today and the future’ .
In terms of the research approach, the first stage is to
establish the links between the various habitat and species
BAPs and their associated ecosystem services. This has been
achieved through an iterative process of consultation with
ecological experts. The second step will be to assess how
greatly people value these ecosystem services. This will be
enabled during a series of 45 ‘valuation workshops’
administered throughout the UK this summer. The
workshops will utilise the choice modelling method, which
requires respondents to consider a series of scenarios for the
future management of BAPs, and then asks them to make
trade-offs between the ecosystem services delivered
through these scenarios and some form of monetary
payment. These trade-offs can be used to establish people’s
willingness to pay for their biodiversity and environmental
benefits, thereby helping to derive a value for the range of
ecosystem services investigated. The results from this
research will be used to help inform government on the
future management of the UK BAP, as well as help to
establish the‘ecosystems approach’ as a tool for future policy
appraisals.
An evaluation of economic and non-economic
techniques for assessing the importance of
biodiversity to people in developing countries
The second Defra-funded research project aims to evaluate
the effectiveness of a range of valuation methods related to
biodiversity in developing countries.The background to this
research is that, although environmental valuation is well
established in developed countries, very little research has
Economic valuation of the UK Biodiversity
Action Plan
The first of the projects aims to estimate the value of changes
in biodiversity and associated ecosystem services which will
result from the delivery of the UK Biodiversity Action Plan
(BAP). Such an assessment clearly requires an
interdisciplinary approach that draws on the expertise of
both social scientists (particularly economists) and natural
scientists (ecologists). IBERS is uniquely placed for this type
of research as it can provide both sets of skills in-house.
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been undertaken in developing nations. The research
undertaken for this project is largely desk-based and will
involve:
a) a review of both the academic and grey literature to
assess the ability of a range of economic and noneconomic techniques to: i) reveal the complex
relationship between people and their natural
environment; ii) reveal meaningful preferences; and iii)
produce results that are meaningful to policy-making;
b) five case studies to illustrate the difficulties, issues and
solutions encountered as these techniques deliver
results. The case studies to be examined include: a
participatory rural development project in the Solomon
Islands; an economic valuation of the benefits of
protected area management to households in the
Volcanoes National Park, Rwanda; water management
services in Nepal; the Southern Africa Millennium
Ecosystem Assessment; and the ecosystem services
provided by the Central Hills region of the island of
Montserrat.
Our initial analysis suggests that simply applying the
economic valuation methods from developed countries will
be problematic in the context of a developing country. Key
challenges include low literacy levels, the high reliance on
subsistence economies, strong spiritual and cultural values
associated with biodiversity, and highly distorted markets.
As an alternative, we suggest that the application of
economic valuation in developing countries will require the
integration of elements from non-economic techniques,
such as the introduction of participatory and action research
approaches. Only then will communities become fully
involved in the valuation process and develop a greater
understanding of why biodiversity is important to them,
thus providing the motivation for managing their biological
resources more sustainably.
Concluding comments
With biodiversity coming under increasing pressure from
human activities, the continuation of the status quo, with
biodiversity and ecosystem services being continually
undervalued or treated as ‘free goods’, is an unsustainable
position in the long term. To counter this, some form of
valuation is required to capture the complexity of uses and
values that are associated with biodiversity and ecosystem
services, thus enabling ecosystem managers to understand
the dynamic nature of the relationship between people and
their environment. The research currently being undertaken
within IBERS will help to provide a greater understanding of
the human benefits associated with biodiversity and its
associated ecosystem services, both within the UK and
globally. In turn, this improved awareness of the structure of
human relationships with the environment will help to
develop better decision-support tools to aid the
conservation of this fragile and threatened resource.
Mike Christie
email: [email protected]
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