This article outlines an approach, based on ecosystem services, for assessing the trade-offs inherent in managing humans embedded in ecological systems. Evaluating these trade-offs requires an understanding of the biophysical magnitudes of the changes in ecosystem services that result from human actions, and of the impact of these changes on human welfare. We summarize the state of the art of ecosystem services-based management and the information needs for applying it. Three case studies of Long Term Ecological Research (LTER) sites-coastal, urban, and agriculturalillustrate the usefulness, information needs, quantification possibilities, and methods for this approach. One example of the application of this approach, with rigorously established service changes and valuations taken from the literature, is used to illustrate the potential for full economic valuation of several agricultural landscape management options, including managing for water quality, biodiversity, and crop productivity.

two referees, and participants at a number of seminars for helpful comments. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research, the Federal Reserve Bank of New York, or the Federal Reserve System. A data diskette is available upon request that contains both the raw and filtered data series that are used in our empirical work.

Most advanced economies have experienced a striking decline in the volatility of aggregate economic activity since the early 1980s. Volatility reductions are evident for output and employment at the aggregate level and across most industrial sectors and expenditure categories. Inflation and inflation volatility have also declined dramatically. Previous studies offer several potential explanations for this "Great Moderation." We review evidence on the Great Moderation in conjunction with evidence about volatility trends at the micro level. We combine the two types of evidence to develop a tentative story for important components of the aggregate volatility decline and its consequences. The key ingredients are declines in firm-level volatility and aggregate volatility -- most dramatically in the durable goods sector. Surprisingly, this has occurred without a decline in household consumption volatility and individual earnings uncertainty. Our explanation for the aggregate volatility decline stresses improved supply-chain management, particularly in the durable goods sector, and, less important, a shift in production and employment from goods to services. We provide evidence that better inventory control made a substantial contribution to declines in firm-level and aggregate volatility. Consistent with this view, if we look past the turbulent 1970s and early 1980s much of the moderation reflects a decline in high frequency (short-term) fluctuations. While these developments represent efficiency gains, they do not imply (nor is there evidence for) a reduction in economic uncertainty faced by individuals and households.

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