National Accounting and the Valuation of Ecosystem Assets and Their Services

Abstract

There has long been interest in integrating the value of environmental stocks and flows into standard measures of economic activity and wealth, in particular through the development of adjusted measures of GDP and extended measures of national wealth. This paper examines how the valuation of ecosystem services and ecosystem assets can be undertaken in an integrated national accounting setting. We clarify the relevant valuation principles, most significantly the need to apply the concept of exchange values, and explain why the integration of ecosystem services necessitates an extension of the standard production boundary used in economic measurement. The main implications of an accounting approach are discussed including the need to distinguish benefits from services, the need for valuation methods that exclude consumer surplus, and the importance of aligning measures of income and degradation. Remaining challenges include the treatment of low or negative rents, accounting for ecosystem disservices, and the derivation of values for ecosystem assets. Meeting these challenges and advancing work in this area should be the joint focus of economists, ecologists and accountants.

Valuing a Statistical Life Year in Relation to Clean Air

“…It is potentially aligned with a natural capital accounting approach to valuation (Obst et al, 2016), see the 'Discussion' section. It also has the potential advantage that both high and low outliers do not significantly affect VOLY, and that there is no need for arbitrary selection of outliers on either the lower or the higher boundary of the range of WTP estimates.…”

“…These studies shown a very wide range for VOLY, varying from several thousand euros to well over 100,000 EUR (see, for example, Chilton et al, 2004;Desaigues et al, 2011;Chanel and Luchini, 2014). In addition, there is increasing interest in natural capital accounting, which requires a different approach to monetary valuation compared to CBA (Obst et al, 2016). In natural capital accounting, valuation methods for environmental assets such as clean air are still under development (UN et al, 2014;Obst et al, 2016).…”

“…In addition, there is increasing interest in natural capital accounting, which requires a different approach to monetary valuation compared to CBA (Obst et al, 2016). In natural capital accounting, valuation methods for environmental assets such as clean air are still under development (UN et al, 2014;Obst et al, 2016).…”

The Role of Economics in Ecosystem Based Management: The Case of the EU Marine Strategy Framework Directive; First Lessons Learnt and Way Forward.

“…The second report further notes that the use of economic valuation of ecosystem (Luisetti et al 2013, Costanza et al 2014. Obst et al (2015) argue that the issues related to the valuation of ecosystem services and their relationship with ecosystem assets for their consideration for national accounting purposes need to be better articulated because several conceptual and measurement challenges still have to be resolved.…”

“…For ecosystem services provision at the practical policy level, however, the decision on whether the 'next unit' is meaningful in terms of marginal analysis is conditioned by the scale (local, regional or global) of the policy decision (Fisher et al 2008) as the consequences of the 'marginal' change may acquire a completely different perspective and meaning at different scales. Furthermore, within the national green accounting context, Obst et al (2015) services for the integration of the ecosystems and their services within national accounts is complex and still under development. 4 The issues surrounding the use of environmental valuation have been discussed in detail elsewhere (e.g.…”