Protecting Natural Capital through Ecosystem Service Districts

Abstract:     
In this article, we focus on the potential of governmental authorities dedicated to management of ecosystem services. We argue that the creation of such Ecosystem Service Districts (ESDs) will improve the efficient provision of services necessary for human welfare. At the moment, when agencies manage for natural resources, they typically do so in a defined geographical area or district. Given the prevalence and importance of districts for soil conservation, resource conservation, flood control, and other local services, we explain how ESDs could provide a coherent and efficient governmental institution for monitoring and investing in natural capital. A focus on ESDs would create a mechanism to help ensure that natural capital is protected and maintained with the same care and concern as that given to built and human capital.

Establishing and managing ESDs will involve an exploration of the underlying ecological processes that provide the services, of the economic significance of the services, and of the legal issues involved in managing natural ecosystems for the good of a local or regional community. Central in all these analyses will be land use decisions. Land use determines which of the initial ecosystems and services are maintained intact. In addition, many of the key trade-offs between the continued functioning of natural ecosystems and the extension of economic activities arise naturally in the context of land-use choices, such as farming versus forestation, development versus conservation, etc.

In examining the geographical, economic, and legal obstacles in designing ESDs, we suggest an integrative framework for managing the patterns of land use in a district that can provide several different ecosystem services, and that also has the potential to support many different types of economic activity, some of which can conflict with the continued integrity of the natural ecosystems. Part I of the article explains the why ecosystem services are under threat and the potential benefits of managing their conservation through ESDs. Part II lays out the basic ecological-economic framework and principles for district design. Part III sets out the key legal issues and Part IV presents a tentative roadmap of how to put theory into practice. The importance of ecosystem services is no longer disputed. How to realize more fully their value, and hence their conservation, however, remains an active research area. ESDs, though fraught with challenges, provide a potentially powerful institutional mechanism to address the relative neglect of ecosystem services in public policy by bringing their crucial importance into focus and aiding in their preservation.

Keywords: Ecosystem services, public goods, natural capital, environment, legal framework, environmental law

JEL Classifications: H50, Q01, Q20, R00

Working Paper Series