Valuing Ecosystem Services as Productive Inputs

52 Pages Posted: 21 Dec 2006

See all articles by Edward B. Barbier

Edward B. Barbier

Colorado State University, Fort Collins - Department of Economics

Abstract

This paper explores two methods for valuing ecosystems by valuing the services that they yield to various categories of user and that are not directly valued in the market, and illustrates the usefulness of these methods with an application to the valuation of mangrove ecosystems in Thailand. The first method is known as the production function approach and relies on the fact that ecosystems may be inputs into the production of other goods or services that are themselves marketed, such as fisheries. I discuss issues that arise in measuring the input into fisheries, particularly those due to the fact that the fishery stock is changing over time, and the shadow value of the ecosystem consists in its contribution to the maintenance of the stock as well as its contribution to current output. The second method is known as the expected damage approach and is used to value the services of storm protection in terms of the reduction in expected future storm damage that the ecosystem can provide. These two methods are shown to yield very different valuations of ecosystems from those that would be derived by the methods typically used in cost-benefit analyses. I argue that they represent a significant improvement on current practice.

Suggested Citation

Barbier, Edward B., Valuing Ecosystem Services as Productive Inputs. Economic Policy, Vol. 22, No. 49, pp. 177-229, January 2007. Available at SSRN: https://ssrn.com/abstract=953126 or http://dx.doi.org/10.1111/j.1468-0327.2007.00174.x

Edward B. Barbier (Contact Author)

Colorado State University, Fort Collins - Department of Economics ( email )

Fort Collins, CO 80523-1771
United States

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