ABOUT Ecosystem Services Markets

Value for Nature provides consulting services in the development of markets for ecosystem services.

The services that ecosystems provide to humanity include, among others, carbon storage, biodiversity, scenic beauty and watershed-related services. They are provided by nature free of charge. But there is a cost to losing them; a spiritual and cultural cost, and in most cases also a hard economic cost.

If ecosystem services are not included in the economic assessment of land use this leads to an under-appreciation of the true value of nature and an over-appreciation of destructive activities, such as pollution; the conversion of natural ecosystems to pastures, agricultural land or building land, resulting in carbon emissions and loss of biodiversity; over-exploitation of resources that causes degradation and collapse of the ecosystem, leading to soil erosion and loss of water flow and water quality further downstream.

Value for Nature believes that an essential step towards solving the planet’s environmental crises is to bring ecosystems into the economy, by giving them a monetary value. One of the instruments to do this is to design markets that are driven by voluntary or mandatory limits on environmentally damaging activities. Where the level of activity exceeds the limit this then needs to be compensated, or offset, by the purchase of an equivalent amount of environmentally positive activity, such as nature conservation or restoration. The metric to express the equivalence between the environmental loss and the gain through the offset is a quantity of one or more ecosystem services.

Markets for ecosystem services are still developing or only in the conceptual stage. One of the most advanced is the forest carbon market, currently small and voluntary, but where the UN’s anticipated REDD+ mechanism is promising a huge step-change in scale, potentially achieving a significant reduction in deforestation rates in tropical countries.

Value for Nature’s main expertise currently lies in the forest carbon markets. Yet the need for similar markets is equally great for biodiversity and other services, and similar principles can be applied there. Value for Nature has participated in international efforts and thinking on developing such markets.