Creating physical environmental asset accounts from markets for ecosystem conservation

Recent developments in economics make it possible to design and create markets in sectors of the economy where they have previously been missing or inefficient. Although of interest from an economic efficiency perspective, market-based approaches to environmental management also reveal information and valuations that could have a role in environmental accounting. Using data from a pilot, involving the creation of a market (auction) for conservation contracts, we demonstrate a methodology to calculate the contribution of purchased ecosystem services to GDP, and create selected physical environmental asset accounts consistent with the System of Integrated Environmental and Economic Accounts. The paper also examines the role this information might play in developing monetary valuations for environmental assets.