Cost benefit analysis and the environment: How to best cover impacts on biodiversity and ecosystem services

There are now a large number of valuation studies on the benefits of biodiversity and on ecosystem services, the services provided by different ecosystems (ESS). Both ideas have been used to elicit values from nature but in recent years the research community has focussed on ESS as the main organising framework, with some additional use of the biodiversity concept to value entities that have intrinsic value and are of an extraordinary nature. Estimates are available for the services from most habitats, by type of ecosystem service, usually expressed in USD per hectare per year. Coverage varies by habitat and region, as does the quality of the assessment, but it is possible now to carry out an estimation of changes in values for a number of ecosystem services a result of the introduction of a new policy or of a physical investment that modifies the ecosystem. While this is a positive development, there remain some issues to be resolved. One is the possibility of double-counting of services when using the standard categories of provisioning, regulating/supporting and cultural ESS. Regulating and supporting services are the basis of the provisioning services and so value estimates for the two cannot always be added up. For example, air pollution absorption is often valued using the cost of alternative ways of reducing the pollutants from the atmosphere while recreation is often valued in terms of willingness-to-pay (WTP) through stated preference methods.