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A guiding framework for ecosystem services monetization in ecological-economic modeling

  • Mateo Cordier
  • José Pérez Agúndez
  • Walter Hecq
  • Bertrand Hamaide

Monetary valuation techniques are often used for evaluating the effect of a change in ecosystem services on components of human wellbeing, even though they face several problems such as poor scientific knowledge on ecological-economic interactions, difficulty for monetary valuation techniques to consider the effect of intermediate ecosystem services on final ones, cognitive limitations of individuals, right-based responses made by individuals instead of consequentialism-based ones,… Considering those limits, this paper proposes an alternative approach for reconciling monetary valuation techniques with methods that address ecosystem-economy interactions. To achieve this goal, we develop a guiding framework that limits the use of monetary valuation to real market simulations. Simulations of scenarios of environmental measures are carried out with a hybrid ecological-economic input-output model. The guiding framework ensures that monetary valuation techniques contribute to the understanding of the impact of economic activities on changes in ecosystems services and the feedback impact of these changes on economic activities. The framework operates according to a double dichotomy: intermediate/final ecosystem services and direct/indirect monetary valuation techniques. One advantage of our guiding framework is to consider the importance of intermediate ecosystem services even if they cannot be monetized. This seems very relevant since intermediate services condition the existence of all other ecosystem services that ensure benefits to human life and economic activities. Our guiding framework may give natural scientists a better understanding of how to take advantage of economics in analyzing the impacts of interactions between the economy and the ecosystem.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 13-018.

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Length: 23 p.
Date of creation: 22 Apr 2013
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Handle: RePEc:sol:wpaper:2013/143345
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