Ecosystem Services beyond Valuation, Regulation, and Philanthropy: Integrating Consumer Values into the Economy

Stephen K. Swallow, University of Rhode Island
Elizabeth C. Smith
Emi Uchida, University of Rhode Island
Christopher M. Anderson

Originally published in Choices, a publication of the American Agricultural Economics Association.

Abstract

Ecosystem services have been identified as a central link between society, or human systems, and the structure and function of natural systems (e.g., U.S. LTER 2007, MEA 2005). A fundamental economic problem is that while almost everyone—environmental groups, policy makers, and broad segments of the general public—seems to believe ecosystem services are valuable, the available public policy tools and approaches for private action fall short, and often omit, a direct link to the real values of the people. If ecosystem services are of economic value, then a fundamental challenge concerns how to identify the link between ecosystem services and the quality of life of individual households, and how to use that link to integrate ecosystem service values into the decisions of businesses and individuals in society. Given current markets and policies decision–makers are unable to recognize the full value of services ecosystems provide. What can be done to integrate ecosystem service values into the economy? After reviewing a fundamental cause for why markets often overlook ecosystem services, and after considering some limitations of the often effective approaches of philanthropy and government, we consider the potential to leverage experimental economics to create and test approaches to integrate values at the individual level into markets addressing ecosystem services.