The Price of Everything and the Value of Nothing* – What are Ecosystem Services?

Photo credit: flickr/bobtravis

In October of 2015, President Obama issued a memorandum directing all Federal agencies to factor the value of ecosystem services into Federal planning and decision-making. That necessarily begs the question: what are ecosystem services, and how are they relevant to the economy in Maine?    

Ecosystem services are the ways in which natural systems provide benefits to human society.  The Millennium Ecosystem Assessment categorizes ecosystem services into four main classifications:  provisioning service; regulating services; cultural services; and supporting services.  Provisioning services is just what it sounds like – physical products provided by nature, such as water, food, and raw materials, among others.  Regulating services are “benefits obtained from the regulation of ecosystem processes,” such as carbon sequestration, water purification, and soil stabilization.  Cultural services are more difficult to measure, from an economist’s standpoint: if the lobster industry were to go into a tailspin, for example, the loss to Maine would be far greater than the lost revenue and income would suggest.  We would also lose part of our culture, history, and identity.   Finally, supporting services are those services that “support” the previous three – such as biodiversity, nutrient cycling, and photosynthesis.

By its nature (pun very much intended!), this is an anthropocentric concept.  Ecologists and others will no doubt argue that nature or natural systems have intrinsic value, even if humans are unaffected by a specific ecosystem’s existence.  I won’t argue with that.  Nonetheless, quantifying and even valuing ecosystem services may be a way of bringing the benefits provided by a well-functioning ecological system into economic decision making.  Otherwise, those services may well be disregarded.

Many ecosystems on which Maine businesses depend are at risk, either through mismanagement, human intervention, or changing weather patterns.  Ecosystem decline can pose a number of risks to businesses in Maine – as well as create new opportunities.

A simple example:  My hometown, Portland Maine, is now home to a burgeoning – and fantastic – micro-brew industry.  Micro-breweries (well, any brewery, of course) rely heavily on clean water, hops, barley and malt in their input process.  These are examples of provisioning services.  Going a little bit deeper, the process also depends upon the regulating services of soil stabilization, climate regulation, water filtration, and pollination. And that’s just in the process of brewing the beer itself.  There are also ecosystem services involved in the bottling / canning of the beer (think raw materials such as aluminum or silica), and in the distribution process. And this is only the input side of the equation.

Identifying the ecosystem services relevant to a particular industry can serve two purposes: to pinpoint areas of dependence upon natural systems in order to better predict trends that may affect that industry in the future (certain hops-growing areas may be impacted by changes in growing conditions, for example); and to highlight the value of functioning ecosystems as a part of an industry’s supply chain.  Once that value is recognized, the industry might see their own self-interest in managing those ecosystem services, so as to minimize their vulnerability.

So how do you assess your organization’s exposure to and dependence on ecosystem services?  There are basically five steps to an ecosystem services review, according to a report by the World Resources Institute, the World Business Council for Sustainable Development, and the Meridian Institute.  These steps are: selecting the scope, identifying the priority ecosystem services in your supply chain, identify risks and opportunities, and develop strategies for addressing them.  (These guidelines are for businesses, but they can be used to analyze exposure to and dependence on ecosystem services for government, municipalities, and non-profits as well.)

Well, that’s all very interesting, you might say, but how does it affect me, or businesses and organizations in Maine?  Here’s my thought: if the White House is directing all Federal agencies to incorporate ecosystem services into decision-making, how far behind can states (at least the more forward thinking ones) be? Massachusetts already has a Division of Ecological Restoration.  What about EPA regions? And once “ecosystem services” become a household name (OK, maybe a boardroom name), then the first movers, early adopters, and visionaries better be prepared.

What are your thoughts?  Post them here, email me at rachel@rbouvierconsulting.com, or visit my website at rbouvierconsulting.com.  You can also like my Facebook page, here, or connect with me on Linkedin, here.  Thanks!

*apologies to Oscar Wilde!