Ecosystem Services Valuation

The Natural Capital Project (NCP) is a non-profit venture startedin 2006 between Stanford University, the University of Minnesota, The NatureConservancy and the World Wildlife Fund. Put in simple terms, NCP strives toquantify the values of “natural capital,” or ecosystem services provided free bynature. Such natural capital or ecosystem services include water purification,storm buffering, and regulating our climate through carbon sequestration. NCPtries to answer an extremely difficult question: “What is nature worth?”

The idea of natural capital is poorly understood, so thistrailblazing venture created tools with the intention to answer the questionabove by integrating the scientific and economic understanding of naturalassets. NCP also engages with leaders and experts from many different sectorsacross the globe. Named one of Forbes “Names You Need To Know” in 2011, NCPcreated a tool called Integrated Valuation of Environmental Services andTradeoffs, or InVEST. The goal of NCP is to present results to environmental decisionmakers regarding multiple land use planning and investment alternatives.Multiple use conflicts and competing interests can often delay or complicatemanagement decisions, so NCP presents the trade-offs for competing choices. Bypresenting different scenarios of land use or policy decisions, and therebydifferent results of gains or losses in ecosystem services, NCP hopes to fosterthe balance between economics and conservation.

InVEST is a set of openly available tools for use with theGeographic Information System software ArcGIS, and involves multiple modelsthat quantify, map and value ecosystem services. Such models include but arenot limited to: coastal vulnerability, marine habitat risk assessment, carbonstorage and sequestration, and crop pollination. Each of these models allow foran estimation of changes in services under different climate and managementscenarios, along with the capability to consider trade-offs among the differentscenarios. InVEST takes an ecological production function approach where keyinputs are connected to an estimation of the production of outputs. Forexample, inputs such as labor or habitat can be used to estimate the output offish yield, if focusing on food yield from fisheries.

The outputs are not only biophysical, but economic as well.An economic value derived from a particular model could be the net presentvalue of something like net revenue from fish sales or the property valuechange of coastal land around a fish processing plant. The model category ofrenewable energy is measured through power density or potential energy, theservice provided is captured power, and the value of that service is netpresent value of wave or wind energy. Note that “valuation” outputs not onlyprovide values in economic terms but in social terms as well, if applicable.