Ecosystem Services

This is a collection of information on the concept of “ecosystem services” which is becoming a more common phrase, although many do not know the context of its development. Water is integral to ecosystem services. Bodies of water could be considered natural capital, as defined below. Take for example the 2014 report Nature’s Value in the Colorado River Basin.
This is a work in progress…

“Ecosystem services,” sometimes also phrased as “environmental services” or “nature’s services” is a more common concept than “natural capital,” even though the two terms are related. The recently released Natural Capital Protocol from the Natural Capital Coalition provides some definitions:

Natural capital

The stock of renewable and non-renewable natural resources (for example, plants, animals, air, water, soils, and minerals) that combine to yield a flow of benefits to people (adapted from Atkinson and Pearce 1995; Jansson et al. 1994).


A dynamic complex of plants, animals, and microorganisms, and their non-living environment, interacting as a functional unit. Examples include deserts, coral reefs, wetlands, and rainforests (MA 2005). Ecosystems are a component of natural capital.

Ecosystem services

The most widely used definition of ecosystem services is from the Millennium Ecosystem Assessment: “the benefits people obtain from ecosystems”. The MA further categorized ecosystem services into four categories: Provisioning, Regulating, Cultural, and Supporting (MA 2005).

Despite that fact that the Natural Capital Coalition may seem to have some reverence for nature and interest in stewardship of the commons, some of the major corporations involved or interested in water privatization (Suez, Thames Water, AECOM, Ch2M) and beverage/water bottling (Coca Cola, Nestle) are involved in the coalition.

In “Ecosystem Services Markets: One Neoliberal Response to Crisis,” (pdf) Larry Lohman explains,

Techniques used to establish the economic value of ecosystem services… aim not so much at providing new incentives for protection of the environment as at redefining that environment in a way that creates new assets and economic sectors. Like many other responses to business crisis, economic valuation of ecosystem services is, at bottom, a struggle to create and acquire property rights.

The “ecosystem services” concept has evolved within a process of the following: framing of the functions of ecosystems in terms of their use and benefit to humans; application of a monetary value; and then commodification, involving appropriation, exchange, and financialization.

This “appropriation of land and resources for environmental ends” has been called “green grabbing,” where “‘Appropriation’ implies the transfer of ownership, use rights and control over resources that were once publicly or privately owned – or not even the subject of ownership – from the poor (or everyone including the poor) into the hands of the powerful,” according to “Green Grabbing: a new appropriation of nature?”.

It is true that the original use of the term “ecosystem services” was meant to bring awareness to the value of the functions ecosystems have for providing humans with countless and free resources, many we don’t tend to think about such as flood control. It makes sense to get industry in particular to pay attention to the ways that they are destroying so much that really should be valued by people because they’re necessary for survival. Why not make businesses realize they’re necessary to keep the economy going as well?

Yet the process of putting a value on these services was not originally meant to turn into a financial project. Even Robert Costanza, who was involved in applying the first monetary value to ecosystem services argued that “… expressing values in monetary units DOES NOT imply that these values came from market (or even pseudo-market) exchanges. The whole point is that most ecosystem services are outside the market – and should remain there. They contribute to human well being just by existing and functioning, not necessarily by being exchanged in markets.”

That doesn’t change the fact that ecosystem services are being used for financial gain.

In Banking nature, Sian Sullivan discusses an article in the journal Nature which Costanza co-authored with several others in 1997 called “The value of the world’s ecosystem services and natural capital”. Sullivan points out that,

Costanza et al sought to draw attention to ways that exclusion of environmental factors as externalities in conventional economic analyses misrepresented the cost of environmental impacts of development activities. This has been rapidly transformed into an optimistic embrace of the financial returns that might accrue if this ‘value’ of environmental externalities could be priced and traded.

In “Payments for ecosystem services as commodity fetishism,” Kosoy, et al wrote,

First, [commodification] involves narrowing down an ecological function to the level of an ecosystem service, hence separating the latter from the whole ecosystem. Second, it assigns a single exchange-value to this service and, third, it links ‘providers’ and ‘consumers’ of these services in market or market-like exchanges.

Most people are at least vaguely familiar with offsets or credits, especially for the carbon market. There are also biodiversity credits, water offsets, etc.

In “Conservation and concealment in, USA: an analysis of neoliberal performance in the species offsetting industry“, J . Pawliczek and Sian Sullivan wrote:

Offset markets, whereby harm in one location is mitigated through trade in conservation credits awarded to a different location, have become popular and profitable choices in conservation, proposed for the entrepreneurial mitigation of environmental damage regionally, nationally and internationally (UNEP/IUCN [United Nations Environment Programme/International Union for Conservation of Nature] 2007; Carroll et al. 2008).

…despite rhetoric to the contrary, offsetting markets for conservation seem likely to tend towards net losses of habitat (Wilcove & Lee 2004; Fox & Nino-Murcia 2005), as quantified for wetland mitigation banking by Robertson and Hayden (2008). This arises because conservation banking is development dependent. That is, it occurs against the assumption that more development will occur which, under current regulatory contexts, will require purchase of conservation credits so as to offset impacts (Mead 2008). Indeed, development that produces transformation of habitats is required for conservation credits to attain the prices that will encourage establishment of conservation banks and bankers, thereby generating trade in conservation credits as a funding strategy for conservation management. (Citations here).

In most cases, the conservation is used to justify environmental damage elsewhere.

Lohman wrote, “As with all ecosystem services markets, the first step was to simplify and quantify the ecological functions in question, so that standardized increments of ‘environmental improvement’ could be traded for standardized bits of ‘environmental destruction.”

Payments for ecosystem services are supposedly meant to deter damage and incentivize care and stewardship over nature.

The Economics of Ecosystems and Biodversity’s (TEEB) explanation of payments for Ecosystem Services (PES):

Simply put, those who use ecosystem services pay those who provide them – and when providers are compensated, conservation becomes more attractive. PES can focus on a variety of services, from water flows to carbon sequestration and storage, biodiversity protection, landscape beauty, salinity control and soil erosion prevention. … Direct private payments are transactions that take place between private service providers and users. Typically, they involve firms, conservation NGOs or households that benefit directly from certain environmental services. Stakeholders are motivated to conserve for a diversity of reasons – from ‘pure profit’ (for example, a mineral water company that depends on water quality and availability) to conservation concern. Payments may also be made by stake-holders who want to manage risk (avoid running short of a resource they rely on) or to pre-empt anticipated regulations… At present, most PES schemes protect watershed services…

Sian Sullivan writes in Green capitalism, and the cultural poverty of constructing nature as service-provider is that,

The new global multi-billion dollar trade in carbon, in particular, is providing a market-based model, embraced by both business and major environmental organizations, for pricing and exchanging environmental products across the environmental spectrum under the rapidly proliferating arenas of PES and the proposed programme administered by the United Nations Environment Programme (UNEP) for Reducing Emissions from Deforestation and Degradation (REDD). A critical component of the logic underlying these approaches is an assumption that environments, emissions and effects in very different locations somehow are equivalent and therefore substitutable, such that they allow negative impacts in one location to be offset against environmental investments in another.

More from Sian Sullivan in “Banking Nature”:

“Of course, any ensuing payments for its services do not return to ‘nature’, but to those who are able to annex them. What becomes significant then are questions regarding what nature work is able to become ‘billable’ and of who, via enforceable property or ownership rights, can either capture payments for this billable work right away, or profit by speculations on its future value.”

To get a bit deeper into the political economy of “payments for ecosystem services” we can turn to Bram Büscher:

In other words, for conserved nature to truly function as capital, it has to go beyond environmental services. After all, the generally accepted definition of PES talks about a “well defined environmental service” that is sold by a particular provider to a buyer “if and only if the ES provider secures environmental service provision (conditionality)” (Wunder 2005:3)… In business terms, most environmental services markets lack sufficient “liquidity.” Liquidity is business lingo for a market with an ever-ready supply of sellers and buyers where assets can easily be bought or sold with little effect on price-levels. It means that commodities need to be fully “alienable” and/or fully transferable at minimum transaction cost. This presents fundamental problems for markets of “environmental services,” as their liquidity is usually circumscribed in space and time (see also Fletcher and Breitling 2012). Thus when the rather naive idea of PES has scarcely become popular in mainstream conservation, it is already being overshadowed by a host of much farther-reaching proposals to turn conserved nature into circulating capital. We are currently witnessing the creativity at work of those who push the frontiers of capitalist commodification ever further, as conservation derivatives, “sustainability enhanced investments,” wetland and mitigation banking, biodiversity offsets and other schemes are rapidly making headway in conservation and extra-conservation arenas.

The utility of each ecosystem service is not uniformly appreciated. For example, a conservation program to support ecosystem services may involve taking “conserved” a quantity of water that would’ve seeped into an aquifer (that would’ve continued to contribute to the ecosystem and beneficial functions for humans) and transferring it to a private conservation easement run by a big NGO so that they can sell water offsets to a corporation so that corporation can claim to be “green” meanwhile continuing to exploit water resources.

Further reading:


Millennium Ecosystem Assessment

Walter Reid, as vice president of the World Resources Institute from 1992-1998 (involved with Resources for the Future sometime before this), proposed the Millennium Ecosystem Assessment (MA or MEA) in 1998, and received grants from the Packard Foundation in 1999 and 2000, among much other funding. The popularity of “ecosystems services” is often attributed to the MA. It is considered a “critical landmark that firmly placed the ecosystem services concept in the policy agenda.”  In fact, current CEO of The Nature Conservancy, Mark Tercek, who had formerly worked for Goldman Sachs and has been on the board of the Business for Social Responsibility (BSR), wrote in Nature’s Fortune, that the Millennium Ecosystem Assessment, published in 2005, was highly influential in Goldman Sachs’ and others’ development of environmental policies and concept of ecosystem services. Goldman Sachs was the first major financial institution to officially adopt an environmental policy. “In 2005, after two decades as an investment banker, Mark was tapped to develop the firm’s environmental strategy and to lead its Environmental Markets Group” (Source).  And Reid became a key advisor for Goldman Sachs.

The MA, according to its website, provides “a state-of-the-art scientific appraisal of the condition and trends in the world’s ecosystems and the services they provide (such as clean water, food, forest products, flood control, and natural resources) and the options to restore, conserve or enhance the sustainable use of ecosystems…Major donors included: the Global Environment Facility (GEF), the UN Foundation, the David and Lucile Packard Foundation, and the World Bank…The World Resources Institute, in partnership with the Meridian Institute, supported the MA’s outreach and engagement activities, and coordinated the publications process.”

Reid became director of the Conservation and Science Program of the David & Lucile Packard Foundation in 2006. He was (or is?) also now on the Advisory Board of “The Economics of Ecosystems and Biodiversity” (TEEB), commissioned by G8+5 in 2007, run by environmental economist Pavan Sukhdev (board member of Conservation International). “Its principal objective is to mainstream the values of biodiversity and ecosystem services into decision-making at all levels. It aims to achieve this goal by following a structured approach to valuation that helps decision-makers recognize the wide range of benefits provided by ecosystems and biodiversity, demonstrate their values in economic terms and, where appropriate, capture those values in decision-making” (Source).  In 2014, the TEEB for Business Coalition would become Natural Capital Coalition. He’s also listed as an “other advisor” for the Natural Capital Project.

In Green capitalism, and the cultural poverty of constructing nature as service-provider, Sian Sullivan writes,

In this zeitgeist of crisis capitalism, the environmental crisis itself has become a major new frontier of value creation and capitalist accumulation…

Through combining the quantification skills of ecological science and economics, the MEA proposes that breaking nature down into these increasingly scarce services, quantifying their functionality, and assigning a price to them, will assist conservation by asserting their financial value; at the same time as fostering economic growth by creating new tradeable assets…

Increasingly, PES involves the creation of derived environmental ‘products’ that are agreed by sellers and buyers to represent some sort of measure of environmental health or degradation. An example might be the creation of schemes financed as commercial deals by private investors whereby new products representing a defined environmental good are sold both to fund conservation practice and to generate a return to investors…