Evaluation methods of ecosystem services

Experts more and more often encounter the problem that the value of a
certain area, ecosystem or species has to be estimated. They have to decide
how to handle a certain area and what to do with plants and animals, for
example, whether a forest has to be left in its natural state or has to be
cultivated. In this case, the value of that forest has to be estimated. In the
academic literature, there are two approaches regarding the value estimation
of natural ecosystems, the anthropocentric and the biocentric one. According
to the first one, anything in nature can be as valuable as it benefits mankind.
However, according to the second approach, everything in nature has an inner
value, independently from its benefits for mankind [18]. Supporters of the
anthropocentric approach mean that since humans are the dominant species
on the Earth, they have the right to determine the value of anything [18].
According to the other approach, nature has direct (use) and indirect (nonuse)
values [19]. According to the Millennium Ecosystem Assessment, goods
provided by nature can be divided into four categories: provisioning services
(e.g., fishing, timber), regulating services (e.g., climate and flood regulation),
supporting services (e.g., pollination, pest control) and cultural services (e.g.,
tranquility, inspiration) [20]. Since the 1960s, more and more attention is
paid to ecosystem value assessment in the academic literature [21]. Since first
mentioning ecosystem services in 1983, the number of articles related to
these and that of their citations has been rising steeply [22]. Ecosystems
provide a wide range of goods and services to mankind, which are essential
for the well-being of people [23]. In order to protect ecosystems, politicians
should ensure that human activities are sustainable and resources are
distributed fair and efficiently [24]. Decisions of politicians and the public
opinion certainly strongly influence the value and usefulness of a certain
service, thus value assessment of the services is rather contradictory [25].
Some people think that it is not possible or does not make sense since
economists should not give a value to incomprehensible things such as
esthetics and long-term ecological benefits [26]. Thus, there can be
significant differences, contradictions between economical and ecological
assessments [27]. It is especially important in western countries to give a
value to natural ecosystems, where great importance is attached to high
productivity in economical decisions [28]. Furthermore, monetary expression
of ecosystem services does not necessarily mean that these can be considered
as market products or private properties [29]. For example, pollination and
water regulation cannot be in private property, everybody can benefit from
them; however, they cannot belong to anybody [30]. This should definitely be
included in political decisions, although translation of ecosystem services
assessment into suitable financial mechanisms is not completely solved yet
[31]. Since it is difficult to match them with economical processes or factory
goods, they have only little weight in political decisions [32]. However,
economical assessment of the services and their benefits is highly important
because of the control of the services [33]. Attitude toward the assessment of
services is best represented by the water-diamond paradox. Water is essential
for life, still little value is attached to it, diamond is not important to maintain
our quality of life at all; however, it has a great monetary value [34].

While mankind is receiving beneficial services from natural ecosystems, it is

changing those, thus it is extremely important to monitor changes in their
status continuously since their degradation influences the quality of life of
mankind as well [35]. Ecological processes are endangered by human
activities, destruction and transformation of habitats and pollution result in
the disappearance of natural ecosystems all over the world [36]. Despite
international, national and local environmental regulations, improvement of
agriculture, industry and residential areas leads to further degradation and
pollution of remnant intact natural vegetation [37]. In the future, these threats
will be even graver since energy and raw material demand of mankind is
continuously rising [38]. Nowadays, most people live torn away from nature
and often consider nature protection as a barrier of industrial development;
however, ecosystem services may change the point of view, and nature
protection can drive the development [39]. Assessment of ecosystem services
is also a tool for decision-makers, which helps to choose from alternative
management options in order to reach multiple goals [40]. It is a system that
links ecology to economy, which is why economical methods should be used
for assessment of components of ecological systems [41]. There are several
assessment methods which help to determine the monetary value of the
services, although missing data make the work more difficult [42].
2.1. Direct market valuation methods

2.1.1. Revealed preference methods

2.1.1.1. Market price method

In some cases, value of the services can be directly measured based on the
market price of goods, and these goods can be directly marketed. In these
cases, the value is determined by how much they are paid for during the
transaction. Thus, there is no need to use complicated methods. Such goods
are, for example, sawn timber, firewood, fish and other foods. The value of
the goods reflects the value of the ecosystem service. The advantage of this
method is that it is simple to use since it considers available price, quantity
and cost information, and simple assumptions are needed. However, it has the
disadvantage that several services cannot be directly marketed, and obtained
information may be false and distorted; thus, the value of the service is false
as well. Furthermore, it is not easy to use it in the case of large-scale changes
influencing the stock and the demand on the service [43].
2.1.1.2. Production function method

This approach is used if a certain good or service is partly created by human

work and partly by the contribution of an ecosystem. For example, several
agricultural plants depend on pollination by insects and the value of
pollination can be estimated based on the value and quality of the crops.
Thus, this method has been developed to estimate indirect use values. It has
the disadvantage that it is difficult to determine how tight the relationship is
between ecosystem service and human contribution. Thus, this method is not
often used. However, it is used to measure water quality and the change in
that for example, considering lower costs of water purification, improving
agricultural production data due to better pollination or improving soil
quality. Thus, the quality of a marketable good has improved due to an
ecosystem service. Another problem with this method can be that the
researcher has to consider both human and machine contribution, which can
lead to overestimation of the value of the ecosystem service. However, it has
the advantage that theoretically it is rather suitable for evaluating ecosystem
services since it is based on the assumption that the service and the economic
advantage are strongly interconnected [44].
2.1.1.3. Cost-based methods

This method measures the value of ecosystem services so that it estimates the
damage in case of loss of the service as well as it considers possible costs of
substituting the ecosystem service. It is used to measure water quality and
water purification costs, guard against soil erosion, storms and other natural
disasters and protect natural habitats. These are not marketable goods, and the
method reflects costs of creating the benefit and not the benefit itself. The
method has the advantage that it supports the way the economy thinks about
value and value creation. However, it has the disadvantage that in certain
cases, cost of repairing the damages does not reflect the advantages obtained
[45].
2.1.2. Random utility and travel cost methods

The travel cost method and the random utility method developed are based on
the empiric assumption that people surely know their preferences; however,
these are not always known for researchers. However, certain factors of
preferences can be obtained using statistical methods. This method is mainly
used to evaluate hobby fishing at lakes, rivers and seas. It measures the value
of nonmarketable ecosystem services based on the money and time spent in
order to get to the fishing or swimming sites. Time, money and the number of
visits express the value of a site, fish and swimming [37].
2.1.3. Hedonic pricing method

This method measures the indirect value of ecosystem services, which is not
marketable but can be estimated based on the observed value of a good. In
order to determine the value, two goods are necessary which are the same
from most points of view but differ by certain environmental conditions, for
example, traffic noise or distance from a park. Difference between monetary
values of the goods can be interpreted as the willingness to pay for an
ecosystem service. This method is often used to estimate the benefits or costs
the environmental quality has (air pollution, water pollution, noise). This
means that the environmental quality can also be estimated based on the price
of houses. If there are two houses which are similar almost in every respect,
however, air is more polluted in the surroundings of one of them, that one
may cost less. The analysis reveals if changes in the environmental
conditions affect the value of a market good [46].
2.2. Stated preference methods

2.2.1. Contingent valuation

This method measures the value of ecosystem services with surveys. Filled
and submitted surveys show how much people are willing to pay for certain
ecosystem services. In other words, it studies how people would behave in
certain situations. Since these services cannot be marketed, the questions in
the surveys ask what price respondents would pay in certain situations. The
survey may contain options such as a new tax, an entrance fee to a national
park, annual or monthly maintenance fee or a single charge. This method is
widely used to assess the value of public goods. However, respondents are
often not able to determine how much they would pay for a certain service.
Thus, it is rather difficult to assess what an ecosystem is worth. Several
respondents highly appreciate them but cannot attach monetary value to them
and the answers also depend on the income of the individuals [47].
2.2.2. Conjoint analysis

This is also a commonly used and favored method and is based on surveys.
The respondent has to answer questions regarding the characteristics of a
good or service. For example, he has to choose between two options which
describe possible characteristics of a park (distance from the house, size,
vegetation and accessibility). Statistical analysis shows the relative
importance of the different features for the respondents. It reveals the
distance people are willing to cover to get there. Answers can be compared
with answers given regarding other recreational opportunities [48].
2.3. Biodiversity as nonmonetary evaluation approach

Individual plants or animals, which constitute the biota together, can have
characteristics which directly satisfy any demand of mankind. At the same
time, biota and its role in supporting the biophysical cycles in the ecosystem
benefit mankind indirectly [49]. It is necessary to maintain or restore the
integrity of ecosystem services so that they persist and benefit mankind in the
future as well [50]. Changing biodiversity and its effect on the functioning of
the ecosystem have been a rather important field of ecological research in
recent decades [51]. Due to landscape transforming human activities, habitats
become fragmented, isolated, and dispersion ability of species may decrease.
Thus, relationship among populations and viability of species also decrease,
which may lead to extension [52]. If global average temperature increases by
2–3°C by the end of the century, 20–30% of all species will be endangered by
extinction [53]. Disappearance of certain species is able to change habitats
physically as well, and biogeochemical cycles as well as productivity,
structure and functioning of the ecosystems may also change [54]. Reduction
of the number of plant species results in decreasing primary production and
decomposition processes [55]. Even under stable conditions, a certain
minimal number of species is necessary in order to maintain the stability of
the ecosystem. Under changing conditions such as the present climate
change, an even larger number of species would be necessary so that the
community is able to react to changes resiliently [56].