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This Week in the Global Environment
Apr 21 2014 10:05AM Posted by David Ludwig, Ph.D.

A foundational problem of sustainability is that money, which drives human activities, has no currency in the ecosystem. A flux of dollars, or more generally, capital, occurs with only the investment of physical matter and energy needed for an electronic transaction. But the capital shifted in that minimalist transaction can have enormous environmental effects. Open-pit mines, forest clear cuts, blue water fishing trawls, can be triggered by a few cents-worth of electronic information exchange. Such massive environmental alterations cascade impacts through the “non-market” goods and services provided by the biosphere. Ecologists and economists struggle for ways to quantify the monetary value of nonmarket goods and services. Lack of a common grammar is just one of the issues. We have trouble rectifying conceptual maps of ecologic vs. economic parameters without generating nonsense.

The tools economists bring to this intellectual party are arithmetically intricate and putatively quantitative [1]. Hedonic price models attempt to estimate downward pressure on residential property values. Contingent valuation surveys responses to suites of hypothetical choice alternatives. Travel cost methods compare willingness-to-pay for transit to substitute sites. None of the available economic tools convincingly capture the range of goods and services inherent to functional ecosystems. Ecologists invariably see a broad range of environmental parameters needing economic accounting, while economists of necessity collapse complexity into a few simplistic categories that allow pricing.

Under some circumstances, ecological processes directly affect goods or services of known economic value, allowing valuation of ecosystem components. We may have trouble identifying the ecosystem processes associated with such prices, and the outcomes are difficult to generalize. Nonetheless, more effort to exploit price effects of recognizable ecological functions might help us address general problems of ecosystem valuation. 

For example, among the services provided by healthy ecosystems is disease suppression. While disease is of course a fact of life, damaged ecosystems tend to propagate certain illnesses, via biochemical, physiological, or landscape impairments. An easy example to think of is schistosomiasis, which tends to proliferate in rivers whose ecology is impaired by poorly conceptualized dams.

Recently, a specific disease suppression function of North American ecosystems failed. Porcine epidemic diarrhea (PED), endemic in China, appeared a year or so ago in U.S. pig populations [2]. PED causes high mortality in piglets. Since its discovery in North America in May 2013, three to four million pigs have died of the disease [3]. 

It is not known how or why PED has proliferated in the U.S. For service valuation from a systems-analytic perspective, such epidemiologic details are irrelevant. The ecological processes of pig farming ceased suppressing PED in the spring of 2013. In the intensely managed, monitored, and regulated world of pig farming, it would seem that there is an opportunity to value the function of disease suppression by measuring the economic consequences of its failure.

If only things were so simple. The economic consequences of this single, narrowly confined ecosystem service can be estimated in various ways [2][3]. Prices of retail cuts of pork are up to 13% higher than a year ago. Pork production is likely to decline by 7%. By number, the U.S. pig population will shrink by about 3%. Labor has been affected. Processors have cut up to 20% of shift work. Research and investigation investments include an immediate commitment by the pork industry of $1.7 million. Public and private sector funds are being devoted to epidemiologic studies and the search for a vaccine. Regulatory and voluntary veterinary monitoring has increased. There are costs associated with euthanasia and disposal of infected piglets. 

The challenge to anyone attempting to value PED suppression services provided by the ecosystem is selecting from among the varied monetary impacts those that are environmentally meaningful. Clearly multiple parameters reflecting different, non-overlapping aspects of PED suppression services need to be accounted. Likely a complex function, with differential weighting of single monetized parameters, would be necessary for estimating total value of such services. 

I have never seen an attempt made to convert known monetary impacts of loss or failure of specific ecosystem services into a valuation of those services. There are conceptual challenges to doing so, and estimates are likely to be mechanistically intricate and highly uncertain. However, given the present state-of-the-science—that we know qualitatively that such services exist, but then have no means to estimate quantitative outcomes—valuation efforts are important. It is not enough for us to know the identity of impaired ecosystem services. We need to understand the economic consequences of impairment. This will allow us to allocate zero-sum environmental management resources of time, money, and expertise by design, rather than by default. Sustainability depends on wise investment. 


[1] a clear, readable introduction to the conceptual foundations of environmental economics is available at



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