The simple but not-too-simple valuation of ecosystem services: basic principles and an illustrative example

R. David Simpson

Journal of Environmental Economics and Policy, 2017, vol. 6, issue 1, 96-106

Abstract: Albert Einstein is reputed to have said ‘Everything should be made as simple as possible, but not simpler.’ This is good advice for valuing ecosystem services. The fundamental principle of economic valuation is simple, but powerful: value is determined on the margin. This means that context is crucial in estimating ecosystem service values and, therefore, ‘benefit transfer’ exercises that fail to account for location and relative abundance are, at best, meaningless, and at worst, counterproductive. I illustrate the principles of valuation with the example of water purification by riparian buffers. Values can differ greatly over even relatively small areas, and some ostensibly paradoxical results can arise.

Date: 2017
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DOI: 10.1080/21606544.2016.1184594

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