Ecosystem Services in a Simple Macroeconomic Framework

Björn Döhring, Loanna Grammatikopoulou, Alessandra La Notte, Beatrice Pataracchia, Domenico Pisani, Christophe Planas, Josselin Roman, Alessandro Rossi, Anna Thum-Thysen and Mayra Nucci Zurbaran

No 231, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: Economic activity is exerting increasing pressure on natural ecosystems while it depends at the same time on the provision of the services that these ecosystems provide. In this paper, we build on the conceptualisation of ecosystem services in the statistical framework developed by the United Nations, namely the System of Environmental-Economics Accounting - Ecosystem Accounting (SEEA EA). We use a simple aggregate production function augmented with the direct and indirect contribution of ecosystem services to illustrate the dependence of economic activity in EU Member States on forest ecosystem assets. Simulating the degradation of ecosystems 25 and 60 years ahead, we show that the negative impact on economic activity in the EU could be sizeable. This is particularly so when we assume that fixed capital and labour cannot easily substitute for the loss of forest assets. While our analysis is limited to one type of ecosystem and our quantification purely illustrative, our framework serves as a proof of concept for tools that could usefully inform macroeconomic policy decisions for the medium term.

JEL-codes: E23 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2025-11
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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:231

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