Economic Valuation of Watershed Ecosystem Services

a logging road constructed immediately adjacent to a stream (image credit: Andres Araujo, 2009)

Economic valuation is a tool used to estimate the utilitarian value of ecosystem services. Typically, ecosystem services are not traded in any formal markets and therefore lack an ascribed monetary value. For example, there is no market price attached to the services that make it possible for us to breathe clean air or drink clean water. As a result, land-use decision makers often overlook the contribution ecosystem services make to human wellbeing. Many favour transforming ecosystems to land-uses with a known value, such as forestry and agriculture, thereby putting ecosystem services at risk of degraded functionality. By assigning a monetary value to these services, economic valuation offers a means to compare the trade-offs among alternative land-uses and therefore enhances the ability of decision makers to properly formulate sustainable land-use management strategies. In British Columbia, a lack of understanding exists with respect to the trade-offs between timber harvesting and the loss of ecosystem services where these occur as externalities from the timber harvest. As a result, the full economic potential of multiple-use watersheds frequently remains unrealized. Ashley Page, a REM graduate student from the Water Research Group and the Environment and Development Research Group is working under the supervision of Dr. Duncan Knowler to determine the economic value of the water supply service in a watershed where the tradeoffs between the supply of clean drinking water and timber harvesting must be considered. See also: Climate Change Impacts Research Consortium.