9 - Commodifying Ecosystem Services

Summary

To facilitate the conservation of natural environments, some economists have proposed to include environmental goods and services in financial accounting. It is argued by the advocates that putting environmental goals explicitly into the economic dimension can help decision-makers in designing and implementing interventions in environmental management. To this end, the concept of “natural capital” was created to explain the spatio-temporal interactions between man-made economies and natural ecosystems (Guerry et al. 2015; Polasky et al. 2015). It regards “natural capital” as the stock of natural ecosystems that may be somehow expressed in monetary terms. Natural capital provides various ecosystem services (ES) to human society. In agriculture and forestry, ES provided by soil and water are among the most conceivable in terms of economic consideration as land price is largely correlated to fertility and productivity (Robinson et al. 2014). It is, however, more complicated to link some ES to productivity in the short term, such as regulating services provided by carbon sequestration and biodiversity, although both have long-term effects on agriculture and the overall ecosystem.

Following this direction, a strategy that advocates incorporating ES with the contemporary market economy through monetizing “nature” with economic accounting practices has emerged as a means to address unsustainable land-based economies (Missemer 2018). This forms the basis for developing a conservation-oriented eco-economy. Commonly, the term “payment for ecosystem services” (PES) is used to describe such a strategy. More specifically for the case of Borneo, it proposes the creation of compensation schemes for landholders who choose conservation over intensive cash crop cultivation (especially palm oil) or logging. In a broad sense, the landholders will be paid a certain amount of money for some sort of ES provided by their land. Logically, the amount should be more or less equivalent to net benefits, in all aspects, received in other less sustainable land-use scenarios.

This requires linking natural capital to human benefits on a monetary basis. In any case, the precondition is a standard mechanism to quantify ES so that there are manageable attributes of natural capital stocks for interventions to take place (Maseyk et al. 2017). The next challenge is creating schemes to monetize the ES and platforms for the transaction (Gunton et al. 2017).