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Ecosystem Service Valuation for National Accounting: A Reply to Obst, Hein and Edens (2016)

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While recent experimental frameworks for national ecosystem service accounting have shown substantial progress, in our view some crucial methodological issues remain that deserve further consideration before setting final standards. In response to the landmark work of Obst et al. (Environ Resour Econ 64:1–23, 2016. doi:10.1007/s10640-015-9921-1), we provide arguments with regard to the suitability of particular valuation approaches. Generally, we agree that respective valuation methods need to produce values that are consistent with national accounting standards such as representing exchange values. However, we disagree with their conclusions regarding specific valuation techniques. Firstly, the circumstance that methods used for estimating shadow prices can also be used to derive consumer surplus does not justify the general exclusion of all shadow pricing methods for valuation of ecosystem services for national accounts, especially for public ecosystem services. Secondly, that preference-based methods can also be used to assess welfare changes does not imply that cost-based methods are generally better suited for ecosystem accounting. To the contrary, we see an essential need for preference information in accounting contexts. Thirdly, that accounting standards use a written-down replacement cost approach, does not mean ecosystem accounting requires to employ a replacement cost approach. To the contrary, we argue that assessing ecosystem degradation through restoration costs would be in line with writing down depreciation, but we also point to its limits.

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  1. A compatible market price proxy “is such that the revealed prices reflect the truthful responses of the market participants” (United Nations et al. 2014a, para. 5.44). Despite the focus on \({ revealed}\) prices in this sentence, we read this paragraph not against but in favor of SP methods since it is elsewhere stated that SP methods can be suitable (cf. United Nations et al. 2014b, para. 5.107).

  2. Note, however, that in a non-accounting world the economic replacement cost valuation technique for ecosystem services is based on the cost of replacing the services with a man-made alternative (and human inputs)—which implies substitutability and is a different concept than measuring the depreciation through changes in written-down replacement costs.

  3. See Defra and ONS (2014, p. 16) for a similar perspective.

  4. This is already reflected to some extent in the different framing for consumption of capital assets: man-made capital depreciates due to use (Vanoli 2005, p. 327), non-renewable natural capital depletes due to extraction (Edens 2012), and renewable natural capital only degrades when overused (MEA 2005).



Discrete choice experiment


Consumer surplus


Contingent valuation


Millennium ecosystem assessment


System of environmental economic accounting


SEEA 2012 experimental ecosystem accounting


System of national accounts


Stated preference


The economics of ecosystems and biodiversity


United Kingdom of Great Britain and Northern Ireland


United Nations


Willingness to pay


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We thank Jasper Meya and our colleagues at the Department of Economics at the UFZ - Helmholtz Centre for Environmental Research for helpful discussions. Furthermore, we are grateful for the comments of two anonymous referees which helped greatly to improve our manuscript. Any remaining errors remain our sole responsibility.

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Correspondence to Nils Droste.

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Droste, N., Bartkowski, B. Ecosystem Service Valuation for National Accounting: A Reply to Obst, Hein and Edens (2016). Environ Resource Econ 71, 205–215 (2018).

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