Technical report 125

Natural capital and ecosystem services

Human wellbeing and economic prosperity depend on the sustainable use of ecosystems. The biophysical components of ecosystems – land, water, air, minerals, species, genes – provide the stocks of natural capital from which flow benefits (i.e. ecosystem services), such as clean air and water, food and fibre, disease suppression and climate regulation. Natural capital may be renewable (e.g. ecosystems) or non-renewable (e.g. mineral deposits) and renewable natural capital may be depletable (e.g. fish stocks) or non-depletable (e.g. wind) (Maes et al, 2013). Each natural capital asset may provide one or more ecosystem service, which may be combined with other capital inputs (e.g. built, human, social) to produce goods that people use. Many of these ecosystem services are used almost as if their supply is unlimited. They are treated as ‘free’ commodities, their economic value is not properly accounted for and therefore they continue to be overly depleted or polluted, threatening our long-term sustainability and resilience to environmental shocks.

There is no single agreed definition of ecosystems services (Nahlik et al, 2012). Some authors consider services to be the outputs of ecosystems that are used to derive benefits, whereas others consider services to be the same as well-being benefits. In this document we adopt the TEEB (2010a) definition, which is used by the EU: ecosystem services are the direct and indirect contributions of ecosystems to human well-being. The TEEB definition, which is illustrated in Figure 1.1, places ecosystem services between the natural and human systems and identifies benefits for people flowing from services delivered by ecosystems. In addition, this definition separates benefits and values and clearly shows that ecosystem services are derived from interactions between biotic and abiotic components of ecosystems.

Figure 1.1: The TEEB overview diagram from Braat and de Groot (2012)

figure 1.1

A single human well-being benefit may depend on several ecosystem services. The production of wild berries, for example, depends on pollination, pest and disease regulation, climate regulation, nutrient cycling and primary production, amongst others. However, several of these services also contribute to other benefits so in order to avoid multiple accounting when valuing services, a distinction has been made between final services (those that are used directly and therefore valued) and intermediate services that contribute to the final service (Boyd and Banzhaf, 2007). Whereas direct quantification of final services may be sufficient for accounting purposes, if ecosystems are to be managed for service delivery, it is important to know what changes in biophysical structure and processes are resulting in changes in intermediate and final services. The translation from ecosystem structure and function to ecosystem services is referred to as the ecological production function (Figure 1.2) (National Research Council, 2005; Tallis and Polasky, 2009).

Figure 1.2: Linkages between the components of ecosystem valuation: ecosystem structure and function, goods and services, human actions, and values (source: National Research Council, 2005)

figure 1.2

Wainger and Mazzotta (2011) present a modification of the National Research Council (2005) scheme illustrated in Figure 1.2 in which they highlight four key functions (i.e. empirical data or models) linking a change in human actions to resulting change in social welfare: impact functions, which connect human actions to increases or decreases in stressors; response functions, which demonstrate how changes in stressors result in ecological changes that underpin ecosystem service delivery; ecoservice production functions, which translate ecological changes into outcomes that people use or value (i.e. final services) and benefit functions, which demonstrate what people would be willing to pay (WTP) to achieve a gain or avoid a loss in an ecosystem service. The distinction between ecological production functions and ecoservice production functions is that, whereas ecological production functions define services in terms of biophysical measures only, ecoservice production functions also consider the potential for a service to be used at a specific location and time.

It is proposed that, in general, ERA should focus on ecological production functions rather than ecoservice production functions, the rationale being that whereas the former is based on ecological information and may be extrapolated between similar ecosystems, the latter requires ecological information to be evaluated within the context of location-specific social and economic factors and can only be applied to site-specific assessments. A modification of the Wainger and Mazzotta (2011) framework in which ecological production function replaces ecoservice production functions is presented in Figure 1.3.

Figure 1.3: Framework to assess the risk of chemical exposure resulting from change in human action on ecosystem services and societal benefits (adapted from Wainger and Mazzotta, 2011)

figure 1.3

Environmental risk assessment traditionally focusses on impact functions (i.e. environmental exposure assessment) and response functions (i.e. ecological effects assessment), although the endpoints measured are generally not selected to enable quantification of ecosystem service delivery. Adopting an ecosystem services approach means that ERA needs to be extended to include the link to ecosystem services. This may involve: (1) refining existing methodologies to provide information on more relevant endpoints; (2) developing new approaches for assessing the effects of chemicals on structure and functioning of ecological entities of interest; (3) enhancing and applying ecological understanding of causal relationships between biophysical structure, functioning and service provision; (4) developing models to translate outputs from ecotoxicological studies to estimates of ecosystem service delivery. However, in order to ensure that future developments are fit for purpose, it is essential that the focus of the ERA, i.e. the protection goal, is clearly defined within an ecosystem services framework.