The Economics of Rural and Agricultural Ecosystem Services: Purism versus Practicality

Ecosystem goods and services (we henceforth refer to these solely as "services"] have been defined in general terms as the outputs of natural systems that benefit society (Daily 1997, Millennium Ecosystem Assessment 2005) or, more precisely, as tithe flows from an ecosystem that are of relatively immediate benefit to humans and occur naturally" (Brown et al. 2007, p. 334).Economists have long recognized the capacity of natural systems to provide market and nonmarket benefits.Models to quantify these benefits have existed for decades (Krutilla 1967).The more recent concept of ecosystem services provides an alternative framework through which these values may be conceptualized and communicated.Among the factors that distinguish an ecosystem service framework from traditional economic analysis, at least in principle, is a more fundamental multidisciplinary focus, including an emphasis on both ecological production and economic value (Johnston et al. forthcoming, Wainger and Mazzotta 2011).The ecosystem service perspective also seeks to distinguish benefits provided by natural ecosystems from those provided by human capital, labor, and technology, thereby providing a more direct perspective on the benefits provided by natural systems (Bateman et al. 2011, Brown et al. 2007, Johnston and Russell 2011).One advantage of the ecosystem service framework is its resonance with noneconomists, including ecologists and others who study the biophysical processes through which ecosystems produce outcomes that are valued by society (Brown et al. 2007, Carpenter et al. 2009, Daily 1997).The framework provides a means by which to link changes in ecosystem processes and outputs to effects on social welfare, thereby facilitating cost-benefit analysis of policies and projects affecting natural systems (Wainger and Mazzotta 2011).