Potschin y Haines-Young (2011)

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Article

Progress in Physical Geography


35(5) 575–594
Ecosystem services: Exploring a ª The Author(s) 2011
Reprints and permission:
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geographical perspective DOI: 10.1177/0309133311423172
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Marion B. Potschin and Roy H. Haines-Young


University of Nottingham, UK

Abstract
The ‘ecosystem service’ debate has taken on many features of a classic Kuhnian paradigm. It challenges
conventional wisdoms about conservation and the value of nature, and is driven as much by political
agendas as scientific ones. In this paper we review some current and emerging issues arising in
relation to the analysis and assessment of ecosystem services, and in particular emphasize the need
for physical geographers to find new ways of characterizing the structure and dynamics of service
providing units. If robust and relevant valuations are to be made of the contribution that natural
capital makes to human well-being, then we need a deeper understanding of the way in which the driv-
ers of change impact on the marginal outputs of ecosystem services. A better understanding of the
trade-offs that need to be considered when dealing with multifunctional ecosystems is also required.
Future developments must include methods for describing and tracking the stocks and flows that char-
acterize natural capital. This will support valuation of the benefits estimation of the level of reinvest-
ment that society must make in this natural capital base if it is to be sustained. We argue that if the
ecosystem service concept is to be used seriously as a framework for policy and management then the
biophysical sciences generally, and physical geography in particular, must go beyond the uncritical ‘puz-
zle solving’ that characterizes recent work. A geographical perspective can provide important new,
critical insights into the place-based approaches to ecosystem assessment that are now emerging.

Keywords
ecosystem services, natural capital stocks, service providing units, social-ecological systems, valuation of
ecosystem services

I Introduction environmental debates is also driven by forces


outside the science community (Perrings et al.,
The idea that ecosystems provide services to
2011). Much of the current interest in ecosystem
people has taken on many of the features of a
services was stimulated by the Millennium
Kuhnian paradigm. It is both dominating current
Ecosystem Assessment (MA, 2005), an initia-
debates and is shaping research and application.
tive sponsored by the United Nations, and the
The anthropocentric, utilitarian perspective off-
recently completed study on the Economics of
ered by the paradigm also challenges conven-
tional wisdoms, including the belief that the
case for conservation is based on ethics rather
than economics (see, for example, Armsworth Corresponding author:
Marion B. Potschin, Centre for Environmental Management,
et al., 2007; Chan et al., 2007; McCauley, School of Geography, University of Nottingham, Nottingham
2006; Peterson et al., 2010; Salles, 2011). The NG7 2RD, UK
trajectory of research in ecosystem services in Email: [email protected]
576 Progress in Physical Geography 35(5)

Figure 1. Number of article and review publications dealing with ecosystem services by year up to 2010,
identified in the Scopus Database (as of 9 April 2011, 2011 data have not been included)

Ecosystems and Biodiversity (TEEB).1 The lat- that made reference to the term ecosystem ser-
ter examined the long-term costs of failing to vice(s) in the ‘title, abstract and keywords’ field.
address the problem of contemporary biodiver- Between 1966 and 2010, 5136 articles and
sity loss, and arose from a proposal by the Ger- reviews were recorded (out of 7681 documents
man Government to the environment ministers of all types) with more than 60% of them appear-
of the G8þ5 in Potsdam in March 2007. No ing since 2006.
doubt the newly established Intergovernmental Despite the emphasis that Geography has
Platform on Biodiversity and Ecosystem traditionally placed on understanding the rela-
(IPBES) lead by UNEP2 will encourage further tionships between people and the environment,
activity, given its aim of linking research and an analysis of the data shown in Figure 1 suggests
policy communities to ‘build capacity’ and that the contribution of the discipline to this
‘strengthen the use of science in policy making’. expanding field has been limited; only about
Finally, the paradigmatic character of ‘ecosys- 366 publications of all types contained variations
tem services’ is illustrated simply by the pros- ‘geography’ or ‘geographical’ in the affiliation
pect it offers for straightforward, uncritical field, and 436 with the same terms for ‘title,
‘puzzle solving’. Although some publications abstract and keywords’ criteria. The analysis is
have criticized the topic, many more have sought perhaps only indicative because it reflects the
to apply it. The expansion of interest in the topic terminology used by geographers and the fact
of ecosystem services and its growing domi- that geographers may be publishing under other
nance may be gauged by Figure 1, which plots affiliations. However, although some reference
the number of publications identified in Scopus3 to the topic has been made in this journal,4 it
Potschin and Haines-Young 577

seems that it has yet to achieve significant expli- II Conceptual challenges


cit and general interest among geographers; the 1 Connecting ecosystem function and
gap between the total number of publications and
those contributed by geographers appears to be
human well-being
widening. Progress, in understanding the rela- Whether we choose to think of the ecosystem ser-
tionships between people and the ecosystems, it vice concept as a new paradigm or not, the novel
seems, is largely driven by work in other disci- aspect of the idea is that it encourages people to
pline areas, particularly ecology, conservation re-examine the links between ecosystems and
and environmental economics (cf. Egoh et al., human well-being in a pragmatic way. Although
2007; Fisher et al., 2008; Seppelt et al., 2011). it is often conflated with the more broadly based
Moreover, while mapping studies are increas- ‘ecosystem approach’, the so-called ‘ecosystem
ingly frequent in the literature, the development services approach’ (cf. Turner and Daily, 2008)
of mapping methodologies and spatial analyses is put forward as a way of developing integrated
commonly appears to be undertaken by disci- solutions to the problem of understanding the
plines other than Geography; less than 20% of the nature and scale of ecosystem degradation. In
papers identified above included the key word both cases, their merit rests on making explicit
‘map’ or its variants in the title or abstract and the direct and indirect benefits that people de-
had authors with affiliations related to Geogra- rive from natural capital. The maintenance
phy. Do other disciplines now find a spatial view- and enhancement of ecosystem services is also
point more interesting than Geographers? seen as a fundamental part of any strategy for
In the light of the relatively weak interest in dealing with future environmental change.
ecosystem services apparently shown by Geogra- We have suggested (Haines-Young and
phers, the aim of this paper is to examine more Potschin, 2010a) that the idea of a ‘service cas-
closely the putative ecosystem service paradigm cade’ can be used to summarize much of the logic
and highlight the contribution that the discipline that underlies the contemporary ecosystem ser-
can make to this emerging field. We do this by vice paradigm and key elements of the debate
examining some of the most challenging concep- that has developed around it (Figure 2). The
tual issues. At a time when the ‘relevance’ of all model, which has also been adapted and dis-
subjects is often questioned, it is important to cussed by others (e.g. De Groot et al., 2010; Sal-
identify what is distinctive and important about les, 2011), attempts to capture the prevailing
the geographical perspective. We take this per- view that there is something of a ‘production
spective to be one which explores the spatial chain’ linking ecological and biophysical struc-
relationships between people and the envi- tures and processes on the one hand and elements
ronment and so puts ‘understandings of social of human well-being on the other, and that there
and physical processes within the context of is potentially a series of intermediate stages
places and regions’.5 As the ecosystem ser- between them. It also helps to frame a number
vice paradigm develops from the ‘revolution- of the important questions about the relationships
ary’ to more ‘normal’ phases, it is essential between people and nature, including: whether
that we maintain a critique of what it entails there are critical levels, or stocks, of natural cap-
and where significant problems remain; the ital needed to sustain the flow of ecosystem
assumptions underlying all paradigms must services; whether that capital can be restored
continually be challenged (Haines-Young and once damaged; what the limits to the supply of
Petch, 1986). Geography has much to offer, ecosystem services are in different situations;
we suggest, in terms of understanding issues and how we value the contributions that eco-
of space and place. system services make to human well-being. The
578 Progress in Physical Geography 35(5)

Figure 2. The ecosystem service cascade model initially proposed in Haines-Young and Potschin (2010a)
modified to separate benefits and values in De Groot et al. (2010)

judgement made about the seriousness of these intermediate and final products or services is
issues or pressures partly shapes the feedback fundamental according to Boyd and Banzhaf
implied in the diagram that goes through policy (2007) and Fisher et al. (2009), for example,
action. In this paper we will use the model as a because they suggest it helps avoid the problem
framework for understanding how concepts of ‘double counting’ when undertaking valuation.
and definitions are shifting. Valuation, they argue, should only be applied to
The version of the cascade shown in Figure 2 the thing directly consumed or used by a benefi-
reflects the refinements suggested in the review ciary, and the value of the ecological structures
of conceptual frameworks in TEEB (see De and processes that contribute to it are already
Groot et al., 2010). Here benefits are separated wrapped up in this estimate; or, to put it another
from values, because it is argued that if benefits way, the same structures and functions may also
are seen as gains in welfare generated by ecosys- support many services and, for those interested
tems, then it is clear that different groups may in valuations, these should only be counted once.
value these gains in different ways at different The extent to which this problem of ‘double
times, and indeed in different places (cf. Fisher counting’ applies to non-economic forms of
et al., 2009: their Figure 5). Despite this modifi- valuation is, however, rarely considered.
cation, however, the fundamental tenet of the In following the ‘cascade’ idea through it is
ecosystem service paradigm remains: namely, important to note the particular way in which the
that a service is only a service if a human bene- word ‘function’ is being used, namely to indicate
ficiary can be identified and that it is important some capacity or capability of the ecosystem to
to distinguish between the ‘final services’ that do something that is potentially useful to people.
contribute to people’s well-being and the ‘inter- This is the way commentators like De Groot
mediate ecosystem structures and functions’ (1992), De Groot et al. (2002) and others (e.g.
that give rise to them. The distinction between Brown et al., 2007; Costanza et al., 1997; Daily,
Potschin and Haines-Young 579

1997) use it in their account of services. In his consider the further modifications of termi-
Functions of Nature, De Groot (1992) actually nology surrounding exactly what is being valued
proposed a classification of functions to capture that has been introduced in the conceptual
the relationships between ecosystem processes framework of the UK National Ecosystem
and components and goods and services, which Assessment7 (UK NEA) (Bateman et al.,
he has subsequently revised on several occa- 2011b; Mace et al., 2011). Here a clear distinc-
sions. However as Jax (2005, 2010) notes, the tion is made between ‘services’ on the one hand
term ‘function’ can mean a number of other and ‘goods’ on the other. The cascade model
things in ecology. It can refer to something like follows the MA by treating them as essentially
‘capability’ but it is often used more generally synonymous, while recognizing that some (e.g.
also to mean processes that operate within an Brown et al., 2007) prefer to use the term goods
ecosystem (like nutrient cycling or predation). to refer to tangible ecosystem outputs, and
Thus Wallace (2007) prefers to regard functions services to denote more intangible ones. For
and processes as the same thing, to avoid confu- Bateman et al. (2011b) and Mace et al. (2011),
sion, and commentators like Fisher and Turner however, the usage of these terms is quite differ-
(2008) and Fisher et al. (2009) simply label all ent. They argue that from an economic pers-
the elements on the left-hand side of the cascade pective ecosystem services are ‘contributions
diagram, that ultimately give rise to some ser- of the natural world which generate goods which
vice and benefit, as ‘intermediate services’. On people value’ (Bateman et al., 2011b), and
the basis of their work on the economic conse- include all use and non-use, material and non-
quences of biodiversity loss, Balmford et al. material outputs. For them, the notion of a good
(2011) suggest a threefold division between goes beyond those things that can be traded in
‘core ecosystem processes’, ‘beneficial ecosys- markets and includes ecosystem outputs which
tem processes’ and ‘ecosystem benefits’; they have no market price; they can, in other words,
then go on to rank the beneficial processes in have both use and non-use values. These authors
terms of their importance to human well-being also note that some goods come directly from
and their analytical tractability. nature without human intervention (e.g. scenic
The key messages that seem to emerge from beauty) making the good and service identical,
these debates is that, in relation to the cascade while others result from a combination of nat-
idea, whether or not it involves three, four or ural and human inputs (e.g. a processed food
more steps, or how particular boxes are product). For the latter, any attempt at valuing
labelled, the fundamental task is to understand ‘nature’s services’ would have to try to disentan-
the mechanisms that link ecological systems to gle the contribution that these two types of cap-
human well-being. The intention of the cascade ital make to the good being considered, although
idea is to highlight the essential elements that clearly any such manufacture remains dependent
have to be considered in any full analysis of on some natural input. The need to separate
an ecosystem service and the kinds of relation- goods from benefits arises because goods can
ships that exist between them. The challenge of give rise to different types of benefit in different
the new paradigm is the assertion that all of spatial and temporal contexts.
them have to be considered together, as an These developments suggest that, despite
inter- and even transdisciplinary undertaking.6 their paradigmatic nature, the constellation of
To emphasize the point that it might be best to concepts that surround the idea of ecosystem
think of the links between nature and people services is far from universally agreed. Whether
more as a cascade or sequence of transforma- any final agreement about terminology and con-
tions rather than a discrete set of steps, we can ceptual frameworks will emerge remains to be
580 Progress in Physical Geography 35(5)

seen. In its absence, a pragmatic way forward framing the notion of ecosystem service, and the
would be to recognize that it is, perhaps, most need to be clear in describing how the concepts
useful to treat the things called ‘services’ simply are applied. Lamarque et al. (2011) have also
as thematic labels and seek to understand or argued for more careful framing of the way con-
articulate the production chain (cascade) that cepts are used. From the perspective of Physical
underlies them. Labels like ‘benefits’, ‘goods’, Geography, a particular conceptual challenge is
‘services’, ‘functions’ and ‘structures/processes’ to help identify what the appropriate spatial units
are clearly helpful in understanding the transfor- of analysis are, and find ways of characterizing
mations that link humans to nature, but the pre- the ‘significant’ functions and the services they
cise boundaries between them might be difficult deliver, so that comprehensive assessments can
to define, unless referenced to specific situa- be made. We need to show how the structure and
tions. The proposal for a Common International dynamics of ecological systems vary with geo-
Classification for Ecosystem Services (CICES; graphical location so that we can better under-
Haines-Young and Potschin, 2010b) recently stand the ways in which spatial context affects
made as part of the discussions surrounding the societal choices and values. As we will argue
revision of the SEEA (System of Integrated below, a place-based perspective is one that is
Environmental and Economic Accounting; UN becoming increasingly relevant. It is a concep-
et al., 2003) suggests that a hierarchical app- tual framework that geographers could clearly
roach to describing the different service themes help to articulate.
might be helpful in taking account of the differ-
ent levels of thematic generality that is apparent
in recent work, and for linking service assess-
2 Biophysical contexts: service providing
ments to other data related to economic activity units and social-ecological systems
(Figure 3). What does seem clear, however, is One criticism of the cascade analogy is that it
that if we accept that there are layers of different implies that there is a simple linear analytical
ecological structures and processes that under- logic that can be applied to the assessment of eco-
pin all ‘final service’ outputs, then the category system services, and that once those interested in
of ‘supporting services’ proposed by the MA is biophysical structures and processes have ‘done
probably unnecessary or best used as a synonym their work’, social science in the form of eco-
for ecological functions and processes. The nomics, say, can ‘take over’. Such a reading of
argument here is that given the biophysical com- the model is, however, misleading. Its central
plexity that underlies most of the things that we idea is that to be effective analytical approaches
would identify as a final service for people, and have to be inter- or even transdisciplinary, and
the fact that any given service depends on a that no individual component should be looked
range of interacting and overlapping functions at in isolation. Valuation is certainly not the final
and processes, any attempt to seriously define outcome or only motivation for applying the
the set of supporting services is likely to over- idea. Indeed, it might well be that only through
simplify matters. the identification of what people value can sig-
If progress is to be made with the ecosystem nificant biophysical processes be recognized or
service paradigm, then a key task is to ensure the problematized, and strategies for adaptive man-
rigour of analytical outputs and not become pre- agement therefore developed and executed.
occupied with definitions. The splitting of goods Cowling et al. (2008), for example, distin-
and services in the UK NEA, like the other dis- guish three complementary types of assessment
tinctions discussed above, merely emphasizes according to whether they focus on social, bio-
the complexity of the problem that we face in physical or valuation issues. Collectively such
Potschin and Haines-Young 581

Figure 3. The proposal for a Common International Classification of Ecosystem Services (CICES) (see
Haines-Young and Potschin, 2010b)

assessments allow decision makers and stake- a valuation of ecosystem services (see their
holders to look at the opportunities and con- Figure 1) and, while they emphasize how impor-
straints available to them and the tools needed tant it is to ground the analysis on an understan-
for management. They argue that social assess- ding of biophysical relationships, like Cowling
ments are important because they provide an et al. (2008) they also propose that definition
insight into the perspectives of the owners and of the boundary of the ecosystem to be valued
beneficiaries of ecological systems that give rise is essentially a social process. Specification of
to a service. In this sense, they suggest, these the boundaries of the ecosystem involves mak-
types of appraisal should precede any biophysi- ing clear what the ‘Service Providing Unit’
cal assessment; the latter aims more to generate (SPU) actually is; since it looks at nature from
information about the dynamics and geography the perspective of the beneficiary its specifica-
of the ecological systems and the impacts of tion is fundamentally socially determined. The
direct and indirect drives of change. Valuation concept was originally proposed by Luck et al.
assessments, they suggest, are dependent on (2003) and has more recently been refined
inputs from the social and biophysical analysis. and extended (see Luck et al., 2009). The discus-
This generally, but not exclusively, seek to place sion of Hein et al. (2006) echoes many features
a monetary value on the services being consid- of the SPU concept. They argue that ecosystem
ered and provide insights into the changes in units can range across all spatial scales, and that
value under different conditions or assumptions. decisions about the nature of the assessment
Hein et al. (2006) have described what they units take account both of the biophysical scales
consider to be the key steps needed for making at which the services are generated and the
582 Progress in Physical Geography 35(5)

institutional scales at which stakeholders inter- decisions, provision of pollination services, and
act and benefit from the services. They test their the impacts of payments for carbon storage, all
approach using a case study from the De Wieden of which were assumed to operate at different
wetlands in The Netherlands, and found that spatial scales. They found that while Payments
stakeholders can have quite different interests for Ecosystem Services (PES) schemes that
in the associated ecosystem services, depending encourage carbon storage can increase the aver-
on the scale of analysis. Thus a multiscale per- age well-being, the effects of spatial heterogene-
spective may be necessary if a range of different ity at the landscape scale can result in greater
interest groups are involved. inequalities between land-owners, depending
The SPU corresponds to what others have on the mix of land-cover types on their holdings;
referred to as a ‘social-ecological system those with larger areas of forest receive higher
(SES)’8 (Anderies et al., 2004; Folke, 2007) rewards than those with larger areas of agri-
which also describes how ecosystem services cultural or abandoned land. Elsewhere, Jones
and human welfare are linked through some kind et al. (2009) have illustrated that to understand
of demand-supply relationship. If natural scien- the factors that influence ecological functioning
tists are to be involved in taking the ecosystem within a national park area in the USA, for
services paradigm forward, then they must example, broader-scale monitoring of land-
become more involved in describing the cover and land-use change around the park area
dynamics of such ‘socially constructed’ systems, is vital. A more general review of cross-scale
and the sensitivity of the system outputs to dif- issues has been provided by Du Toit (2010), who
ferent drivers of change. In particular it seems noted that despite the widespread acknowledge-
to imply that they move beyond the types of ment of the importance of scale in biodiversity
process-response units, such as catchments or conservation, multiscale studies are ‘remarkably
habitats, that they have traditionally dealt with, uncommon’ in the literature. He suggests that an
and begin to characterize space-place relation- examination of a conservation issue at a range of
ships in more sophisticated ways. One of the spatio-temporal scales often shows that the
problems with applying the ecosystem service nature of the problem or its causes are often quite
concept, for example, is the proposition that it different from those initially considered.
should be applied at ‘the appropriate spatial and Rounsevell et al. (2010) have extended the
temporal scales’.9 In a given locality, once we thinking around the idea of an SPU in their
start to consider how different services might proposal for a ‘Framework for Ecosystem Service
relate to each other, it soon becomes clear that Provision’ (FESP). Their schema seeks to extend
there may be no single scale that is appropriate, the widely acknowledged Driver-Pressure-State-
and that cross- or multiscale approaches are Impact-Response (DPSIR) model into the discus-
probably more ‘appropriate’. The problem is not sion of ecosystem services, by better describing
so much of defining the boundaries of a system how ‘service providers’ are embedded in the sys-
at the most suitable scale, but of dealing with tem. Like others (e.g. Potschin, 2009), they argue
influences at different scales that are relevant that new frameworks are needed to provide a
to understanding the issues in play at a given more balanced or integrated treatment of supply
place. and demand side issues, and the analyses at mul-
Satake et al. (2008) have looked at scale mis- tiple spatial and temporal scales. It is important to
matches and their ecological and economic note, however, that the FESP is only offered as an
effects on landscapes from a theoretical perspec- analytical strategy. Rounsevell et al. (2010) sug-
tive using a spatially explicit model. They con- gest a stepwise process for its implementation and
sidered the relationships between deforestation illustrate its features by reference to a set of case
Potschin and Haines-Young 583

Figure 4. Ostrom’s multi-tier approach for analysing social-ecological systems


Source: After Ostrom (2007)

studies that are retrospectively interpreted into using a probabilistic logic, such as Bayesian
its structure. Nevertheless, it does provides a Belief Networks (BBNs), stand out as a promis-
picture of the kind of ‘system’ that the natural ing way of approaching both complexity and
science community might need to consider if uncertainty, and dealing with the character of
they are to engage with the ecosystem service different kinds of ‘data’. The use of BBNs as an
paradigm. But, as these authors point out, it is a analytical-deliberative tool for exploring social-
framework and not a model, and we are some ecological systems is explored further in this
way from making testable generalizations about special issue (Haines-Young, 2011).
either the biophysical or social processes that Definition of the boundary of an ecosystem is,
operate within such systems. As Fish (2011) has it seems, not merely a biophysical problem.
argued, one of the key challenges we face is to While Physical Geographers can contribute in
‘combine analytical rigour with interpretive terms of understandings they provide about the
complexity’, and it is precisely in the construction structure and function of environmental systems,
of these kinds of analytical framework that the they also need to be familiar with how to cha-
task seems to lie. Given that these systems have, racterize and investigate these coupled social-
in a sense, to be co-constructed by drawing on ecological systems, the interactions within
both biophysical and social understandings, we them as well as their emergent properties. One
will also need to find ways in which deliberative possible way forward has been provided by
approaches can capture and make operational Ostrom (2007), who has described a nested
different types of knowledge and associated multi-tier framework (Figure 4) for organizing
uncertainties, by combining both quantitative information about the structure of SESs, in terms
and qualitative types of evidence using, for exam- of a resource system, resource units, users and
ple, multicriteria methods. Smith et al. (2011) governance systems. She argues that such fra-
provide a wide-ranging review on the use of meworks can help bridge ‘the contemporary
quantitative methods in the analysis of ecosystem chasm separating biophysical and social science
services. They suggest that graphical models research’ (Ostrom, 2007: 15186), and build the
584 Progress in Physical Geography 35(5)

kind of interdisciplinary science needed to assumptions on which current monetary meth-


address problems of sustainability. odologies are based, and Gómez-Baggethun
et al. (2010; see also Gómez-Baggethun and Ruiz
III Application challenges Pérez, 2011) look at the ideological issues that
attend recent trends to commodity nature. Fish
1 The limits of economic valuation (2011) has provided a discussion of the role of
There is little doubt that the ability to estimate analytical and deliberative assessment methods.
the economic value of ecosystem services has In reviewing such debates it is important to
done much to stimulate interest in ecosystem note that reference to ‘Total’ in TEV is often
services, particularly among those concerned misunderstood because the goal is not to calculate
with policy and management issues. However, the complete value of the ecosystem in any abso-
economic valuation of the benefits ecosystems lute sense, but to understand how economic val-
provide to people is not the only goal. As the ues change ‘marginally’ with a unit gain or loss
ecosystem service paradigm matures, the con- in some ecosystem asset (Bateman et al., 2011b;
texts in which economic valuation is useful are Fisher et al., 2009). The word total should also not
becoming clearer, and the limits and assump- be taken to imply that only economic values are
tions of valuation methods are being better relevant. The main service groups (provisioning,
understood. We therefore now turn to an exam- regulating and cultural) have different profiles in
ination of the limits of economic valuation and terms of the various TEV categories, and the
the need for broader ethical perspectives in rela- general aim is to achieve an aggregated value
tion to understanding the importance of eco- for the ecosystem that can be used to com-
system services. Although these issues are not pare the differences between the contrasting
usually debated in this journal, it is important sets of circumstances, say as the impacts of
that physical geographers along with other natu- different policies or interventions. While
ral scientists engage with these topics because non-money measures of the value of a ser-
they help define some key research challenges vice to people can be aggregated in some
in the biophysical arena. kind of multicriteria assessment (cf. Hein
The ‘Total Economic Value’ (TEV) frame- et al., 2006), interest currently focuses most
work has been widely employed to estimate both on aggregating monetary estimates.
the use and non-use values that individuals and The work of Pagiola et al. (2004) remains par-
society assign to changes in ecosystem services. ticularly useful in helping to define the different
A feature of recent work has been the attempt to contexts in which such biophysical understand-
describe how different methods can be used to ings of marginal economic change must be set;
estimate the various components of TEV (e.g. we have to understand the magnitude of the bio-
Brown et al., 2007; Chee, 2004; De Groot et al., physical changes before economic estimates of a
2010; Farber et al., 2006; Pagiola et al., 2004) and change in value can be made. The first broad
how such data can be used to estimate the way context concerns attempts to determine the total
monetary values change under different geogra- value of the current flow of benefits from an eco-
phical conditions (say across spatial gradients, system, to better estimate the contribution that
or as a result of environmental change over time). ecosystems make to society. The analytical strat-
An additional feature of recent work has been a egy suggested here is to identify all the mutually
more critical reflection on economic valuation, compatible services provided, to measure the
marginality (see below) and the role of non- quantity of each service and multiply these out-
monetary methods of valuation. For example, puts by their marginal value. They argue that
Spangenberg and Settele (2010) question the these approaches are probably mainly applicable
Potschin and Haines-Young 585

at local scales because the question implicitly At a broader scale, the approach to valuation
being asked is: ‘how much worse off would we based on the analysis of costs and benefits of
be without this ecosystem?’ (but see section III, interventions is illustrated by the UK NEA. Here
2, below); thus an understanding of the ‘per hec- the land-cover changes implied by the different
tare’ benefits of a natural area might be useful in national scenarios (Haines-Young et al., 2011)
demonstrating that it has value to a society. At were used to compare the impacts of the differ-
global scales, however, they suggest this kind ent storylines on a range of ecosystem outputs
of question makes little sense because the value that could be valued using market- and non-
is essentially infinite as there is no alternative market-based methods (Bateman et al., 2011a);
(cf. Heal et al., 2005). the marginal changes in value were calculated
The second area of the application identified using the year 2000 as the baseline. Elsewhere,
by Pagiola et al. (2004) is in valuing the costs Swetnam et al. (2011) have used GIS and parti-
and benefits of interventions that modify eco- cipatory methods to construct a scenario study of
systems with the aim of deciding whether the the Eastern Arc Mountains of Tanzania (see also
intervention is economically worthwhile. The Fisher et al., 2011), and Polasky et al. (2011)
approach involves measuring how the quantity have made a similar kind of economic analysis
of each service changes as a result of the inter- of alternative scenario outcomes describing
vention compared to doing nothing. It forms the different land-use futures in Minnesota, USA,
basis of traditional cost-benefit analysis which is using the InVEST GIS toolbox (Daily et al.,
widely used as an aid to decision making. A 2009). These kinds of study illustrate some of
number of studies illustrate the power of this the strengths and limitations of economic analy-
approach. At a local scale, for example, sis. Thus, while a comparison of the marginal
Luisetti et al. (2011) have compared the impact differences in economic values between alter-
of different strategies for managed realignment native policy options of management strategies
along the eastern coast of England, and have is a powerful framework for decision making,
shown that, for the Humber and Blackwater decisions ultimately depend on what criteria are
estuaries, set-back schemes seemed to be more included in the analysis. So, while the scenarios
economically efficient in the long term than developed in the UK NEA were not proposed
either the ‘business as usual’ or ‘hold the line’ as policy alternatives, the view that one might
scenarios. However, they note the importance take of these alternative futures depends upon
of using a spatially explicit approach in these whether we only focus on market-priced values
types of analysis because the results may be or also take account of non-market values in
context dependent. The body of work that has the discussion. In both the UK and US studies,
been built up around the topic of managed rea- the scenarios that led to the greatest expansion
lignment in the East of England is particularly of marketed agricultural goods (and hence pri-
valuable in demonstrating how fundamental a vate benefits) led to the largest declines in those
good understanding of biophysical processes is services that provide public or shared benefits,
to valuation studies. Studies such as those of such as greenhouse gas emissions and carbon
Andrews et al. (2006) and Shepherd et al. sequestration.
(2007) have looked more closely at the eco- The third and fourth application areas des-
nomic value of nutrient storage, as alongside the cribed by Pagiola et al. (2004) further emphasize
cycling and storage of carbon and sediment. the importance of what economic analysis can
Jickells et al. (2000) illustrate the insights that and cannot achieve. They concern examining
long-term historical environmental reconstruc- how the costs and benefits of an intervention
tion can bring to such debates. or impact on an ecosystem are distributed across
586 Progress in Physical Geography 35(5)

society and over time, and the kinds of financing those who directly benefit from a service to
mechanisms that might be established to better make contractual or conditional payments to
realize the public benefits that ecosystem ser- local landholders who provide them. The market
vices can provide. The examination of impacts mechanism thus helps internalize environmental
on social equity requires the identification of the externalities, and potentially can change aspects
relevant stakeholder groups, the services they of property rights.
use, their needs and the values they attach to ser- Van Hecken and Bastiaensen (2010) have,
vices, and how they would be affected by any however, looked at the political economy
intervention or impact. This kind of distribu- aspects of PES schemes, and noted that in recent
tional analysis is now being widely applied to debates the market efficiency aspects of such
ensure that management interventions do not schemes have often overshadowed discussion
harm vulnerable groups and, in particular, to try of the distributional implications. They argue
to ensure that interventions reduce poverty that key issues that need to be considered include
(De Koning et al., 2011; see also Fisher et al., how the externality is defined, whether such
2011). However, as a number of commentators schemes should focus on positive or negative
have argued, distributional issues are not simply externalities, and what the implications of this
a matter of economic analysis, and the ‘commo- decision might be. These kinds of issue will
dification’ of ecosystem services is likely to lead determine whether the user should pay for the
to counterproductive outcomes for biodiversity right to enjoy the service or the provider for the
and equity in relation to ecosystem service ben- right not to provide it. On the basis of their work
efits (Gómez-Baggethun and Ruiz Pérez, 2011). on multiple forest uses, Corbera et al. (2007)
By turning services into commodities, these have argued that unless legitimacy and equity
authors argue, one potentially transforms them issues are fully considered these new kinds of
into things that can only be accessed by those market mechanism may only reinforce existing
with purchasing power. Wegner and Pascual inequalities and power structures. Given the
(2011) have also provided a critique of eco- complex relationships between ecosystem func-
nomic cost-benefit methods, and argued that tions in different spatial and social contexts, Van
when dealing with public ecosystem services Hecken and Bastiaensen (2010) emphasize
we need more pluralistic approaches to articulat- how important it is to ground the design of
ing the values that people hold and that, although schemes on a good biophysical understanding
traditional approaches have a place, we must not of the social-ecological system as well as knowl-
be locked into a ‘monistic approach’ based on edge about social and political contexts. Jack
individualistic values and ethics. These types et al. (2008) make a similar point, and suggest
of issue are especially apparent in the context that this is a particular issue when the marginal
of the new kinds of financing mechanisms for benefits of intervention are not constant across
ecosystem services. space and time, and when there is uncertainty
It has been argued that Payments for Eco- about the way performance measures used to
system Service (PES) schemes can help realign assess service output relate to the kinds of inter-
the private and social benefits resulting from vention or efforts made by the provider. Further
their environmental management decisions (for biophysical complexities emerge when we con-
reviews, see Smith, 2006; Smith et al., 2006; sider how to deal with situations where more
Wunder, 2005, 2007). The approach is based than one service is influenced by the decisions
on paying individuals or communities to under- that land managers make, and where those ser-
take actions that increase the levels of the vices have benefits to groups at different spatial
desired services and, in their purest form, enable scales. It is apparent that an understanding of the
Potschin and Haines-Young 587

values people hold about particular services, and carbon, water and ecotourism) appear to attract
the views they take of the trade-offs between more funding than those more traditionally
them, can often only be achieved by an appre- focused on biodiversity from a more diverse set
ciation of the multifunctional character of the of sources. Instead, our purpose here is to con-
localities or places in which decisions are being sider the ecosystem services paradigm in a more
made. Thus a place-based perspective on the balanced way, and describe how different disci-
structure and dynamics of social-ecological sys- plinary expertise might be more effectively com-
tems and the ecosystem services that are associ- bined. Nowhere is this more vital than in the
ated with them is a key area where Geography identification of critical thresholds in social-
might make a distinctive contribution. ecological systems.
Consideration of the contexts in which eco- It is widely acknowledged that social-
nomic assessments of ecosystem services are ecological systems can exhibit complex
made suggests that while such research dynamics, that include non-linearities, thresholds
appears to be a major force in shaping ideas (regime shifts) and more gradual changes to
in the current paradigm it is clearly not unpro- external pressures. In fact, these non-linearities
blematic. Too great a focus on economic appear to be part of the emergent properties
valuation, and the assumption of rational eco- that coupled social-ecological systems can exhi-
nomic behaviour, results in an unfortunate nar- bit. The consequence is that management or pol-
rowing of perspectives that tends to obscure icy interventions may be difficult because they
ethical and political issues and the role that can involve making decisions against a backdrop
natural science can play in understanding how of considerable uncertainty (Rockström et al.,
people and nature are linked. Better under- 2009; Scheffer and Carpenter, 2003; Scheffer
standing the limits of economic valuation is et al., 2001, 2003; Walker and Meyers, 2004;
a key application challenge if we are to pre- Walker et al., 2006). The existence of such beha-
serve the broad perspective of the ecosystem viour also has implications for the way we value
service paradigm. Whether we are concerned or assign importance to ecosystem outputs, be-
with economic assessments or wider distribu- cause they undermine key assumptions on which
tional issues, knowledge about the sensitivity economic valuations are made. As a number of
of ecological structures and functions to the commentators have argued (see above and, for
different drivers of change in different places example, Fisher et al., 2008) if economic valua-
is a prerequisite for making any progress, and tion is primarily about the ‘difference’ something
it is precisely here where Physical Geography makes, then the analysis of marginal value is only
can provide insight. possible when an ecosystem is far from an
unstable threshold or tipping point. It is in this
context that the notion of Safe Minimum Stan-
2 Maintaining natural capital dards (SMS) arises (see also Ekins, 2011). By
The emphasis currently placed on the economic crossing such thresholds social-ecological sys-
valuation of ecosystem services is perhaps inevi- tems, by definition, will exhibit quite different
table, given the financial terminology used to characteristics to those we are familiar with, and
express the idea that people benefit from nature. the level and mix of benefits they provide to peo-
In arguing that there are limits to such work we ple may be significantly changed. In these situa-
do not suggest that efforts to make monetary esti- tions, arguments about whether strategic policy
mates are not without their merits. Indeed, as or management interventions are justified turn
Goldman et al. (2008) have found, conservation more on ethical and political considerations, or
projects involving ecosystem services (e.g. arguments about the intrinsic and instrumental
588 Progress in Physical Geography 35(5)

Figure 5. The relationship between natural and human-made capital, and ecosystem stocks and flows, in a
social-ecological system (R ¼ reinvestment)

values we attach to nature, rather than on eco- rewetting of peatland ecosystems can transform
nomic impacts (see, for example, Justus et al., the prospects for water quality and carbon seques-
2009). The differences are too large and signifi- tration (Holden et al., 2011; Ramchunder et al.,
cant to be regarded any longer as ‘marginal’. 2009; Wilson et al., 2011a, 2011b). While such
Spangenberg and Settle (2010) argue more gener- case studies are important in their own right, it
ally that economic analysis alone is not adequate is also helpful to look at them in the context of
for defining conservation objectives or policies, wider debates about how we characterize nat-
which rather should be set by political processes ural capital stocks in general and what interven-
based on ‘multistakeholder’ and ‘multicriteria’ tions are required to maintain their integrity.
analysis. We might add that the views people take The issue of maintaining capital stocks has
of the risks associated with system collapse are been the focus of recent debates in environmen-
also key issues. tal accounting (Bartelmus, 2009; Mäler et al.,
Discussion of what these minimum levels of 2008, 2009; Walker and Pearson, 2007; see also
natural capital might be and how we might Haines-Young, 2009; Weber, 2007). These dis-
describe, maintain and restore them, has taken cussions highlight the fact that, while much of
many forms in the natural sciences. They have the current literature dealing with the problem
been considered implicitly in this journal by of valuing the benefits from natural capital has
O’Keeffe (2009), for example, who considered focused on the flows of final products or ser-
the problem of defining sustainable flows in vices, the importance and costs of maintaining
rivers in South Africa. He found that, while the ecosystem structures and functions (stocks)
knowledge about the eco-hydraulics of the sys- that underpin them cannot be overlooked. Figure
tem was necessary, understanding the social- 5 describes how natural and human made capi-
economic and political context was of overriding tals are linked and co-dependent with a social-
importance for successful implementation of ecological system, and suggests how both stocks
management responses. Elsewhere, Physical and flows might be considered. In addition to
Geographers have provided relevant case-study valuating final services, we suggest an equally
materials in the context of whether strategies for important application challenge is to understand
Potschin and Haines-Young 589

the scale and/or value of the intermediate ser- about the importance of environment to people
vices consumed in the production of these final has, perhaps, most of all stimulated interest
goods. In the same way in which society has to among decision makers, and, as Daily et al.
reinvest in human-made capital to take account (2009) have noted, perhaps we are at a point
of depreciation, we must also consider the level where it is ‘time to deliver’. The task of develop-
of reinvestment in the stock of natural capital ing a rigorous body of research that addresses
needed to sustain the output of ecosystem ser- both science and user concerns, alongside cred-
vices. Such ‘reinvestment’ in natural capital ible decision support tools that can be used
stocks arises because we judge the flow of some beyond the academy, will not be an easy one.
service or set of services to be impaired or inad- As Sagoff (2011) has argued, the conceptual
equate, and may take many forms including distance between market- and science-based
maintenance or management, protection and approaches to constructing and using knowledge
restoration costs (assuming ‘restoration’ is pos- is considerable. The challenges of this transdis-
sible). However, it could also include less tangi- ciplinary exercise will not, however, be met by
ble things like resilience (e.g. Deutsch et al., uncritical puzzle solving.
2003; Vergano and Nunes, 2007) and ‘use for- In this paper we have sought to argue that
gone’; the latter can be thought of as the stock Physical Geographers, along with other natural
of natural capital that must not be appropriated scientists, can make a significant contribution to
to ensure that ecosystems retain their capacity the research and policy questions posed by the
renew and sustain themselves. If the kind of notion of ecosystem services by helping charac-
‘stock-based’ approaches to measuring sustain- terize the structure and dynamics of social-
able development described by Bartelmus ecological systems. As we have shown, the need
(2009) and Walker and Pearson (2007) are to to provide understandings of social and physical
be delivered, however, those interested in the processes within the context of places and regions
structure and dynamics of social-ecological sys- has never been more important. Thus social-
tems must devise improved physical accounting ecological systems should be a key part of what
methods that describe the ways in which the physical geographers study. Although such sys-
quantity and quality of natural asset stocks tems are ‘socially contracted’, in the sense that
change over time for social-ecological account- they depend on how beneficiaries see the world
ing units that are relevant in a decision-making as well as on understanding its biophysical charac-
context. teristics, they also constitute meaningful and rele-
vant process-response units. They provide new,
inter- and transdisciplinary frameworks in which
IV Conclusion more traditional approaches can be set. Future
Whether we choose to view the developments research challenges include describing how the
around the idea of ecosystem services as a para- ecological structures and functions embedded in
digm or not, it is clear that a considerable body such systems link to service outputs, and how sen-
of interest has been built up around the concept sitive these outputs are to the various drivers of
that goes beyond the science community. The change. Such knowledge is needed before an eco-
debate has usefully reinvigorated discussions nomic valuation of ecosystem services can be
about the critical natural capital and sustainable made and to avoid the problems of double count-
development, and refocused attention of ideas ing. More importantly, it is an essential ingredient
about thresholds and uncertainties in coupled of the ethical and political debates at the interface
social-ecological systems. The promise it app- of people and the environment. We need to see the
ears to hold for making economic arguments ecosystem service paradigm as part of broader
590 Progress in Physical Geography 35(5)

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