Ecosystems and the biological diversity contained within them provide a stream of goods and services, the continued delivery of which remains essential to our economic prosperity and other aspects of our welfare. Ecosystem services provide large scale benefits at several levels (local, regional and global) and to different groups (individuals, commercial firms and public bodies). Despite this, ecosystem services tend to be significantly undervalued by society. Reasons for this include a lack of adequate information and knowledge about ecosystem functions and the benefits they generate for society, and because no formal market for ecosystem services exists, meaning these services are not allocated a price that would give some indication of their economic value to society.

A distinction can be made between the value of goods which are used directly (e.g. timber, fish etc) and those services which indirectly support human welfare (e.g. controlling soil erosion and preserving water quality). Ecosystem goods and services are also valuable for reasons not related to their use, for example in contributing to cultural and spiritual traditions. There is evidence from studies in developed countries that populations are willing to pay for conservation in countries they will never visit because they believe biodiversity should exist for others now or in the future and for its own sake. The Total Economic Value of a resource is the combination of these use and non-use values.

The main objective of this study is to showcase the current evidence base for the benefits of ecosystem goods and services. In achieving this objective, the focus has been on those goods and services about which there is no readily available data from markets. The report also provides a framework which links ecosystems to their goods and services and resulting benefits to society. This framework can enable better decision-making for ecosystem use, by demonstrating the full economic costs implicit in trade-offs between development and preservation of ecosystems. The report focuses on ecosystem services in developing countries, and particularly the interaction between poverty and the environment.

Whilst ecosystem goods and services play a vital role in supporting life at all levels, it tends to be rural communities in developing countries who are most reliant on these goods and services for survival. Many of the world’s poor live in or near areas rich in biodiversity and are heavily dependent on the goods and services they provide. It is therefore the poor who tend to bear the brunt of the impact of ecosystem loss and degradation through conversion to alternative uses, pollution and over-exploitation. It is they who have the most to gain from sustainable management. Rural communities tend to be dependent on agriculture (often subsistence agriculture) and as such, are exposed to risks from pest outbreaks, flood and water scarcity. In addition, the rural poor are more likely to inhabit marginal, less agriculturally productive land, where harvests are more vulnerable to deterioration in soil or water quality.

Income from harvesting wild products often represents a significant source of income, being particularly important for households close to the survival line. Studies have shown that this additional income provides a safety net in periods of both predicted and unexpected shortfalls in other sources of income. Harvesting ecosystem goods can also support current consumption, maintaining the existing level of income and preventing a decline into further poverty. Natural resources may also offer a route out of poverty, either by enabling households to accumulate capital so as to move into other activities, or by intensification and specialisation in existing activities. It is important to recognise, however, that a balance must be struck between the sustainable exploitation of ecosystem goods to support local communities and over-exploitation of these resources. Over-exploitation may occur, despite resource users being aware of the value of ecosystem services, either because of the need to meet immediate food shortages, or because they do not own the property rights to the land.

Whilst the poor are likely to suffer the most from the loss of ecosystem goods and services, they are often least able to mitigate this risk. For example, the poor who are more likely to live in areas exposed to flooding, also tend to lack the means to protect themselves against the impact of these events (e.g. reinforced buildings) or to recover from them quickly. Similarly, whilst farmers in developed countries are able to purchase farm inputs such as pesticides and fertilisers to mitigate against soil degradation, farmers in developing countries are less likely to have access to the resources to enable them to do this. The viability of local agriculture in developing countries is thus often reliant on ecosystem services to perform these functions (e.g. wetlands as storm buffers or forests to control soil erosion).

The maintenance of ecosystem goods and services should therefore not be seen as a luxury for poor communities in developing countries but vital for their continued livelihoods. Demonstrating the value of these services is a necessary first step to bringing about sustainable management of precious resources. However, this alone is not the solution. The report points to a range of options available to policy-makers to ‘capture’ value. For example, by creating markets or payment systems for ecosystem services, providing information and technology exchange, and creating and enforcing appropriate property right regimes.