Classifying Ecosystem Services for Economic Valuation: The case of forest water services

Abstract

Since the release of the Millennium Ecosystem Approach (MEA), the number of studies valuing ecosystem services has grown. As a consequence of this growing literature, different interpretations exist on the classification of services as derived from MEA, and several studies have argued that this may not be the most appropriate framework when the aim of the analysis is economic valuation. The present paper contributes to this debate by reviewing and comparing these critical views in order firstly to clarify the existing confusion in the terminology and interpretations; and secondly to shed some light on a desirable classification and conceptualization of ecosystem services for valuation. To illustrate this, we present an examination of existing primary valuation studies of water related services provided by tropical forests, which we analyze under the MEA classification framework and compare it with an output-based classification, in which the service is defined in terms of its benefits (outputs) to humans. Our results support the idea that an output-based classification should provide more accurate values and could help avoid certain problems such as double accounting and potential underestimation of services values.