Monetary Valuation of Ecosystem Services: A Review of Methods

It should be noted that some valuations in the literature covered only specific geographical areas of a country. The Belgian publication was relevant to the Flanders region only, the Chinese studies were for Guangxi and Guizhou provinces, the South African publication covered only KwaZulu-Natal province, the Ecuadorian publication was for the Insular Exclusive Economic Zone and only peatlands on the islands of Sumatra and Kalimantan were included for Indonesia.

It is also important to note that across the literature, similar or related ecosystem services were often referred to by different terms. In presenting the results, where possible, similar or related ecosystem services were grouped together into the most relevant SEEA-EA service categories presented in chapter 6 of the framework. However, variations in ecosystem services exist in the literature that do not completely align with the SEEA-EA categories. Likewise, similar or related valuation methods found in the literature were grouped into the most relevant SEEA-EA valuation method types presented in chapter 9 of the framework. See Background Notes for further information on these variations and their allocation to the SEEA-EA categories.

In some cases, related ecosystem services presented separately in their respective publications were grouped into one ecosystem service type. For example, the timber provisioning and woodfuel provisioning services valued for the United Kingdom were grouped into one under Wood provisioning services (ONS, 2024). See Background Notes for further information.

Ecosystem Services

A review of the 20 publications found that 23 distinct ecosystem services were valued in monetary terms for 18 countries and regions for a total of 125 valuations. Of these valuations, 40.8% (51) were for Provisioning services, another 40.8% (51) for Regulating and maintenance services and 18.4% (23) for Cultural services (See Figure 3.1). For descriptions of ecosystem services, see Background Notes.

Within the Provisioning services category, the review indicated that valuation methods were applied for eight ecosystem services (See Figure 3.2a). Crop provisioning was the most commonly valued service type and was valued for 14 countries and regions. Wood provisioning was next, valued for 10 countries and regions. Water supply and Wild fish and other natural aquatic biomass provisioning were each valued for seven countries and regions.

There were 11 Regulating and maintenance services with valuation methods identified in the review (See Figure 3.2b). Within this category and overall, Global climate regulation was valued for the highest number of countries and regions at 16. Water purification was next, valued for six countries and regions. Air filtration and Flood control services were each valued for five countries and regions.

In the Cultural services category, Recreation-related (recreation and tourism) services were valued for 14 countries and regions (See Figure 3.2c). This was followed by Visual amenity, valued for five countries and regions.

Valuation Methods

To align with concepts of the System of National Accounts (SNA), the SEEA-EA recommends the usage of exchange values for the monetary valuation of ecosystem services. Exchange values are defined as the “values at which goods, services, labour or assets are in fact exchanged or else could be exchanged for cash” (SNA, 2008).

Table 3.2 presents the SEEA-EA typology of valuation methods as presented in chapter 9 of the SEEA-EA framework, and the specific methods that fall under each type as identified in the literature review. Note that the first five types are based on the concept of exchange values. The framework recommends that the choice of methods to be applied be made according to the order listed in the table with methods where prices are directly observable being of highest preference. See Background Notes for descriptions of valuation methods.

The SEEA-EA framework recognises there are other methods to value ecosystem services aside from the five exchange value-based methods in Table 3.2. Other methods found in the literature review include the shadow project cost method, which is a variation of the replacement cost method but based on hypothetical costs, and stated preference methods, which are based on people’s willingness to pay for an ecosystem service or willingness to accept payment for its loss. It is recommended that these other methods are not applied in preference over any of the top five listed in Table 3.2. However, if they are applied, they should be checked for consistency with exchange value principles and adjusted if required before use in ecosystem accounts. See Background Notes.

Table 3.2 SEEA-EA typology of valuation methods

1 Estimates were based on net profit, value added or used the dependency ratio method. 2 These methods may or may not be consistent with exchange value principles depending on a variety of factors such as data used and conditions. 3 This is not a valuation method but a technique that is applied utilising data from specific locations in the estimation of monetary values in other locations (see chapter 9.5.2 in SEEA-EA framework (United Nations, 2024b)).
Valuation concept	Valuation method type	Valuation method identified in review
Exchange value	Methods where prices are directly observable	Directly observed values
	Methods where prices are obtained from markets for similar goods and services	Prices from similar markets
	Methods where prices (and associated values) are embodied in market transactions	Residual value and resource rent methods Productivity change method Hedonic pricing method Other1
	Methods where prices are based on revealed expenditures in related goods and services	Travel cost method Consumer expenditure method
	Methods where prices are based on expected expenditures or markets	Replacement cost method Avoided damage costs method
Other	Other valuation methods2	Shadow project cost method Opportunity cost method Social cost of carbon Stated preference methods Benefit transfer3

A review of the 20 publications found that 15 methods were used to value ecosystem services for a total of 125 valuations. Note that a particular method can be applied to different ecosystem services. Furthermore, in some cases, different methods were applied to the same ecosystem service. In particular, two different methods were used to value Recreation-related services (recreation and tourism) for Anguilla and Montserrat. In these two cases, the valuations were treated as separate valuations in the results of this paper.

Figure 3.3 presents the number of times each method was applied across the 125 valuations disaggregated by ecosystem service category. The resource rent and residual value methods were the most frequently applied at 31 times, with nearly all of the applications used to value Provisioning services. This was followed by directly observed values which were used to value Provisioning services 20 times, and 8 times for Regulating and maintenance services. The replacement cost method was the third most frequently applied at 21 times, most of which were to value Regulating and maintenance services.

Table 3.4 presents the number of times specific valuation methods were applied for selected ecosystem services. Note that the physical flows of these selected services are required reporting for EU member states commencing in 2026 under the amendment to Regulation (EU) No 691/2011 (Regulation (EU) No 2024/3024).

Directly observed values were most frequently used to value Crop provisioning services (eight times), followed by the residual value and resource rent methods (six times). These two methods were also used to value Wood provisioning services. The directly observed values used to value these two provisioning services were based primarily on market prices and land rental prices.

Global climate regulation services and Recreation-related (recreation and tourism) services were the most commonly valued services overall, valued 16 times each.

Half of the valuations for Global climate regulation services used directly observed values based mainly on national carbon prices or carbon trading schemes. The social cost of carbon was also commonly used to value this service type and was applied five times.

The consumer expenditure method was used most frequently to value Recreation-related (recreation and tourism) services (nine times). This method is based on estimates of the travel expenditures to visit recreational sites and consists of entrance fees, transport costs and/or accommodation costs (NCAVES and MAIA, 2022).

 

Table 3.5 contains detailed information on the number of times valuation methods were applied to each of the 23 ecosystem services found across the 20 publications included in the literature review.

Country and Region Analysis

Figure 3.4 presents the total number of ecosystem services valued disaggregated by the 18 countries and regions included in the review.

Overall, the highest number of ecosystem services valued was for Guangxi province in China at 14. This was followed by Guizhou province in China, Uganda and the United Kingdom, in which 11 ecosystem services were valued for each. KwaZulu-Natal province in South Africa was next with 10 valuations. In the EU, 10 ecosystem services were valued for the Netherlands and 8 for Estonia.

Table 3.6 is a detailed table presenting the specific ecosystem services valued for each country and region. See also Background Notes for further information on the services for countries and regions.

Table 3.7 is a detailed table presenting the specific valuation method used for each service by country and region.

Conclusion

In total, 20 publications were reviewed to identify methods used to value ecosystem services. Valuations included in the review were carried out by National Statistical Institutes, Other National Authorities or collaborations linked to these organisations. The literature indicates that the most common ecosystem services valued were Crop provisioning, Wood provisioning, Global climate regulation and Recreation-related services.

In accordance with the recommendation of the SEEA-EA framework, the exchange value concept was the predominant valuation concept used to value such services. Overall, the resource rent and residual value methods were the most frequently applied, followed by directly observed values and the replacement cost method. Further investigation will be required to identify the most appropriate valuation method for specific ecosystem services. This is particularly relevant in cases where multiple methods were used to value the same or similar services, such as Provisioning services where both directly observed values and residual value and resource rent methods were common.