Indicators of Ecosystem Value: Deriving Units of Exchange for Habitat Trades, Banking, and Preservation Priorities

EPA Grant Number: R827921
Title: Indicators of Ecosystem Value: Deriving Units of Exchange for Habitat Trades, Banking, and Preservation Priorities
Investigators: Boyd, James W.
Current Investigators: Boyd, James W. , King, Dennis , Simpson, R. David , Wainger, Lisa
Institution: Resources for the Future
Current Institution: Resources for the Future , University of Maryland Center for Environmental Science
EPA Project Officer: Chung, Serena
Project Period: September 1, 1999 through December 31, 2001
Project Amount: $273,000
RFA: Decision-Making and Valuation for Environmental Policy (1999) RFA Text |  Recipients Lists
Research Category: Environmental Justice


The research will develop a system of ecosystem value indicators (EVIs). The goal is a system, implemented by agency field office staff, that uses generally available data to provide an economically sound means to prioritize habitat acquisitions, evaluate habitat trades, and establish debit/credit criteria for wetland mitigation banking programs.

There is a need for easily implemented, cost-effective tools to rank land parcels in terms of the economic value of the environmental services they provide. The increased use of habitat trading and banking and nationwide efforts to target land parcels for acquisition or development restrictions demand a workable system for comparing and ranking lands with often highly idiosyncratic characteristics. Most current state and federal programs geared toward land preservation and restoration rely on purely bio-physical, and often very rudimentary, descriptions of lands. In particular, the social value of different services provided by land is typically ignored. For instance, proximity to population increases the social value of habitat, due to the relatively higher value of recreational and aesthetic services. But even a crude form of ranking based on the nation of population proximity is not part of most wetland banking systems. An acre is not an acre. In a world where habitats are traded, acceptable trades will be defined by what is measured.

Measurement must be conducted in a pragmatic way, however. Academic research - in particular economic research - urges the use of techniques that monetize habitat values. Monetization of the value of individual 5 or 10 acre parcels is impractical. The indicators we propose are by their very nature imprecise proxies for the measurement of the true, underlying value or condition they signal. This is their weakness, but also their virtue. Indicators are based on observable forms of data that can be integrated with existing decision-making tools to provide theoretically-grounded judgments regarding relative habitat values.


Wetland scientists study biophysical processes that affect the functioning of wetlands but do not generally link specific functions to services valued by people. Economists, by and large, ignore the bio-physical processes that generate value. The value indicator system that is the subject of this research will fill this gap by addressing the necessary conditions for a habitat to provide services and necessary conditions for those services be valuable.

The proposal will develop and evaluate a valuation system that can be broadly outlined as follows: First, a habitat is characterized in terms of its bio-physical functions. Note that this is the goal of existing assessment methodologies, such as the HGM model. Second, habitat functions are translated into services that are valuable to society. Third, the value of these services must be assessed, via relatively observable indicators. Fourth, future risks to the value of services are assessed, also via observable indicators.

The research will construct an EVI system based on three primary "sub-indices" used to characterize a habitat. A service capacity sub-index will be constructed to reflect off-site characteristics that either limit or enhance the ability of a habitat to provide services. Value comparisons will be based on a value of service sub-index, related to regional supply and demand conditions and preference rankings that reveal the value of incremental increases or decreases in service flows. The value of service is then modified using a service risk sub-index. This reflects conditions and trends that influence the risk of service flow disruptions.

A variety of descriptive statistics, particularly spatial statistics, can be used to describe landscape contexts that affect service flows at various scales. Development of site-based indicators of service value and risks to that value will use generally available landscape, land use, demographic, and other socio-economic data, including GIS, zoning, census, and regional and local public records. Integration of the method with reliable existing data sources is a primary objective. The EVI method will also be ground-tested in at least one specific landscape context.

Expected Results:

The research will derive a habitat valuation technique that is more pragmatic - in that it can be applied more quickly, cheaply, and widely by existing agencies and institutions - than full-blown (and impracticably expensive) monetization techniques. Moreover, in contrast to existing trading rules, the system to be developed will explicitly highlight the importance of social value to the determination of habitat-for-habitat exchanges and acquisition priorities. This will yield better overall decisions, from the standpoint of preserving the social value of endangered or otherwise scarce habitats.

Government efforts such as the Conservation and Wetlands Reserve Programs and programs under the Clean Water and Oil Pollution Acts will directly benefit from this research. These programs and regulatory requirements involve decision-making at the U.S. EPA, Department of Agriculture, the Natural Resources Conservation Service, the Corps of Engineers, and Fish and Wildlife Service. Decision makers implementing these policies face the same types of questions: if trading or banking is to occur, what types of compensating habitat conservation are enough to offset habitat losses elsewhere? If conservation is to be induced via cash payments or tax-breaks, which habitats should be the highest-priority targets for conservation? This research will develop a tool to help answer these questions in a methodologically sound, but also cost-effective manner.

Publications and Presentations:

Publications have been submitted on this project: View all 7 publications for this project

Journal Articles:

Journal Articles have been submitted on this project: View all 3 journal articles for this project

Supplemental Keywords:

watersheds, aquatic, public policy, cost benefit, nonmarket valuation, public good, social science, socioeconomic., RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Ecosystem Protection/Environmental Exposure & Risk, Ecosystem/Assessment/Indicators, Ecosystem Protection, Ecological Effects - Environmental Exposure & Risk, Ecology and Ecosystems, Economics & Decision Making, Social Science, ecosystem valuation, habitat, policy analysis, public resources, ecological exposure, valuation, preservation priorities, decision analysis, economic benefits, risk management, environmental assets, conservation, economic incentives, environmental values, non-market valuation, socioeconomics, cost benefit, units of exchange, cost/benefit analysis, ecosystem indicators, landscape ecology, aquatic ecosystems, psychological attitudes, public values, habitat trades, ecological indicators, public policy, land use, value transfers, benefits assessment, econometric analysis, environmental risk assessment

Progress and Final Reports:

  • 2000 Progress Report
  • 2001
  • Final Report