Researchers revolutionize how we price nature

Researchers have introduced a new method that could transform how governments decide which ecosystems to protect by dramatically increasing their calculated economic worth.

A team from the University of Hamburg, the University of York, the London School of Economics, and the University of Exeter developed a formula that addresses two critical gaps in traditional ecosystem valuation methods.

The novel approach recognizes that as global incomes rise by approximately 2% annually, people’s willingness to pay for nature conservation increases correspondingly. Additionally, it accounts for how ecosystem services become more valuable as they become scarcer due to biodiversity loss.

Reassessing nature’s true worth

Traditional economic assessments have long undervalued the services that ecosystems provide, such as water purification, crop pollination, and carbon storage. This undervaluation has made it challenging for conservation projects to compete with development initiatives for public funding.

“Our study equips governments with a formula to estimate the future values of scarce ecosystem services, enhancing decision-making processes,” said Professor Moritz Drupp from the University of Hamburg, the study’s lead author and a renowned expert in sustainability economics.

The research suggests that the current monetary values assigned to nature in cost-benefit analyses should increase by more than 130% when income growth alone is considered. When also factoring in impacts on endangered species listed in conservation databases, this figure rises to over 180%.

Implications for policy decisions

This recalibration could significantly improve the chances that conservation projects pass the cost-benefit evaluations governments use to allocate public funding. The approach ensures that ecosystem protection is evaluated on equal footing with other significant public infrastructure investments.

“The monetary values for the environment that are currently used by policymakers in the appraisal of public investments and regulatory change mean that nature becomes relatively less valuable over time compared to other goods and services,” noted Professor Ben Groom from the University of Exeter. The research demonstrates that this assessment is economically incorrect.

Coral reefs demonstrate rising value

The study’s implications are particularly significant for threatened ecosystems like coral reefs. As climate change threatens these vital marine habitats, the remaining healthy reefs become increasingly valuable.

“The fact that scarce goods become more expensive is a fundamental principle in economics, and it also applies here,” explained Professor Drupp. Coral reefs provide essential services, including coastal protection, support for fisheries, and tourism revenue.

Dr. Frank Venmans from the London School of Economics emphasized how this principle applies specifically to coral reefs. As climate change reduces coral cover globally, the ecosystem services provided by surviving reefs become more precious, especially as household incomes worldwide rise.

Standardizing conservation evaluation

Professor Mark Freeman from the University of York stressed the importance of consistent evaluation methods. He emphasized that this work ensures ecosystem protection receives the same rigorous assessment as other significant public infrastructure investments.

The framework provides a standardized method for comparing conservation projects with traditional development initiatives. This levels the playing field when governments decide how to allocate limited public resources between competing priorities.

Global impact on conservation funding

Published in the journal Science, the study offers policymakers worldwide a scientifically robust tool that reflects the true economic worth of natural systems. The formula accounts for both growing human prosperity and the increasing rarity of healthy ecosystems.

This approach could fundamentally reshape environmental policy and global budget allocation for conservation efforts. By properly valuing nature’s contributions to human well-being, governments can make more informed decisions that balance economic development with environmental protection.

The research provides crucial support for conservation at a time when biodiversity loss and climate change threaten ecosystems worldwide, offering hope that nature’s actual value will finally be recognized in economic decision-making.

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