Ecosystem services economic value estimation

For instance, Costanza et al. [24] estimated the value of 17 ecosystem services in 16 biomes to an average US 33 trillion (12 zeroes) globally. This value is almost twice the size of the compared global GDP (or Global Gross National Product to be precise). The ecological economists estimate these values so that ecosystems and biodiversity can be included in new calculations of economic efficiency and economic performance. 

External costs is an economic concept, which gives the possibility of setting the prices right. External costs are the cost involved by the rest of the lifecycle of products and by-products and not accounted for in present cost calculations. For example, the price of fossil fuels depends not only on exploration costs but also on the costs involved by the production of C02 and resultant adverse climatic effects, which will be many trillions of dollars. In an article in Nature the value of the world ecosystem services is estimated to be worth 33 1012 per year (19). This means that for economic activities that destroy part of the ecosystem, the ecoval-ue (service) reduction should be accounted for. 

Over the past half century, the held of economics has developed a rich and extensive literature that advances the theory and methodology of estimating values associated with the myriad unmarketed yet economically valuable benefits provided by nature. While the literature is vast, the number of approaches available to estimate the economic value of ecosystem services remains limited to only a handful, each with its own strengths and weaknesses (for comprehensive reviews, see Mitchell and Carson, 1989 Freeman, 1993 Smith, 2000 Mathis et al., 2003). These include replacement costs and avoided costs analysis, factor income analysis, hedonic pricing, contingent valuation, and travel costs analysis. A discussion of these approaches follows later in this section. Although there is often considerable debate about the methods used and the accuracy of the values derived, there is little doubt that the unpriced economic value of ecosystem services is enormous.9... 

Approaches for Estimating the Economic Value of Ecosystem Services. As... 

Estimating the economic value for nonmarket ecosystem services presents a unique challenge because no direct evidence of value can be observed in actual behavior. Thus, methods that seek to estimate economic value based on willingness to pay generally fall into one of two categories those that use indirect evidence from observed actual economic behavior, and those that use direct evidence from hypothetical behavior.11... 

---