Valuing Ecosystems and Biodiversity

Abstract

Environmental resources in the Great Plains supply a flow of direct and indirect services to the citizenry. The services provided by these ecosystems and their corresponding levels of biological diversity are multifarious—ranging from basic life-support to the filtration of nonpoint source pollution from urban and rural runoff. While these resources provide a nearly limitless set of valuable attributes, many of their services remain unpriced by the market. The services are rarely bought and sold by the pound on the auction block, and therefore never enter into private markets and remain unpriced by the public sector. For example, the market price of cropland does not generally account for the nutrient filtration and wildlife habitat services provided by a Nebraska wetland. The market undervalues wetland services because the associated costs and benefits accrue to more than just the owner of the land. Water filtration benefits all those downstream; wildlife does not stay within the confines of one landowner’s property. This inability to exclude others from enjoying benefits or suffering costs prevents the market price from sending the correct signal about the true value of the wetland (Crocker and Tschirhart 1992).