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Framework for valuing ecosystem services in the Himalayas

A large portion of the world’s population depends directly and indirectly on mountain resources for their livelihoods and wellbeing. However, the importance of ecosystem services arising from mountains is not well recognised. Approaches to economic valuation of services and payment mechanisms in mountain areas are needed to comprehend and realise the benefits. This paper aims to bridge this gap by outlining a general framework for economic valuation of ecosystem services focusing on mountain specific situations, which could be applied in the Hindu Kush Himalayan region.

The paper presents the following reasons why it is important to value ecosystem services:

  • raising awareness – assigning a monetary value to ecosystem services in mountain areas helps to raise awareness of the importance of the services that upstream systems provide to downstream users
  • creating a ‘market’ for ecosystems – valuation of ecosystem services is essential for creating a market
  • improving management mechanisms – valuation helps in deciding between different policy options, in identifying more efficient and cost effective alternatives, and in designing appropriate institutional and market instruments, including payment for ecosystem services
  • providing a framework for decision making – valuation techniques provide supporting arguments for the protection of biological resources and understanding of ecosystems in general by evaluating the costs and benefits of development and environmental decisions as a trade-off between the resources and their utility values
  • extending justice and equity – it is possible to show how costs and benefits are distributed across society, thus extending justice and equity by distributing the benefits and costs of any change in ecosystem services.

The paper presents the following limitation of economic valuation:

  • it cannot value everything because not all benefits provided by ecosystems are fully translatable into economic terms, damage to ecosystems can be non-linear and the impact of changes in ecosystems can be much higher or irreversible above certain thresholds
  • methodological limitations constrain the extent to which economic valuation methods can capture the ecological interdependencies of different ecosystem entities
  • it is just an indication of the value of an ecosystem rather than an actual value, because it relies on stated preferences and does not capture normative and ethical aspects of ecosystems
  • it helps to inform management decisions, but is only useful when decision-makers take appropriate action for conservation including enabling strong institutions and governance mechanisms, multi-stakeholder efforts, and context and ecosystem specific policy.