Ecosystem services

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As stated by the IUCN, in recent years, attention for ecosystem services and their values have increased rapidly. Several international conferences (e.g. the IUCN's 2004 World Conservation Congress) and Conventions (for example CBD or Ramsar) placed "Ecosystem Services and Benefits" high on the agenda. The release of the Millennium Ecosystem Assessment (2005) was an important milestone, highlighting the dependence of human wellbeing on ecosystems, and stressed the need to better describe, quantify and value (ecologically, culturally and economically) the importance and benefits of the goods and services provided by ecosystems and biodiversity. Walter Reid, Robert Watson and Harold Mooney, leaders of the Millenium Ecosystem Assessment, defend the use of the term 'ecosystem services' as an essential way of communicating to policy makers the importance of the benefits that people receive from ecosystems (original reference).

Ecosystem services are a key concept in our network, linking social perceptions and use of ecosystems to their properties, that is both their ecological structure (such as species composition) and processes (such as annual biomass productivity). In spite of its recognized importance, multiple definitions exist for the term and we have listed here the most common of these. We have also included a practical example in defining our use of the term in the Chancani (Argentina) case-study. Additional details and links are given on ecosystem service classifications and their use in economic valuation and payment schemes for ecosystem service.


The term "Ecosystem services" is vague and has multiple definitions. This is both it's strength as ambiguity enables it to bring together people with a priori differing conceptions of the term, as well as it's weakness since it is not always easy to translate into tangible, manageable, "things" to measure, count or qualify. Below are some of the most common definitions, sometimes followed by a brief comment.

Daily et al., 1997

Ecosystem services refers to a wide range of conditions and processes through which natural ecosystems, and the species that are part of them, help sustain and fulfil human life. These services maintain biodiversity and the production of ecosystem goods, such as seafood, wild game, forage, timber, biomass fuels, natural fibers, and many pharmaceuticals, industrial products, and their precursors. The harvest and trade of these goods represent important and familiar parts of the human economy.

To find out more, you can consult Issues in Ecology on ecosystem services published by the Ecological Society of America.

ESA, 2000

Ecosystem Services are the processes by which the environment produces resources that we often take for granted such as clean water, timber, and habitat for fisheries, and pollination of native and agricultural plants. Whether we find ourselves in the city or a rural area, the ecosystems in which humans live provide goods and services that are very familiar to us.

This definition is part of an educational package available here.

IPCC, 2001

"Ecosystem services are ecological processes or functions that have value to individuals or society". This definition was taken from the useful glossary of terms of the IPCC's Third Assessment Report.

CSIRO Ecosystem Services Project, 2002

The billions of species on our planet, including humans, interact with one another in many ways. These interactions among and between species are what define ecosystems. Ecosystems in turn, provide many "services" from which humans benefit. Ecosystem services are the transformation of a set of natural assets (soil, plants and animals, air and water) into things that we value. For example, when fungi, worms and bacteria transform the raw "ingredients" of sunlight, carbon and nitrogen into fertile soil this transformation is an ecosystem service. However, if we allow natural assets to decline, so do the benefits. Conversely, if we look after and maintain our natural assets, we will benefit from greater returns.

This definition is available on the Ecosystem Services Project website.

Boyd & Banzhaf, 2006

Ecosystem services are components of nature, directly enjoyed, consumed, or used to yield human well-being. This deceptively innocuous verbal definition is in fact quite constraining and has important properties from the standpoint of welfare measurement. One important aspect of this definition relates to the language “directly enjoyed, consumed, or used.” This signifies that services are end-products of nature. The distinction between end-products and intermediate products is fundamental to welfare accounting. If intermediate and final goods are not distinguished, the value of intermediate goods is double-counted because the value of intermediate goods is embodied in the value of final goods.

This definition was taken from working paper of the RFF (Resources for the Future). The authors argue that their stricter definition allows the integration of ecosystem services into national accounts (both "green accounts" and standard GDP & GNP) because they can be counted. The same definition was recently proposed in Boyd & Banzhaf (2007), published in Ecological Economics.

Díaz et al., 2005 and 2006

Ecosystem services are the benefits provided by ecosystems to humans, which contribute to making human life both possible and worth living. This definition is used in Chapter 11 of the Millennium Ecosystem Assessment (Díaz et al. 2005) and in Díaz et al., 2006.

UK Parliamentary Office for Science and Technology, 2007

An ecosystem may be considered as a unit within which an assemblage of living organisms interact with each other and with the chemical and physical environment. (...) Some of the interactions both between organisms and with their physical habitats (biophysical interactions) result in ecological processes that interact at different scales to deliver ‘ecosystem services’ or ‘natural capital’ that have value to people. (...) For example, the structures within woodland habitats can slow the passage of water into water courses, thereby contributing to the ecosystem regulating service of flood protection. The ecological processes that contribute to ecosystem services, in this case slowing the passage of water, are referred to as ecosystem functions. The habitats and organisms that give rise to the ecological processes are usually described as the ecological assets, and these can be protected to ensure ecosystem services are maintained.

The UK parliament refers back to the definition of the Millenium Ecosystem Assessment. However, the full parliamentary report is an interesting synthesis made in policy circles.

WWF, 2007

Environmental (or Ecosystem) Services are the multiple benefits that people receive from nature, such as water purification and flood control by wetlands. PES schemes reward those whose lands provide these services, with subsidies or market payments from those who benefit. This could mean, for example, that downstream users of water purified by an upstream forest, such as bottling companies or local residents, pay those who manage these upstream forests to ensure a sustainable flow of this service. Arranging payments for the benefits provided by forests, coral reefs and other natural ecosystems is a way to recognize their value and ensure that these benefits continue well beyond present generations. It encourages landowners to manage resources in a manner that ensures they continue to generate the environmental services. In addition to benefiting biodiversity, such schemes also have a potential to benefit poor landowners who manage these environmental services.

This definition was taken from the WWF's web page on PES (payment for ecosystem services). It is often the case that ecosystem service definitions that focus on payment schemes use the term environmental services rather than ecosystem services (see also the definition of the environmental services industry by the OECD).

The Katoomba Group, 2007

The Katoomba Group plans to publish guidelines for identifying ecosystem services for setting up payment schemes. We will add their definition when it is published.

Wallace, 2007

He uses the same definition as the Millennium Ecosystem Assessment, but limited to "outcomes sought through ecosystem management". In his paper, Wallace underlines the ambiguity of the term as it is used by the Millennium Assessment.

Our definition for the Chancani case-study

Defining what we mean by ecosystem service is a key issue for the DiverSus network. During an internal workshop in Cordoba, Argentina, network participants from Argentina discussed their use of the term (see taller interno 17/05/2007 for more information).

A practical example to help clarify the concept

Based on a locally relevant example (livestock raising in Chancani), they discussed whether the ecosystem service was (1) the fodder, (2) the cow or (3) the cow's products (e.g. meat, leather, manure...). They agreed that:

  • The cow's products require capital and workforce input (e.g. for killing and processing the animal...). This means that the ecosystem is only one of many inputs in the elaboration of the these final products.
  • The cow itself grazes the ecosystems, and was most probably born there. However, it probably does not graze only one ecosystem type (i.e. a "configuration" as described in the Chancani case-study page). It might graze under shrub cover in the dry season but prefer more open woodland in the rain season.
  • Fodder is something that the cow needs for growth and reproduction, and that can be quantified within a given ecosystem.

Based on the above example, they agreed that the distinction between fodder, the ecosystem service, and meat, leather and manure, the product was important. Social scientists, in their participatory work, will need to keep this distinction in mind so that their data can be related to the data produced by the ecologists in their sampling sites.

This distinction is close to the one made by Boyd & Banzhaf (2006) (see above), sharing its conceptual clarity, without its mathematical formalism.

Including stakeholder descriptors of relevant ecosystem properties

In order to facilitate the interdisciplinary linkages, network participants from Argentina also discussed the usefulness of an additional concept or stage in the functional diversity - ecosystem service chain: "stakeholder descriptors".

Descriptors are the stakeholders' own description of what characteristics of the ecosystem, in particular its vegetation or its plant species, that make it a good or bad "quality" ecosystem for a given ecosystem service.

Going back to the cow example, a livestock raiser, might say that "the cows don't eat the grass here, it is too tough...". Such statements make it easier to relate fodder production to the community weighted mean of leaf tensile strength, for example.

Ecosystem service classifications

As Wallace (2007) rightly tells us: "If ecosystem services are to provide an effective framework for natural resource decisions, they must be classified in a way that allows comparisons and trade-offs amongst the relevant set of potential benefits". This purpose is not necessarily well served by the following classification, yet they remain interesting if only to see how classifications have evolved.

Costanza et al., 2007

Costanza et al. (1997) made an estimation of the contribution of ecosystem services to world GDP. Although based on a challengeable (and challenged) methodology, their estimation of US$ 16–54 trillion raised considerable interest.

They distinguish "ecosystem functions" from "ecosystem services" (see below for the classification of the former in de Groot et al., 2002). Their classification of ecosystem services includes:

  • Gas regulation (regulation of atmospheric chemical composition)
  • Climate regulation (regulation of global temperature, precipitation...)
  • Disturbance regulation (capacitance, damping and integrity of ecosystem response to environmental fluctuation) is this resilience?
  • Water regulation (regulation of hydrological flows)
  • Water supply (storage and retention of water)
  • Erosion control and sediment retention (retention of soil within an ecosystem)
  • Soil formation
  • Nutrient cycling (storage, internal cycling, processing and acquisition of nutrients)
  • Waste treatment (recovery of mobile nutrients and removal or breakdown of excess xenobiotics)
  • Pollination
  • Biological control (trophic-dynamic regulation of populations, such as predator regulation of pest prey populations)
  • Refugia (habitat for animal and plant populations)
  • Food production
  • Raw materials (other than foodstuffs)
  • Genetic resources (sources of unique biological materials and products)
  • Recreation
  • Cultural (opportunities for non commercial uses)

de Groot et al., 2002

The classification of ecosystem services that de Groot et al. (2002) proposed was inspired by, and very similar to, that of Costanza et al. (1997) (above). De Groot et al. (2002) offer the following classification of ecosystem functions:

  • Regulation functions: the capacity of natural and semi-natural ecosystems to regulate essential ecological processes and life-support systems through biogeochemical cycles and other bbiospheric processes. Resulting clean air, water and soil (among others) benefit humans.
  • Habitat functions: Natural ecosystems provide refuge and reproduction habitat to wild plants and animals, thereby contributing to the in situ conservation of biological diversity.
  • Production functions: Photosynthesis and nutrient uptake by plants makes carbo-hydrates available, directly or undirectly, for human consumption as food, raw materials, energy or genetic material.
  • Information functions: Because most of human evolution took place within undomesticated habitats, natural ecosystems provide an essential "reference function" and contribute to human health by providing opportunities for reflection, spiritual enrichment etc.

The Millenium Ecosystem Assessment classification

The Millenium Ecosystem Assessment distinguishes four classes of ecosystem services:

  • Provisioning services, the products obtained from ecosystems, including, for example, genetic resources, food and fiber, and fresh water.
  • Regulating services, the benefits obtained from the regulation of ecosystem processes, including, for example, the regulation of climate, water, and some human diseases.
  • Supporting services, that are necessary for the production of all other ecosystem services. Some examples include biomass production, production of atmospheric oxygen, soil formation and retention, nutrient cycling, water cycling, and provisioning of habitat.
  • Cultural services, the non-material benefits people obtain from ecosystems through spiritual enrichment, cognitive development, reflection, recreation, and aesthetic experience as well as knowledge systems, social relations, and aesthetic values.

The MA classification si now widely used, both in scientific publications (e.g. Díaz et al., 2006) and in government sponsored projects (e.g. in the British DEFRA's Ecosystem Service Project).

Many of the MA's authors consider today that supporting and regulating ecosystem services cannot be usefully distinguished. In fact, our network agreed that the biggest gap is between the supporting-regulating services that are essentially defined by environmental scientists and the provisionning and cultural services whose definition require input from the actual beneficiaries of those services.

Wallace, 2007

In a 2007 paper in Biological Conservation (139: 235-246), Ken J. Wallace argues for a classification of ecosystem services that allows comparisons and trade-offs amongst the relevant set of potential benefits. According to him, an effective classification of ecosystem services should include:

  • A minimum set of sharply defined terms that effectively encompass the topic (see the definitions section above)
  • Clarity concerning the terms used to characterise services
  • Specifications of the point at which linked processes deliver a service.

He offers the following classification:


  • Food
  • Oxygen
  • Potable water
  • Energy (e.g. for cooking)
  • Dispersal aids (transport)


  • Protection from predation


  • Benign environmental regimes of:
    • temperature
    • moisture
    • light
    • chemical environment


  • Access to resources for:
    • spiritual/philosophical contentment
    • a benign social group (social relations)
    • recreation & leisure
    • meaningful occupation
    • aesthetics
    • opportunity values, capacity for cultural and biological evolution (knowledge, genetic resources)

Payment for ecosystem services

Very pragmatic payment for ecosystem services schemes are being set-up in many parts of the world. They provide sucess-stories of how the ecosystem service concept can be incorporated into land-use policies. However, they often focus on a limited number of ecosystem services.

Common ecosystem service payment schemes

In the CIFOR Occasional Paper No. 42 (2005), Sven Wunder lists 4 ES types that currently stand out in Payment for Environmental Services (PES) schemes:

  • C sequestration and storage (e.g. an electricity company paying farmers in the tropics for planting and maintaining additional trees)
  • Biodiversity protection (e.g. conservation donors paying local people for setting aside areas to create a biological corridor)
  • Watershed protection (e.g. downstream water users paying upstream farmers for adopting land uses that limit soil erosion or flooding risks)
  • Landscape beauty (e.g. a tourism operator paying a local community not to hunt in a forest being used for wildlife viewing).

Ecosystem services and the business world

Perhaps because of its utilitarian content and its potential for economic valuation, the ecosystem service concept has been taken-up by the business world.

Two recent UNEP Finance Initiative meetings outlined key challenges and barriers for financial institutions in the biodiversity & ecosystem services arena. These include:

  1. Need to develop best practice case studies at the country and sector level to better inform financial institutions on risks and opportunities.
  2. Difficulty in reconciling and communicating short-term private gains vs. long-term social (and private) impacts.
  3. Need for disaggregating "ecosystem services" into more specific, "bite-sized" components or issues (e.g., fresh water, carbon, flood control); otherwise, the issue remains too big for an institution such as a bank to tackle effectively.
  4. Absence of relevant and effective regulatory frameworks and price signals.
  5. Absence of consensus on ecosystem services valuation.
  6. Need for developing capacity of consultants that work with banks on these issues.

You can find out more on ES finance in the Katoomba Group's Ecosystem Market Place, in the Nature Valuation and Financing network or by reading a recent report on biodiversity and finance published by the IUCN.

Recommendations on accounting for ecosystem services (but also biodiversity and/or the environment in general) are increasingly taken into consideration in the business world (e.g. a guide to developing biodiversity action plans for the oil and gas sector published by the International Petroleum Industry Environmental Conservation Association.

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