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DEF-PB12852_IntroEco.qxd 4/12/07 16:18 Page 1
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Co
Fore
Exec
Intro
Chap
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Policy
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Chap
Valua
Chap
Key C
Department for Environment, Food and Rural Affairs Chap
Nobel House Case
17 Smith Square
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© Crown Copyright 2007 Anne
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Further copies of this publication are available from:
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Product code PB12852
DEF-PB12852_IntroEco.qxd 4/12/07 16:18 Page 1
Contents
Foreword 2
Executive Summary 3
Introduction 7
Chapter 1:
The Case for the Valuation of Ecosystem Services 10
Chapter 2:
Policy Appraisal and the Environment – The Wider Context 14
Chapter 3:
The ‘Impact Pathway’ Approach to the Valuation of Ecosystem Services 21
Chapter 4:
Valuation of Ecosystem Services 29
Chapter 5:
Key Challenges and Opportunities 41
Chapter 6:
Case Study 49
Chapter 7:
Next Steps 58
Annex 1: Valuation Methods 60
Further References 62
edium
ust be Glossary 63
AKNOWLEDGEMENTS
Many people provided valuable comments in the drafting of this Introductory Guide. In particular, we would
like to thank the steering group which comprised officials from Defra, Department for Transport,
Department for Communities and Local Government, HM Treasury and the Environment Agency. We would
also like to thank members of the Working Group on Economics and Funding of the England Biodiversity
Group whose members come from Defra, Natural England, the Joint Nature Conservation Committee,
paper the Royal Society for the Protection of Birds and the Forestry Commission for their support, comments
and advice.
1
DEF-PB12852_IntroEco.qxd 5/12/07 09:37 Page 4
Foreword Ex
Our natural environment is vital to our health and prosperity. Over recent years, much progress has i
been made towards getting a better understanding of the role of the natural environment in
contributing to our economic performance as a country and as individuals. Environmental assets –
like other assets – provide benefits that enhance economic performance, offer new opportunities for
investment and employment, and improve living standards and quality of life. And – like other assets
– enhancing or diminishing the condition of environmental assets increases or reduces the stream of
benefits we can derive from them in the future. ii
Despite these advances, many indicators suggest we are using the natural environment in a non-
sustainable way, that is, in a way that diminishes their condition. This partly reflects the choices we
make as a society. But it also reflects the fact that we are not always good enough at informing those
choices. In particular, the benefits the natural environment provides are not yet valued properly in iii
policy and project appraisal across government. The new cross-government natural environment
Secure a Healthy Natural Environment for Today and the
Public Service Agreement (PSA),
Future, explicitly calls for the value of the services provided by the natural environment to be
reflected in decision-making.
This Introductory Guide looks at how the framework for the valuation of the natural environment
could be improved by offering a comprehensive and systematic means to ensuring that ecosystems iv
and the services they provide are taken into account in policy appraisal. It builds on traditional
valuation approaches by explicitly considering the environment as a whole – bringing together land,
water, air, soil and biodiversity – and recognising that their linkages provide a wide variety of services
and benefits that are not specific to any one part. The approach stresses that changing any one part
of our environment can have consequences, both positive and negative, and often unintended for
the ecosystem as a whole.
This Guide is a first step towards Defra’s aim to embed impacts on the natural environment in
decision-making. It is purposely ‘introductory’, recognising that further testing and development is v
needed to operationalise this approach in policy appraisal across government.
Comments on this guide are very welcome and should be sent to economics@defra.gsi.gov.uk.
vi
Richard Price
Chief Economist, Defra
December 2007
2
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