Organisations, environmental management and innovation

# 2.11 Ecosystem services

You may already be familiar with the term ‘ecosystem services’. This very old notion maintains that humans derive certain ‘services’ from natural environments, such as drinking water, materials, food, air and so on. The history of ideas relating to ecosystem services is beyond the scope of this course, but it's important to be aware of it, as it does have some bearing on the way environmental issues are being understood by contemporary environmental managers within organisations. In many respects, the notion of ecosystem services is being claimed as an innovation in the way organisations try to make sense of their connections to the natural environment. Its increasing prevalence in policy means ecosystem services are an important aspect of environmental management.

In brief, ecosystem services are divided into four main categories, each resulting in some kind of service:

- Provisioning services: products obtained from ecosystems
- Regulating services: benefits obtained from the regulation of ecosystem processes
- Cultural services: non-material benefits, e.g. aesthetic and well-being, cognitive development, reflection, recreation
- Supporting services: necessary for the production of all other ecosystem services.

## Activity 23 Ecosystem services

Allow about 5 minutes

Match the following examples of ecosystem services to the relevant category.

Water

Provisioning services

Waste processing

Regulating services

Scientific discovery

Cultural services

Seed dispersal

Supporting services

## Discussion

A few more examples are provided in the following table:

## Table 3 Ecosystem services

Category | Examples of service
Provisioning services (products obtained from ecosystems) | foods of all types water minerals chemicals energy sources
Regulating services (benefits obtained from the regulation of ecosystem processes) | climate regulation waste processing purification of water and air crop pollination pest and disease control
Cultural services (non-material benefits, e.g. aesthetic and well-being, cognitive development, reflection, recreation) | cultural, intellectual, religious and spiritual inspiration recreational experiences (including eco-tourism) scientific discovery
Supporting services (necessary for the production of all other ecosystem services) | nutrient dispersal seed dispersal primary production

(Adapted from DEFRA, 2007, p. 11)

Attempts to assess impacts on ecosystem services have been gaining ground in recent years. One of the most ambitious is The Economics of Ecosystems and Biodiversity (TEEB) report (2013), which attempted to draw attention to the global extent of biodiversity loss.

#### Reading 7 TEEB, 2013, pp. 7–13

Approximate reading time: 20 minutes

Read the ‘Executive Summary’ (pp. 7–13) section of the TEEB report on biodiversity titled ‘Natural Capital at Risk’ (TEEB, 2013).

## Activity 24 The TEEB report

Allow about 20 minutes

Focusing on the general aspects (rather than the detail), what are the main concerns about the use and pricing of ecosystem services by the organisations considered in the document? Summarise the recommendations for companies and governments.

Provide your answer...

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## Discussion

The main concerns are that the depletion of and damage to ecosystem services are not being included in the pricing systems of organisations and products. Environmental costs are therefore ‘externalised’, particularly where regulation – a way of ensuring organisations take account or internalise environmental costs – is weak. Even where environmental costs are normally externalised, droughts or floods can cause rapid internalisation of costs through increased commodity prices. This can mean many organisations are exposed to environmental risks within their supply chain.

Although there are some modelling issues to consider, the study suggests that the currently unpriced cost of natural capital used (i.e. land use, water consumption, greenhouse gas emissions, air, land and water pollution, and waste) is approximately $7 trillion (at 2009 prices) and could be higher if all parts of the supply sector were included.

Globally, greenhouse gas emissions from coal-fired power stations in East Asia, and cattle ranching and farming in South America, have the greatest environmental impacts accounting for natural capital costs of over $673 billion.

The report suggests that the consumer sector, in particular food and timber processing, as well as leather and hide tanning, are the sectors with supply chains most at risk from volatile environmental costs. This can affect consumers and suppliers in different countries and is prompting some organisations to develop close links with suppliers. The highest impacts are soybean and oil seed processing and animal production.

The report suggests risks to agricultural commodity prices are particularly notable because, overall, costs to natural capital exceeds revenue. However, organisations that seek to align business models with more sustainable use of natural capital in their supply chains should be able to be more competitive because of greater resilience to environmental impacts, reduced costs and improved security of supply.

The main recommendations for companies centre on developing better data on supply chain risks, internalising natural capital costs, improving resource efficiency in supply chains and exploring alternative suppliers. The recommendations for governments centre on understanding how risks to natural capital are distributed in the economy, understanding how natural capital costs could affect global competitiveness and developing policies for internalising costs to the economy.

The reading was quite challenging to summarise, but hopefully you have at least gained a sense of how the notion of ecosystem services can be used to convey economic costs – a language familiar to policy-makers and businesses.

However, you may also have noticed that ecosystem services place the emphasis on the services that arise from the item or thing itself and have less emphasis on the item itself. This suggests a rather anthropocentric view of the environment where something is not valued intrinsically, but rather by the service it provides. Critics have suggested the concept of ecosystem services remains within an economic language and economic framework, which had created the problems in the first place and led to understanding the environment as an ‘immense collection of service commodities’ (Robertson, 2012, p. 386). In other words, ecosystem services are a way of placing an economic valuation on environmental goods and services within a framework of economic growth as an indicator of well-being – a framework that increases pressure on the natural environment as part of trade-offs between development and the environment.

Thus, the extent to which ecosystem services represent an innovation in conceptualising and managing human–environment relations and the extent to which it can be used to foster innovations in development is subject to some debate, as is the extent to which ecosystem services are likely to be a helpful addition to the EIA. If we return to Ackoff, is the concept and practice of ecosystem services an example of doing the wrong thing righter? There are no immediate answers to the question, but this debate is discussed in Reading 8, part of a special issue on ecosystem services in the journal Environmental Impact Assessment Review.

#### Reading 8 Baker et al., 2013, pp. 5–9

Approximate reading time: 20 minutes

Read Sections 4 and 5 (pp. 5–9) of ‘Ecosystem services in environmental assessment – Help or hindrance?’ (Baker et al., 2013).

## Activity 25 Ecosystem services – help or hindrance?

Allow about 15 minutes

Based on the research explored in the paper, what do the authors consider to be the main strengths and weaknesses of using ecosystem services in environmental assessment? Does the paper make any suggestions as to whether ecosystem services represent an innovation in environmental assessment approaches?

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## Discussion

According to the authors, the main strengths of using ecosystem services in environmental assessment are:

- It allows for integration of bundles of services rather than ‘discrete’ environmental topics.
- The environment is described in terms of benefits rather than things that can help in communication and policy-making.
- Ecosystem services may resonate more easily with stakeholders and members of the public.
- The concept can avoid ‘either/or’-type arguments by emphasising environmental and economic benefits.
- Possible impacts of the environment on the plan or project subject to an EIA can also be considered using ecosystem services.
- The value of the environment is made explicit through ecosystem services.

Some weaknesses include:

- The language of ecosystem services may not connect with all stakeholders.
- Ecosystem services is conceptually complex.
- The legal framework of environmental assessment may be undermined by the contested nature of ecosystem services valuation.
- An ecosystem services assessment can be very resource intensive.
- The different plans, programmes or projects and institutional contexts may mean ecosystem services is irrelevant in some cases.

The extent to which ecosystem services represents an innovation is therefore debatable.

On one hand, it does bring the discussion of environment and economics into a single arena and allows new ways of thinking about the environment as a service provider. This leads to a monetary valuation, thereby allowing an environmental assessment to determine environmental costs.

On the other hand, it may just be another conceptual framing that continues the economic model of the environment as a resource and assumes the environment can be valued and costed. In any case, ecosystem services may not be appropriate to the particular context and situation.

Experience of ecosystem services in environmental assessment is still growing and commentaries are beginning to adopt more critical perspectives on ecosystem services (see Schröter et al., 2014).

However, some organisations are claiming they are using other innovative ways to make connections with the natural environment more explicit and more embedded in the life of organisations.

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