Ecological Economics 41 (2002) 393– 408
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   SPECIAL ISSUE: The Dynamics and Value of Ecosystem Services: Integrating
           Economic and Ecological Perspectives

 A typology for the classification, description and valuation
     of ecosystem functions, goods and services
   Rudolf S. de Groot a,*, Matthew A. Wilson b,1, Roelof M.J. Boumans b,1
   a
     International Center for Integrati6e Studies (ICIS), Maastricht Uni6ersity and En6ironmental Systems Analysis Group,
              Wageningen Uni6ersity, PO Box 616, NL-6200 MD Maastricht, The Netherlands
         b
          Center for En6ironmental Studies, Institute for Ecological Economics, Uni6ersity of Maryland, USA




Abstract

  An increasing amount of information is being collected on the ecological and socio-economic value of goods and
services provided by natural and semi-natural ecosystems. However, much of this information appears scattered
throughout a disciplinary academic literature, unpublished government agency reports, and across the World Wide
Web. In addition, data on ecosystem goods and services often appears at incompatible scales of analysis and is
classified differently by different authors. In order to make comparative ecological economic analysis possible, a
standardized framework for the comprehensive assessment of ecosystem functions, goods and services is needed. In
response to this challenge, this paper presents a conceptual framework and typology for describing, classifying and
valuing ecosystem functions, goods and services in a clear and consistent manner. In the following analysis, a
classification is given for the fullest possible range of 23 ecosystem functions that provide a much larger number of
goods and services. In the second part of the paper, a checklist and matrix is provided, linking these ecosystem
functions to the main ecological, socio–cultural and economic valuation methods. © 2002 Elsevier Science B.V. All
rights reserved.

Keywords: Classification of ecosystem functions; Typology of goods and services; Ecological and socio-economic valuation



                                   concern with the valuation of ecosystem func-
1. Introduction
                                   tions, goods and services. Early references to the
                                   concept of ecosystem functions, services and their
 In the past few decades, the field of ecological
                                   economic value date back to the mid-1960s and
economics has witnessed a spectacular rise of
                                   early 1970s (e.g. King, 1966; Helliwell, 1969;
                                   Hueting, 1970; Odum and Odum, 1972). More
 * Corresponding author. Tel.: +31-43-388-2691; fax: + 31-
                                   recently, there has been an almost exponential
43-388-4916
 E-mail address: d.degroot@icis.unimaas.nl (R.S. de Groot).     growth in publications on the benefits of natural
 1
  As of 09/01/2002, Dr. Wilson and Dr. Boumans can be
                                   ecosystems to human society (see for example,
reached at the Gund Institute for Ecological Economics, Uni-
                                   Pearce, 1993; Turner, 1993; De Groot, 1992, 1994;
versity of Vermont, School of Natural Resources, George D.
                                   Bingham et al., 1995; Daily 1997; Costanza et al.,
Aiken Center, Burlington VT 05405-0088, USA.


0921-8009/02/$ - see front matter © 2002 Elsevier Science B.V. All rights reserved.
PII: S 0 9 2 1 - 8 0 0 9 ( 0 2 ) 0 0 0 8 9 - 7
               R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408
394




     Fig. 1. Framework for integrated assessment and valuation of ecosystem functions, goods and services.


                                it relates to the benefits derived by humans from
1997; Pimentel and Wilson, 1997; Limburg and
                                the properties and processes of ecosystems (e.g.
Folke, 1999; Wilson and Carpenter, 1999; Daily et
                                food production and waste treatment).
al., 2000). Despite the increase in publications on
                                 In this paper, we explicitly define ecosystem
ecosystem goods and services, a systematic typol-
                                functions as ‘the capacity of natural processes and
ogy and comprehensive framework for integrated
                                components to provide goods and services that
assessment and valuation of ecosystem functions
                                satisfy human needs, directly or indirectly’ (De
remains elusive. This paper, therefore, aims to
                                Groot, 1992). Using this definition, ecosystem
provide such an integrated framework, of which
                                functions are best conceived as a subset of ecolog-
the main elements are presented in Fig. 1.
                                ical processes and ecosystem structures (see Fig.
  As Fig. 1 shows, the first step towards a com-
                                1). Each function is the result of the natural
prehensive assessment of ecosystem goods and
                                processes of the total ecological sub-system of
services involves the translation of ecological
                                which it is a part. Natural processes, in turn, are
complexity (structures and processes) into a more       the result of complex interactions between biotic
limited number of ecosystem functions. These          (living organisms) and abiotic (chemical and phys-
functions, in turn, provide the goods and services       ical) components of ecosystems through the uni-
that are valued by humans. In the ecological          versal driving forces of matter and energy.
literature, the term ‘ecosystem function’ has been        Although a wide range of ecosystem functions
subject to various, and sometimes contradictory,        and their associated goods and services have been
interpretations. Sometimes the concept is used to       referred to in literature, our experience suggests
describe the internal functioning of the ecosystem       that it is convenient to group ecosystem functions
(e.g. maintenance of energy fluxes, nutrient          into four primary categories (De Groot et al.,
(re)cycling, food-web interactions), and sometimes       2000).
              R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408                395


1. Regulation functions: this group of functions      society can be analyzed and assessed through the
  relates to the capacity of natural and semi-nat-     goods and services provided by the functional
  ural ecosystems to regulate essential ecological     aspects of the ecosystem. The ecosystem function-
  processes and life support systems through        concept thus provides the empirical basis for the
  bio-geochemical cycles and other biospheric       classification of (potentially) useful aspects of nat-
  processes. In addition to maintaining ecosys-      ural ecosystems to humans: observed ecosystem
  tem (and biosphere) health, these regulation       functions are reconceptualized as ‘ecosystem
  functions provide many services that have di-      goods or services’ when human values are im-
  rect and indirect benefits to humans (such as       plied. The primary insight here is that the concept
  clean air, water and soil, and biological con-      of ecosystem goods and services is inherently an-
  trol services).                     thropocentric: it is the presence of human beings
2. Habitat functions: natural ecosystems provide      as valuing agents that enables the translation of
  refuge and reproduction habitat to wild plants      basic ecological structures and processes into
  and animals and thereby contribute to the (in      value-laden entities. As Fig. 1 shows, in our pro-
  situ) conservation of biological and genetic       posed framework, the form of this translation is
  diversity and evolutionary processes.          not restricted to economic terms of ‘consumption’
3. Production functions: Photosynthesis and nu-       but may also be ecological and/or socio-cultural
  trient uptake by autotrophs converts energy,       (see further).
  carbon dioxide, water and nutrients into a
  wide variety of carbohydrate structures which
  are then used by secondary producers to create
                               2. Classification of ecosystem functions, goods
  an even larger variety of living biomass. This
                               and services
  broad diversity in carbohydrate structures
  provides many ecosystem goods for human
                                Table 1 below provides an overview of the main
  consumption, ranging from food and raw
                               functions, goods and services that can be at-
  materials to energy resources and genetic
                               tributed to natural ecosystems and their associ-
  material.
                               ated ecological structures and processes. The first
4. Information functions: Because most of human
                               column indicates a list of 23 functions and the
  evolution took place within the context of
                               second column lists the ecological structures and
  undomesticated habitat, natural ecosystems
                               processes underlying these functions. The third
  provide an essential ‘reference function’ and
                               column provides a more detailed list with exam-
  contribute to the maintenance of human
                               ples of specific goods and services derived from
  health by providing opportunities for reflec-
                               these functions (not exhaustive).
  tion, spiritual enrichment, cognitive develop-
                                In Table 1, only those goods and services are
  ment, recreation and aesthetic experience.
                               included that can be used on a sustainable basis2,
  Although the rank-order of the function cate-
                               in order to maintain the ecosystem functions and
gories is somewhat arbitrary, there is an underly-
                               associated ecosystem processes and structures.
ing logic in their ordering. The first two
                                Given these restrictions, important non-renew-
function-groups (regulation and habitat) are es-
                               able natural mineral resources like gold, iron,
sential to the maintenance of natural processes
                               diamonds, and oil are excluded from this list.
and components, and are, therefore, conditional
                               Furthermore, energy sources that cannot be at-
to the maintenance of the availability of the other
two function-groups. Since human life is quite
                                2
                                 Ecological sustainability can be defined as ‘the natural
impossible in the absence of any one of these
                               limits set by the carrying capacity of the natural environment
function groups, however, the proposed hierarchy
                               (physically, chemically and biologically), so that human use
should not be interpreted too strictly.           does not irreversibly impair the integrity and proper function-
  Once the functions of an ecosystem are known,       ing of its natural processes and components’ (de Groot et al.,
the nature and magnitude of value to human          2000).
                 R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408
396

Table 1
Functions, goods and services of natural and semi-natural ecosystems

   Functions       Ecosystem processes and components         Goods and services (examples)

   Regulation Functions  Maintenance of essential ecological processes and
               life support systems
1  Gas regulation     Role of ecosystems in bio-geochemical cycles   1.1 UVb-protection by O3 (preventing disease).
               (e.g. CO2/O2 balance, ozone layer, etc.)     1.2 Maintenance of (good) air quality.
                                        1.3 Influence on climate (see also function 2.)
2  Climate regulation  Influence of land cover and biol. mediated     Maintenance of a favorable climate (temp.,
              processes (e.g. DMS-production) on climate     precipitation, etc) for, for example, human
                                        habitation, health, cultivation
3  Disturbance      Influence of ecosystem structure on dampening    3.1 Storm protection (e.g. by coral reefs).
   prevention      env. disturbances                 3.2 Flood prevention (e.g. by wetlands and
                                        forests)
4  Water regulation   Role of land cover in regulating runoff & river  4.1 Drainage and natural irrigation.
              discharge                     4.2 Medium for transport
5  Water supply     Filtering, retention and storage of fresh water  Provision of water for consumptive use
              (e.g. in aquifers)                 (e.g.drinking, irrigation and industrial use)
6  Soil retention    Role of vegetation root matrix and soil biota in 6.1 Maintenance of arable land.
                                        6.2 Prevention of damage from
              soil retention
                                        erosion/siltation
7  Soil formation    Weathering of rock, accumulation of organic    7.1 Maintenance of productivity on arable
              matter                       land.
                                        7.2 Maintenance of natural productive soils
8  Nutrient regulation  Role of biota in storage and re-cycling of     Maintenance of healthy soils and productive
              nutrients (eg. N,P&S)               ecosystems
9  Waste treatment    Role of vegetation & biota in removal or      9.1 Pollution control/detoxification.
              breakdown of xenic nutrients and compounds     9.2 Filtering of dust particles.
                                        9.3 Abatement of noise pollution
10  Pollination      Role of biota in movement of floral gametes     10.1 Pollination of wild plant species.
                                        10.2 Pollination of crops
11  Biological control  Population control through trophic-dynamic     11.1 Control of pests and diseases.
              relations                     11.2 Reduction of herbivory (crop damage)
              Pro6iding habitat (suitable li6ing space) for wild
   Habitat Functions                            Maintenance of biological & genetic diversity
              plant and animal species              (and thus the basis for most other functions)
12  Refugium function   Suitable living space for wild plants and animals Maintenance of commercially harvested species
13  Nursery function   Suitable reproduction habitat           13.1 Hunting, gathering of fish, game, fruits,
   Production Functions Pro6ision of natural resources           etc.
                                        13.2 Small-scale subsistence farming &
                                        aquaculture
14  Food         Conversion of solar energy into edible plants and 14.1 Building & Manufacturing (e.g. lumber,
              animals                      skins).
                                        14.2 Fuel and energy (e.g. fuel wood, organic
                                        matter).
                                        14.3 Fodder and fertilizer (e.g. krill, leaves,
                                        litter).
15  Raw materials     Conversion of solar energy into biomass for    15.1 Improve crop resistance to pathogens &
              human construction and other uses         pests.
                                        15.2 Other applications (e.g. health care)
16  Genetic resources   Genetic material and evolution in wild plants   16.1 Drugs and pharmaceuticals.
              and animals                    16.2 Chemical models & tools.
                                        16.3 Test- and essay organisms
17  Medicinal resources  Variety in (bio)chemical substances in, and other Resources for fashion, handicraft, jewelry, pets,
              medicinal uses of, natural biota          worship, decoration & souvenirs (e.g. furs,
18  Ornamental      Variety of biota in natural ecosystems with    feathers, ivory, orchids, butterflies, aquarium
   resources       (potential) ornamental use             fish, shells, etc.)
   Information Functions Pro6iding opportunities for cogniti6e de6elopment
                 R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408                 397

Table 1 (Continued)

   Functions       Ecosystem processes and components          Goods and services (examples)

19  Aesthetic information Attractive landscape features            Enjoyment of scenery (scenic roads, housing,
                                        etc.)
20  Recreation       Variety in landscapes with (potential) recreational Travel to natural ecosystems for eco-tourism,
              uses                        outdoor sports, etc.
21  Cultural and artistic Variety in natural features with cultural and    Use of nature as motive in books, film, painting,
   information      artistic value                   folklore, national symbols, architect., advertising,
                                        etc.
22  Spiritual and historic Variety in natural features with spiritual and   Use of nature for religious or historic purposes
   information      historic value                   (i.e. heritage value of natural ecosystems and
                                        features)
23  Science and education Variety in nature with scientific and educational Use of natural systems for school excursions,
              value                        etc. Use of nature for scientific research

Adapted from Costanza et al. (1997), De Groot (1992), De Groot et al. (2000).


tributed to a certain ecosystem type are excluded,          processes. Furthermore, analysis of ecosystem
                                   functions and services involves different scales,
e.g. wind and solar-energy. On the other hand,
                                   notably the physical scale of the ecosystem function
some non-ecosystem specific functions that can be
                                   itself, and the scale at which humans value the
used without (permanently) affecting the other
                                   goods and services provided. It is not a necessary
functions, such as the use of natural waterways for
                                   condition that the two correspond. When valuing
transportation, is included. Also some mineral
                                   ecosystem functions, these inter-linkages and scale
resources that are renewable within a time-frame of
                                   issues should be made clear, and on the next few
100–1000 years, like sand on beaches provided by
                                   pages each of the 23 functions are described in more
dead coral and shells, are included. In (economic)
                                   detail.
valuation of these goods and services due account
should be taken of these natural regeneration rates.
                                   2.1. Regulation functions and related ecosystem
  Since the use of one function may influence the
                                   ser6ices
availability of other functions, and their associated
goods and services, the capacity of ecosystems to            Natural ecosystems play an essential role in the
provide goods and services in a sustainable manner          regulation and maintenance of ecological pro-
should be determined under complex systems con-           cesses and life support systems on earth. The
ditions (see Limburg et al., 2002). The ecosystem          maintenance of the earth’s biosphere as human-
processes and components described in the second           ity’s only life support system in an otherwise
column of Table 1 should, therefore, be used in           hostile cosmic environment depends on a very
dynamic modeling to make these interdependen-            delicate balance between many ecological pro-
cies, and the implications for their valuation, more         cesses. Some of the most important processes
explicit (see Boumans et al., 2002).                 include the transformation of energy, mainly from
  It should be realized that ecosystem processes          solar radiation, into biomass (primary productiv-
and services do not always show a one-to-one             ity); storage and transfer of minerals and energy
correspondence: sometimes a single ecosystem ser-          in food chains (secondary productivity); biogeo-
vice is the product of two or more processes,            chemical cycles (e.g. the cycling of nitrogen and
whereas in other cases a single process contributes         other nutrients through the biosphere); mineral-
to more than one service. For example, the function         ization of organic matter in soils and sediments;
‘gas regulation’ is based on biogeochemical pro-           and regulation of the physical climate system. All
cesses (like carbon and oxygen cycling) which            these processes, in turn, are regulated by the
maintain a certain air quality but also influence the         interplay of abiotic factors (i.e. climate) with
greenhouse effect and thereby climate regulating           living organisms through evolution and control
              R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408
398


mechanisms. In order for humans to continue to         The services provided by this function relate to
benefit from these functions, we need to ensure        the maintenance of a favorable climate, both at
the continued existence and integrity of these        local and global scales, which in turn are impor-
natural ecosystems and processes. Because of the       tant for, among others, human health, crop pro-
indirect benefits of regulation functions, they are      ductivity, recreation and even cultural activities
often not recognized until they are lost or dis-       and identity.
turbed, but they are nevertheless essential to hu-
                               2.1.3. Disturbance pre6ention
man existence on earth.
                                This function relates to the ability of ecosys-
2.1.1. Gas regulation                    tems to ameliorate ‘natural’ hazards and disrup-
  Life on earth exists within a narrow band of       tive natural events. For example, vegetative
chemical balance in the atmosphere and oceans,        structure can alter potentially catastrophic effects
and any alterations in that balance can have         of storms, floods and droughts through its storage
positive or negative impacts on natural as well as      capacity and surface resistance; coral reefs buffer
social and economic processes. The chemical com-       waves and protect adjacent coastlines from storm
position of the atmosphere (and oceans) is main-       damage. The services provided by this function
tained by bio-geochemical processes which, in        relate to providing safety of human life and hu-
turn, are influenced by many biotic and a-biotic       man constructions.
components of natural ecosystems. Important ex-
                               2.1.4. Water regulation
amples are the influence of natural biota on pro-
cesses that regulate the CO2/O2 balance, maintain        Water regulation deals with the influence of
the ozone-layer (O3), and regulate SOx levels. The      natural systems on the regulation of hydrological
main services provided by the gas regulation func-      flows at the earth surface. This ecosystem function
tion are the maintenance of clean, breathable air,      is distinct from disturbance regulation insofar as
and the prevention of diseases (e.g. skin cancer),      it refers to the maintenance of ‘normal’ conditions
i.e. the general maintenance of a habitable planet.     in a watershed and not the prevention of extreme
  An important issue when trying to determine        hazardous events. Ecosystem services derived
the service value from this ecosystem function is      from the water regulation function are, for exam-
the scale at which the analysis is carried out. For     ple, maintenance of natural irrigation and
example, the influence of 1 hectare of ocean, or       drainage, buffering of extremes in discharge of
forest, as a carbon-sink is difficult to measure.       rivers, regulation of channel flow, and provision
However, the cumulative effect of losing 50% of       of a medium for transportation. A regular distri-
the earth forest-cover, or 60% of the coastal wet-      bution of water along the surface is, therefore,
lands, and the reduction of algae-productivity in      quite essential, since too little as well as too much
large parts of the oceans due to pollution, on the      runoff can present serious problems.
gas regulation function is considerable.
                               2.1.5. Water supply
2.1.2. Climate regulation                    This ecosystem function refers to the filtering,
  Local weather and climate are determined by        retention and storage of water in, mainly, streams,
the complex interaction of regional and global        lakes and aquifers. The filtering-function is mainly
circulation patterns with local topography, vege-      performed by the vegetation cover and (soil)
tation, albedo, as well as the configuration of, for     biota. The retention and storage capacity depends
example, lakes, rivers, and bays. Due to the green-     on topography and sub-surface characteristics of
house-properties of some atmospheric gases, gas       the involved ecosystem. The water supply func-
regulation (see above) also plays an important        tion also depends on the role of ecosystems in
role in this function, but reflectance properties of     hydrologic cycles (see function No. 4), but focuses
ecosystems are also important in determining         primarily on the storage capacity rather than the
weather conditions and climate at various scales.      flow of water through the system. Ecosystem ser-
              R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408           399


vices associated with water supply relate to the       growth and occurrence of life forms and constant
consumptive use of water (by households, agricul-      (re)cycling of these nutrients is, therefore,
ture, industry).                       essential.
                                Many structural and functional aspects of natu-
2.1.6. Soil retention                    ral ecosystems facilitate nutrient cycling at local
  The soil retention function mainly depends on       and global scales. For example, soil organisms
the structural aspects of ecosystems, especially       decompose organic matter thereby releasing nutri-
vegetation cover and root system. Tree roots sta-      ents to both local plant growth, but also to the
bilize the soil and foliage intercepts rainfall thus     atmosphere; algae in coastal waters perform this
preventing compaction and erosion of bare soil.       same function. Also, migration (of birds, fish and
Plants growing along shorelines and (submerged)       mammals) plays an important role in the distribu-
vegetation in near-coastal areas contribute         tion of nutrients between ecosystems.
greatly to controlling erosion and facilitating         Ecosystem services derived from nutrient cy-
sedimentation.                        cling are mainly related to the maintenance of
  The services provided by this function are very      ‘healthy’ and productive soils. Furthermore, nu-
important to maintain agricultural productivity       trient cycling plays an important role in the gas-,
and prevent damage due to soil erosion (both         climate- and water-regulation functions (see
from land slides and dust bowls).              above).

2.1.7. Soil formation                    2.1.9. Waste treatment
  Soil is formed through the disintegration of         To a limited extent, natural systems are able to
rock and gradually becomes fertile through the        store and recycle certain amounts of organic and
accretion of animal and plant organic matter and       inorganic human waste through dilution, assimila-
the release of minerals. Soil-formation usually is a     tion and chemical re-composition. Forests, for
very slow process; natural soils are generated at a     example, filter dust particles from the air, and
rate of only a few centimeters per century and        wetlands and other aquatic ecosystems can treat
after erosion, soil formation (or regeneration)       relatively large amounts of organic wastes from
from bedrock takes 100–400 years per cm topsoil       human activities acting as ‘free’ water purification
(Pimentel and Wilson, 1997).                 plants.
  Ecosystem services derived from soil formation
                               2.1.10. Pollination
relate to the maintenance of crop productivity on
cultivated lands and the integrity and functioning       Pollination is essential to most plants for repro-
of natural ecosystems.                    duction, including commercial crops. This ecosys-
                               tem function is provided by many wild
2.1.8. Nutrient cycling                   pollinator-species (including insects, birds and
  Life on earth depends on the continuous          bats). Without this function, many plant species
(re)cycling of about 30– 40 of the 90 chemical        would go extinct and cultivation of most modern
elements that occur in nature. In addition to        crops would be impossible. The service provided
carbon (C), oxygen (O), and hydrogen (H) (which       by this function can be derived from the depen-
have been discussed in the gas-, climate- and        dence of cultivation on natural pollination. With-
water-regulation services) the most important nu-      out wild pollinator species, current levels of
trients are nitrogen (N), sulfur (S) and phospho-      agricultural productivity could only be main-
rous (P). Other so-called macro-nutrients are        tained at a very high cost through artificial polli-
calcium, magnesium, potassium, sodium and chlo-       nation (Daily, 1997).
rine. Furthermore, a large number of so-called
                               2.1.11. Biological control
trace elements are needed to maintain life, includ-
ing, for example, iron and zinc. The availability of      As a result of millions of years of evolutionary
these elements is often a limiting factor to the       processes, the biotic communities of natural
               R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408
400


ecosystems have developed many interactions and        consequences (e.g. draining of mangrove lagoons)
feedback mechanisms that led to more or less         (Gilbert and Janssen, 1997).
stable life-communities and prevent the outbreak
                               2.3. Production functions and related ecosystem
of pests and diseases. According to Ehrlich (1985),
natural ecosystems control more than 95% of all        goods and ser6ices
the potential pests of crops and carriers of disease
to human beings.                         Natural and semi-natural ecosystems provide
                               many resources, ranging from oxygen, water,
2.2. Habitat functions and related ecosystem         food, medicinal and genetic resources to sources
                               of energy and materials for clothing and building.
ser6ices
                               However, a fundamental distinction should be
  Natural ecosystems provide living space for all      made between the use of biotic resources (i.e.
wild plant and animal species on earth. Since it is      products from living plants and animals) and
these species, and their role in the local and global     abiotic resources (mainly sub-surface minerals).
ecosystem that provide most of the functions de-       One important difference between biotic and abi-
scribed in this paper, the maintenance of healthy       otic resources is their renewability. Generally
habitats is a necessary pre-condition for the provi-     speaking, biotic resources are renewable, while
sion of all ecosystem goods and services, directly      most abiotic resources are not (although it may be
or indirectly. The habitat, or refugium function,       possible to recycle them). In this paper, produc-
can be split in two distinct sub-functions, each       tion functions are limited to renewable natural
providing different services:                 resources.
                                 Over time, humans have learned to manipulate
2.2.1. Refugium function                   the biotic productivity of natural ecosystems to
  By providing living space to wild plants and        provide certain resources in greater quantities
animals, both for resident and transient (migra-       than available under natural conditions. When
tory species), natural ecosystems are essential to      discussing the contribution of nature to (biotic)
the maintenance of the biological and genetic         production functions, a distinction must, there-
diversity on earth. Natural ecosystems can thus be      fore, be made between products taken directly
seen as a ‘storehouse’ of genetic information. In       from nature, like fish, tropical hardwoods, so-
this ‘genetic library’ the information of environ-      called ‘minor’ forest products (e.g. fruits, leaves),
mental adaptations acquired over 3.5 billion years      and products from cultivated plants and animals.
of evolution is stored in the genetic material of       In this paper, biotic production functions are
millions of species and sub-species. To maintain       limited to that part of natural Gross Primary
the viability of this genetic library (through evolu-     Production that can be harvested on a sustainable
tionary processes), maintenance of natural ecosys-      basis and for which people only need to invest
tems as habitats for wild plants and animals is        minimal time, labor and energy to harvest the
                               goods provided.3
essential.

2.2.2. Nursery function
  Many ecosystems, especially coastal wetlands,
provide breeding and nursery areas to species          3
                                  One service not included in Table 1 is bio-energy fixation
which, as adults, are harvested elsewhere for         although it actually is the most important service provided by
either  subsistence  or  commercial   pur-      natural ecosystems: without their capacity to convert (mainly)
                               solar energy into biomass there would be no life on earth.
poses.Unfortunately, the nursery services of many
                               Primary Productivity can be used to determine maximum
ecosystems are often unknown or ignored and in
                               sustainable use levels: as a general rule-of-thumb, not more
many instances nursery areas are, and have been,       than 50% of Gross PP (or 10% of Net PP) should be harvested
transformed to other more direct ‘economic’ uses       by man (Odum, 1971) to maintain the integrity of the support-
with disastrous ecological and socio-economic         ing ecosystems.
               R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408           401


2.3.1. Food                          wild and cultivated varieties of important crop-
  Although today most foods are derived from         species to complicated manipulations of genetic
cultivated plants and domesticated animals, a sub-      resources through biotechnological research and
stantial part of the global human diet still comes      genetic engineering (Oldfield, 1984).
from wild plants and animals. Natural ecosystems
                               2.3.4. Medicinal resources
are an almost unlimited source of edible plants
and animals, ranging from game and bush meat,          Nature contributes to the maintenance of hu-
fish and fowl, to vegetables, fungi, fruits, and such     man health in many ways: by providing chemicals
exotic items as birds’ nests and sponges. Certain       that can be used as drugs and pharmaceuticals, or
forms of small-scale subsistence farming and         which may be used as models to synthesize these
aquaculture, with minimal external inputs, can        drugs. Animals are used to test new medicines or
also be included in this function, as long as it does     may even serve as medical tools (such as medici-
not interfere with the other services provided by       nal leeches (Hirundo medicinalis) which are ap-
the ecosystem in question. The forest, grassland       plied to reduce blood pressure), or as student
or aquatic ecosystem that is partly or temporarily      specimens.
being used or converted for food production must
                               2.3.5. Ornamental resources
maintain most, preferably all, other functions or
be able to recover in a reasonable time period.         The use of wild plants and animals (and a-bi-
                               otic resources such as precious minerals and
2.3.2. Raw materials                     stones) for ornamental purposes is extensive and
  Here, only renewable biotic resources are taken      varied. Nature provides many kinds of raw mate-
into account, such as wood and strong fibers (for       rials which are used for fashion and clothing
building), biochemicals or biodynamic com-          (notably animal skins and feathers), handicrafts
pounds (latex, gums, oils, waxes, tannins, dyes,       (e.g. wood and ebony for carving), and objects of
hormones, etc.) for all kinds of industrial pur-       worship (i.e. products associated with cultural,
poses. Nature also provides many energy re-          tribal and religious ceremonies). Wild plants and
sources such as fuelwood, organic matter, animal       animals are also collected and traded as pets or
power and biochemicals (hydrocarbons, ethanol,        for decoration (e.g. ornamental plants) in private
etc.), and animal-feed (e.g. grass, leaves, krill).      households or to supplement the collections of
Abiotic resources like minerals, fossil fuels, wind-     zoological and botanical gardens. Many plants
and solar energy are not considered since they are      and animals and their products are used and
usually non-renewable and/or cannot be at-          traded as souvenirs, or as collector’s items (e.g.
tributed to specific ecosystems.                orchids, butterflies, aquarium fish, birds, feathers,
                               skins, ivory).
2.3.3. Genetic resources
                               2.4. Information functions and related ecosystem
  Many biotic resources which were once col-
lected in the wild are now obtained from culti-        goods and ser6ices
vated plants and domesticated animals. Yet, many
important crops could not maintain commercial          Natural ecosystems provide almost unlimited
status without the genetic support of their wild       opportunities for spiritual enrichment, mental de-
relatives. In order to maintain the productivity of      velopment and leisure. Because, the longest period
these cultivars, or to change and improve certain       of human evolution took place within the context
qualities such as taste, resistance to pests and       of undomesticated habitat, the workings of the
diseases, and adaptation to certain environmental       human brain for gathering information and a
conditions, regular inputs of genetic material from      sense of well-being are very strongly tied to the
their wild relatives and primitive (semi-) domesti-      experience of natural landscapes and species di-
cated ancestors remains essential. These inputs        versity (Gallagher, 1995). Nature is, therefore, a
may vary from simple cross-breeding between          vital source of inspiration for science, culture and
              R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408
402


art, and provides many opportunities for educa-       ing, etc. Interestingly, although we are almost
tion and research. As Forster (1973) put it already     constantly using nature for all these (and other)
25 years ago: ‘...natural environments provide a       purposes, we do not seem to be very conscious of
highly inspirational and educative form of re-cre-      this service and there is very little quantitative
ative experience, with opportunities for reflection,     information on the economic value of all these
spiritual enrichment and cognitive development        activities in literature.
through exposure to life processes and natural
                               2.4.4. Spiritual and historic information
systems’.
                                Natural ecosystems and natural elements (such
2.4.1. Aesthetic information                 as ancient water falls or old trees) provide a sense
  Many people enjoy the scenery of natural areas      of continuity and understanding of our place in
and landscapes which is reflected in, for example,      the universe which is expressed through ethical
the preference many people have for living in        and heritage-values. Also religious values placed
aesthetically pleasing environments and the de-       on nature (e.g. worship of holy forests, trees or
marcation of ‘scenic roads’. Aesthetic information      animals) fall under this function-category.
can have considerable economic importance, for
                               2.4.5. Scientific and educational information
example, through the influence on real estate
prices: houses near national parks or with a nice       Natural ecosystems provide almost unlimited
ocean view are usually much more expensive than       opportunities for nature study, environmental ed-
similar houses in less favored areas (Costanza et      ucation (e.g. through excursions) and function as
al., 1997).                         ‘field laboratories’ for scientific research, leading
                               to thousands of publications each year. Natural
2.4.2. Recreation and (eco)tourism              areas also serve as important reference areas for
  Natural ecosystems have an important value as       monitoring environmental change.
a place where people can come for rest, relax-
ation, refreshment and recreation. Through the
aesthetic qualities and almost limitless variety of     3. Valuing ecosystem functions, goods and
landscapes, the natural environment provides         services
many opportunities for recreational activities,
such as walking, hiking, camping, fishing, swim-         The importance (or ‘value’) of ecosystems is
ming, and nature study. With increasing numbers       roughly divided into three types: ecological, socio-
of people, affluence and leisure-time, the demand       cultural and economic value (see Fig. 1). The
for recreation in natural areas (‘eco-tourism’) will     papers by Farber et al. (2002), Limburg et al.
most likely continue to increase in the future.       (2002), Howarth and Farber (2002), Wilson and
                               Howarth (2002) discuss these three concepts of
2.4.3. Cultural and artistic inspiration           value in more detail. In this paper we focus on the
  Nature is an important basis for folklore and       linkages between these valuation methods and the
culture as humans have developed different means       goods and services identified in the previous
of coping and interacting with nature. In other       section.
words, human culture is embedded within natural
                               3.1. Ecological 6alue
systems. Without nature, life would be very dull
indeed or, as Van Dieren and Hummelinck (1979)
state: ‘There is hardly any province of culture to       To ensure the continued availability of ecosys-
which nature does not give shape or inspiration’.      tem functions, the use of the associated goods and
Nature is used as a motive and source of inspira-      services should be limited to sustainable use levels.
tion for books, magazines, film, photography,         The capacity of ecosystems to provide goods and
paintings, sculptures, folklore, music and dance,      services depends on the related ecosystem pro-
national symbols, fashion, architecture, advertis-      cesses and components providing them (column 2
              R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408          403


in Table 1) and the limits of sustainable use are      has sought to use natural water regulation ser-
determined by ecological criteria such as in-        vices of largely undeveloped watersheds, through
tegrity, resilience, and resistance. The ‘Ecological     purchase or easements, to deliver safe water and
Value’ or importance of a given ecosystem is,        avoided a $6 billion water filtration plant. This
therefore, determined both by the integrity of the      implies those watersheds are worth up to $6 bil-
Regulation and Habitat Functions of the ecosys-       lion to New York City. Wetlands trading pro-
tem and by ecosystem parameters such as com-         grams allow property owners to capitalize on the
plexity, diversity, and rarity (De Groot et al.,       demand for wetlands banks, with wetlands being
2000). Since most functions and related ecosys-       sold in banks for $74 100– $4 93 800 per ha (Pow-
tem processes are inter-linked, sustainable use       icki, 1998).
levels should be determined under complex sys-
tem conditions (see Limburg et al., 2002), taking
                               3.3.2. Indirect market 6aluation
due account of the dynamic interactions between
functions, values and processes (Boumans et al.,        When there are no explicit markets for ser-
2002).                            vices, we must resort to more indirect means of
                               assessing values. A variety of valuation tech-
3.2. Socio-cultural 6alue                  niques can be used to establish the (revealed)
                               Willingness To Pay (WTP) or Willingness To
  In addition to ecological criteria, social values     Accept compensation (WTA) for the availability
(such as equity) and perceptions play an impor-       or loss of these services.
                               “ Avoided Cost (AC): services allow society to
tant role in determining the importance of natu-
ral ecosystems, and their functions, to human          avoid costs that would have been incurred in
society (see Fig. 1). In a report by English Na-        the absence of those services. Examples are
ture (1994), social reasons are mentioned as play-       flood control (which avoids property damages)
ing an important role in identifying important         and waste treatment (which avoids health
environmental functions, emphasizing physical          costs) by wetlands.
                               “ Replacement Cost (RC): services could be re-
and mental health, education, cultural diversity
and identity (heritage value), freedom and spiri-        placed with human-made systems; an example
tual values. Natural systems are thus a crucial         is natural waste treatment by marshes which
source of non-material well-being and indispens-        can be (partly) replaced with costly artificial
able for a sustainable society (Norton, 1987).         treatment systems.
                               “ Factor Income (FI): many ecosystem services
The socio-cultural value mainly relates to the
Information Functions (see Table 1).              enhance incomes; an example is natural water
                                quality improvements which increase commer-
3.3. Economic 6alue                       cial fisheries catch and thereby incomes of
                                fishermen.
                               “ Travel Cost (TC): use of ecosystem services
  Economic valuation methods fall into four ba-
sic types, each with its own repertoire of associ-       may require travel. The travel costs can be seen
ated measurement issues: (1) direct market           as a reflection of the implied value of the
valuation, (2) indirect market valuation, (3) con-       service. An example is recreation areas that
tingent valuation, (4) group valuation.             attract distant visitors whose value placed on
                                that area must be at least what they were
3.3.1. Direct market 6aluation                 willing to pay to travel to it.
                               “ Hedonic Pricing (HP): service demand may be
  This is the exchange value that ecosystem ser-
vices have in trade, mainly applicable to the          reflected in the prices people will pay for asso-
‘goods’ (i.e. production functions) but also some        ciated goods; an example is that housing prices
information functions (e.g. recreation) and regu-        at beaches usually exceed prices of identical
lation functions: New York City, for example,          inland homes near less attractive scenery.
              R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408
404


3.3.3. Contingent 6aluation (CV)               tion), Hedonic Pricing (aesthetic information) and
  Service demand may be elicited by posing hypo-      Market Pricing (recreation, tourism and science).
thetical scenarios that involve the description of       To avoid double counting, and to make valua-
alternatives in a social survey questionnaire. For      tion studies more comparable, ideally a type of
example, a survey questionnaire might ask re-        ‘rank ordering’ should be developed to determine
spondents to express their willingness to pay (i.e.     the most preferred valuation method(s). Table 2
their stated preference as opposed to revealed        can be seen as a first attempt for such a rank
preference, see above) to increase the level of       ordering, but much more research is needed.
water quality in a stream, lake or river so that
they might enjoy activities like swimming, boat-
ing, or fishing (Wilson and Carpenter, 1999).         4. Discussion

3.3.4. Group 6aluation                     We have attempted to provide a comprehensive
  Another approach to ecosystem service valua-       and consistent overview of all functions, goods
tion that has gained increasing attention recently      and services provided by natural and semi-natural
involves group deliberation (Wilson and           ecosystems, and we have described their linkages
Howarth, 2002; Jacobs, 1997; Sagoff, 1998).         with available valuation methods. From this anal-
Derived from social and political theory, this val-     ysis it shows that there are several important
uation approach is based on principles of deliber-      theoretical and empirical issues that remain to be
ative democracy and the assumption that public        resolved.
decision making should result, not from the ag-        1. Ecological functions and services can overlap,
gregation of separately measured individual pref-        leading to the possibility of economic ‘double-
erences, but from open public debate.              counting’. For example, gas-regulation func-
  As the extensive literature on ecosystem service       tions (and associated services) have influence
valuation has shown, each of these methods has          on the climate and can, therefore, be valued
its strengths and weaknesses (see Farber et al.,         separately, or as an integral part of the climate
2002; Wilson and Howarth, 2002). Based on a           regulation service. Similar problems can occur
synthesis study by Costanza et al. (1997), using         when accounting for ‘disturbance prevention’
over 100 literature studies, Table 2 gives an          and ‘water regulation’ services: excessive
overview of the link between these valuation           runoff can lead to flooding and thereby larger
methods and the 23 functions described in this          disturbances. The interconnectedness of cer-
paper.                              tain ecological functions, and associated
  Table 2 shows that for each ecosystem function        ecosystem services, highlights the need for the
usually several valuation methods can be used.          development of dynamic models that take ac-
The table also shows that in the Costanza study         count of the interdependencies between ecosys-
(Costanza et al., 1997) for each function usually        tem functions, services and values (see
only one or two methods were used primarily.           Boumans et al., 2002).
There also seems to be a relationship between the       2. By matching the proposed typology against
main type of function and the preferred valuation        the best available valuation methods, we have
methods: Regulation Functions were mainly val-          shown that for all types of ecosystem functions
ued through Indirect Market Valuation tech-           it is possible, in principle, to arrive at a mone-
niques (notably Avoided Cost and Replacement           tary estimation of human preferences for the
Cost), Habitat Functions mainly through Direct          availability and maintenance of the related
Market Pricing (i.e. money donated for conserva-         ecosystem services. However, while several val-
tion purposes), Production Functions through Di-         uation methods can be used alongside each
rect Market Pricing and Factor Income methods,          other (Table 2), it may ultimately be necessary
and Information Functions mainly through Con-          to identify a rank ordering from the least to
tingent Valuation (cultural and spiritual informa-        most preferred valuation methods for each
Table 2
Relationship between ecosystem functions and monetary valuation techniques

Ecosystem    Range of    Direct market  Indirect market pricing                       Contingent  Group
functions (and  monetary    pricingb                                      valuation  valuation
associated    values in           Avoided cost  Replacement  Factor income Travel cost  Hedonic
goods and    US$/ha yeara                  cost                   pricing
services (see
Table 1)

Regulation
  functions
1. Gas      7–265                     0       0                   0      0
                        +++
  regulation
2. Climate    88–223                     0       0                   0      0
                        +++
  regulation
3. Disturbance  2–7240                           0              0           0
                        +++       ++                         +
  regulation
4. Water     2–5445                    0                     0     0      0
                +        ++              +++
  regulation
5. Water     3–7600            0               0       0       0     0      0
                +++               ++
  supply
6. Soil     29–245                            0              0     0      0
                        +++       ++
  retention
7. Soil      1–10                     0       0                   0      0
                        +++
  formation
8. Nutrient   87–21 100           0               0                   0      0
                                +++
  cycling
9. Waste     58–6696            0               0              0           0
                                +++                         ++
  treatment
10. Pollination 14–25      0                                          0      0
                        +        +++      ++
11. Biological  2–78             0                                  0      0
                +                +++      ++
  control
                                                                       R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408




Habitat
  functions
12. Refugium   3–1523                    0       0              0           0
                +++                                         ++
  function
13. Nursery   142–195             0        0       0              0     0      0
                +++
  function
Production
  functions
14. Food     6–2761                    0                                0
                +++                      ++                  +
15. Raw      6–1014                    0                                0
                +++                      ++                  +
  materials
                                                                       405
                                                                                     406




Table 2 (Continued).

Ecosystem     Range of   Direct market  Indirect market pricing                              Contingent    Group
 functions     monetary    pricingb                                             valuation    valuation
 (and       values in
 associated    US$/ha            Avoided cost   Replacement   Factor income Travel cost    Hedonic
 goods and     yeara                      cost                      pricing
 services (see
 Table 1)

16. Genetic     6–112                     0                                0        0
                 +++                       ++
 resources
17. Medicinal                  0        0                                0        0
                 +++                       ++
 resources
18. Ornamental   3–145                     0                        0        0        0
                 +++                       ++
 resources
Information
 functions
19 Aesthetic    7–1760                    0                0                0        0
                                                         +++
 information
20 Recreation    2–6000                    0
                 +++                       ++        ++       +        +++
 and tourism
21 Cultural and         0                        0        0       0                 0
                                                                  +++
 artistic insp.
22 Spiritual and  1–25                                      0       0                 0
                                                                  +++
 historic inf.
23 Science and                                  0        0                0        0
                 +++
                                                                                    R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408




 education

 a
  Dollar values are based on Costanza et al. (1997) and apply to different ecosystems (e.g. waste treatment is mainly provided by wetlands and recreational benefits
are, on a per hectare basis, highest in coral reefs). In the columns, the most used method on which the calculation was based is indicated with +++, the second most
with ++, etc.; open circles indicate that that method was not used in the Costanza study but could potentially also be applied to that function.
 b
  Based on added value only (i.e. market price minus capital and labor costs (typically about 80%).
                 R.S. de Groot et al. / Ecological Economics 41 (2002) 393–408                 407

                                  Costanza, R., d’Arge, R., de Groot, R.S., Farber, S., Grasso,
  service to avoid double counting and enhance
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