Forest Ecosystem Services As Production Inputs

Are we cutting down tropical forests too rapidly and too extensively? If so, why? Answers to both questions are obscured in some ways by insufficient and unreliable data on the economic worth of forest ecosystem services. It is clear, however, that rapid, excessive cutting of forests can irreversibly and substantively impair ecosystem functions, thereby endangering the flow of several socially valuable goods and services from standing forests. One reason for such excessive deforestation is failure to consider the full range of goods and services provided by the forests, particularly latent and complex ecosystem services. Forests provide ecosystem services by sequestering carbon, maintaining habitat and biodiversity, stabilizing hydrological flows, mitigating soil erosion, and improving microclimates. Public protection of tropical forests is necessary because the market mechanism cannot provide the optimal level of ecosystem services. The level of public support for forest protection depends on the net benefits of providing these services. Recent surveys of valuation studies reveal that economic benefits of forest ecosystem services are not well understood and are rarely quantified (WRI 2000). Two challenges are posed in the literature. First, recent reviews show that (1) ecosystem valuation studies have framed the valuation question incorrectly and have applied inappropriate methods (Bockstael et al. 2000), and (2) valuation studies have overlooked livelihood values of natural resources in developing countries, focusing largely on amenity values in developed countries (Deacon et al. 1998). Second, valuation of ecological services that are inputs into production processes have typically relied on data-intensive approaches, such as the measurement of full profit functions, instead of focusing on