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Define scope and decision context — Identify the specific ecosystem(s), geographic boundary, and time horizon for the assessment. Clarify the decision the valuation will inform (e.g., infrastructure project approval, conservation investment, green bond issuance). Scope determines which service categories and methods are appropriate.
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Classify ecosystem services using MEA/TEEB taxonomy — Categorize all services provided by the ecosystem: provisioning services (food, water, timber, genetic resources), regulating services (climate regulation, flood control, pollination, water purification), cultural services (recreation, aesthetic value, spiritual significance), and supporting services (soil formation, nutrient cycling, primary production).
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Identify and map service flows — For each service category, identify the biophysical process generating the service, who benefits (beneficiary mapping), and how the service flows from the ecosystem to people. Use GIS mapping where spatial data is available. Distinguish between service potential, service flow, and value realized.
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Select valuation methods by service type — Match each service to the most appropriate economic valuation method:
- Market price/factor income: timber, fish, crops, water supply
- Avoided cost / replacement cost: flood control, water purification, carbon sequestration
- Travel cost method: recreation, ecotourism
- Hedonic pricing: aesthetic value, proximity premiums in property markets
- Contingent valuation / choice experiments: non-use values (existence, bequest), cultural services
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Collect biophysical and economic data — Gather ecosystem function data (biomass, flow rates, habitat area) and economic data (market prices, willingness-to-pay estimates from literature, avoided cost baselines). Use TEEB value database, peer-reviewed benefit transfer studies, and local primary data where available.
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Apply benefit transfer carefully — When primary data collection is infeasible, transfer values from studies of comparable ecosystems using unit value transfer or function transfer. Adjust for differences in income levels (GDP per capita ratio), ecosystem quality, and beneficiary population. Flag benefit transfer estimates as lower-confidence.
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Calculate total economic value (TEV) — Sum use values (direct use + indirect use + option values) and non-use values (existence + bequest values) for each service. Express results in consistent units (annual flow in $/year, or net present value using a social discount rate of 1.4–3.5% per HM Treasury Green Book guidance).
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Aggregate and present with uncertainty ranges — Do not report a single point estimate. Present value ranges reflecting methodology uncertainty, data quality, and ecosystem condition scenarios. Use Monte Carlo simulation or sensitivity analysis to show which assumptions drive results most.
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Interpret and communicate trade-offs — Compare ecosystem service values against the values of proposed alternative land uses. Identify which stakeholders gain and lose under each scenario. Highlight irreversibilities (extinction, soil loss) that market values cannot capture.
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Integrate into decision-making and accounting — Feed results into cost-benefit analysis, natural capital accounts (SEEA EA framework), environmental impact statements, or corporate sustainability reporting. Recommend policies or investments that internalize ecosystem values (payments for ecosystem services, biodiversity offsets, green infrastructure).
