The economics of ecosystem services: from local analysis to national policies

The paper builds around the key messages from the recently completed study — The Economics of Ecosystems and Biodiversity (TEEB). The paper essentially attempts to map the problem encountered in up scaling the findings from site/local scale to national scale. First, the rationale for economic analysis of ecosystem services has been discussed and then the challenges in applying economics to ecosystems and biodiversity have been identified. The paper discusses the role of economic valuation, discounting and necessary indicator for it. Social and cultural context of economic valuation along with the nature of value articulating institutions have been highlighted. Most of these issues typically deal with ecosystem services at site and project level. The paper lays down the need for arriving at national policies from microlevel valuation work. The paper suggests that for national policy formulation and design, valuation and accounting of ecosystem services must be seen in the economy wide context where interdependence of sectors is the key. The paper shows the existing hiatus between this level of analysis of economics of ecosystems and the need for credible national level policies. An attempt has been made to highlight necessary steps to arrive at national level policies on ecosystems management.