Ecosystem-based management and the wealth of ecosystems

Abstract

We merge inclusive wealth theory with ecosystem-based management (EBM) to address two challenges in the science of sustainable management of ecosystems. First, we generalize natural capital theory to approximate realized shadow prices for multiple interacting natural capital stocks (species) making up an ecosystem. These prices enable ecosystem components to be better included in wealth-based sustainability measures. We show that ecosystems are best envisioned as portfolios of assets, where the portfolio's performance depends on the performance of the underlying assets influenced by their interactions. Second, changes in ecosystem wealth provide an attractive headline index for EBM, regardless of whether ecosystem wealth is ultimately included in a broader wealth index. We apply our approach to the Baltic Sea ecosystem, focusing on the interacting community of three commercially important fish species: cod, herring, and sprat. Our results incorporate supporting services embodied in the shadow price of a species through its trophic interactions. Prey fish have greater shadow prices than expected based on market value, and predatory fish have lower shadow prices than expected based on market value. These results are because correctly measured shadow prices reflect interdependence and limits to substitution. We project that ecosystem wealth in the Baltic Sea fishery ecosystem generally increases conditional on the EBM-inspired multispecies maximum sustainable yield management beginning in 2017, whereas continuing the current single-species management generally results in declining wealth.

Modifying national accounts for sustainable ocean development

“…Many of the 'how' questions have been asked and answered in the literature already. For example, in a case where the boundary issues were relatively easy to resolve, Yun et al 40 showed how ecosystem-based management increases the wealth stored in Baltic Sea fisheries by about 30%. A regular production of accounts, rather than one-offs, will provide the necessary information to learn from past decisions.…”

The economics of conservation debt: a natural capital approach to revealed valuation of ecological dynamics

“…Such dynamics determine how the quantity of stock influences future benefits through changes in the stock itself and through its influence on human behavior. Thus, accurate natural capital and social valuation must consider the interdependent ecological relationships and dynamics that underlie and sustain natural resource production (Yun et al 2017). For instance, extractable timber, arising from the survival and production of forest trees, depends on fertile soils that are produced and maintained by soil organisms.…”

“…Emerging asset valuation frameworks now explicitly address species interdependence and ecological contingency (Quass et al 2013, Strong and Bond 2017, Yun et al 2017, Fenichel et al 2018). These frameworks can provide asset prices for populating sustainability metrics such as comprehensive or inclusive wealth accounts (Matson et al 2016, Lange et al 2018, Managi and Kumar 2018).…”

Is Natural Capital Really Substitutable?

“…If renewable natural capital regenerates sufficiently quickly, then sustainable development may be possible even at low levels of substitutability. However, renewal functions of different forms of natural capital are heterogeneous and uncertain (28). Second, substitutability is not constant over space and time.…”