Using a final ecosystem goods and services approach to support policy analysis

Evaluating environmental policies requires estimating the impacts of policy-induced changes on ecological and human systems. Drawing connections between biophysical and economic models is complex due to the multidisciplinary nature of the task and the lack of data. Further, time and resource constraints typically limit our ability to conduct original valuation studies to fit the specific policy context. Policy analysts thus rely on methods to transfer and adapt value estimates from existing studies. To conduct end-to-end policy analysis, assumptions are needed to make the linkages between ecological and valuation models as well as to conduct benefit transfers. This paper discusses an approach that can potentially help a policy analyst to minimize assumptions and identify appropriate caveats. This approach focuses on what human beings truly value from ecosystems, or, in other words, metrics of Final Ecosystem Goods and Services (FEGS). Our hypothesis is that the FEGS approach will help support policy analysis by drawing important linkages between ecological and economic models as well as by designing valuation studies that will be more conducive to benefit transfers. To examine this hypothesis, we use a selected set of existing valuation studies as case study examples, and we examine how the methods used in these studies compare with the FEGS approach. We find that the studies are not always consistent with the FEGS approach, in many cases due to data limitations. We illustrate ways in which using FEGS metrics can provide economists with a useful starting point for considering how the commodity can be defined and specified in the valuation study. Even if data limitations exist, a FEGS approach can help in determining whether the context in which the original study was conducted matches with the policy context. This can also help in determining the extent of uncertainty associated with the analysis and in providing transparent documentation that can be informative for policy makers.