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How does the economic valuation of environmental impacts and ecosystem services differ?
The economic valuation of environmental impacts focuses on estimating in monetary terms the economic damage of alterations to the environment. This damage can be associated with a decrease in the provision of ecosystem services. Both the economic valuation of environmental impacts and ecosystem services have an anthropocentric focus. The former seeks to measure the variation in human well-being due to environmental alteration; while ecosystem services refer to the services provided by the environment that people benefit from, which can be quantified in monetary terms through the economic valuation of ecosystem services.
How are ecosystem services evaluated in Environmental Impact Assessments?
Environmental Impact Assessments (EIA) present in detail the potential variations of environmental components associated with a project. In Peru, EIAs also incorporate impacts on the social environment. In most cases, social impacts stem from environmental impacts, except for the perceptions and/or expectations of the population. Clearly, there is an opportunity to integrate impacts on the environment and social environment through ecosystem services. Currently, ecosystem services are included in the EIA in the chapters of: Baseline (Chapter 2) and Economic Valuation of Environmental Impacts (Chapter 7). The Impact Assessment chapter (Chapter 5) evaluates each of the potential environmental and social impacts identified in isolation. The EIA does not present an impact evaluation on the provision of ecosystem services.
How are ecosystem services incorporated into the economic valuation of environmental impacts?
The development of economic valuation considers grouping environmental and social impacts based on the same implications for human well-being. However, an evaluation approach of human well-being by the affectation to the provision of ecosystem services is a more intrinsic way of integrating environmental and social impacts. This ultimately reflects in greater detail the different components, associated with ecosystem services, of affectation on human well-being. Since 2022, with the approval of the Guide for the Economic Valuation of Environmental Impacts within the SEIA Framework (MINAM, 2022), it proposes to perform the economic valuation under an ecosystem services approach. In practice, and within the context of the content of EIAs in Peru, there are challenges for the development of economic valuation of environmental impacts considering ecosystem services.
What are these challenges and opportunities for improvement?
Baker et al. (2013) presents an in-depth analysis of the strengths and weaknesses of incorporating the ecosystem services approach in EIAs. In the Peruvian context, this new approach to incorporating ecosystem services under the current content of an EIA file leads to various challenges.
Available information on ecosystem services: With the exception of some provisioning ecosystem services (water, raw materials, soils for agriculture and/or livestock, among others), the EIAs do not present information that can suggest the magnitude of the value that may be associated with the services. This is because the tools for collecting primary environmental and social information are not necessarily integrated and focused on providing an idea of the magnitude in the transcendence of an ecosystem service.
Absence of evaluation of the decrease in the provision of ecosystem services: The Impact Assessment chapter (Chapter 5) does not contemplate an analysis of affectation on ecosystem services. However, considering the new approach of the guide, the Economic Valuation of Impacts chapter (Chapter 7) must develop this evaluation despite the fact that EIAs do not fully provide the information required to develop and estimate the economic value of ecosystem services. Consequently, which lends itself to the subjectivity of the professionals who draft the chapter and professionals who review the chapter.
Final Notes
The main reason for the focus on ecosystem services proposed by the guide (MINAM, 2022) is understood. However, it seems that this approach has been a hasty incorporation as it is necessary to align the content of different chapters of the EIAs to maintain the objectivity of the analysis based on ecosystem services.
One way to align the approach of economic valuation of ecosystem services in the EIA is through the analysis of impacts on the social environment. Requiring that social impacts are based on ecosystem services implies that from the baseline, the characterization of these is presented.
The underlying question is whether the new approach will allow improving the content considering the additional costs to align the information required in the preceding chapters of the EIA.
