Framework for Valuing Ecosystem Services in the Himalayas. ICIMOD Technical report

Mountains occupy 24% of the global land surface area and are home to 12% of the world’s population. Mountains have an ecological, aesthetic, and socioeconomic significance, not only for those living in the mountain areas, but also for people living beyond them. About 10% of the world’s population depends directly on mountain resources for their livelihoods and wellbeing, and an estimated 40% depends indirectly on mountain resources for water, hydroelectricity, timber, biodiversity and niche products, mineral resources, flood control, and recreation (Schild 2008). Despite their important contribution, mountains are still marginalised in the development agenda. The importance of ecosystem services arising from mountains is not properly recognised. Approaches to economic valuation of services and payment mechanisms in mountain areas are needed to comprehend and realise the benefits. However, as yet these have only been developed to a very limited extent.

Recently there have been some developments in applying economic thinking to the use of biodiversity and ecosystem services. The two critical points to consider are (1) why prosperity and poverty reduction depends on maintaining the flow of benefits from ecosystems; and (2) why successful environmental protection needs to be grounded in sound economics, including explicit recognition, efficient allocation, and fair distribution of the costs and benefits of conservation and sustainable use of natural resources (TEEB 2010a). There is also a compelling cost-benefit case for public investment in ecological infrastructure (especially restoring and conserving forests, river basins, wetlands, and others), particularly because of its significant potential as a means of adaptation to climate change (TEEB 2009a). Another dimension is that payments for ecosystem services, or PES, are generating considerable attention because they have the potential to create new funding opportunities for biodiversity protection and other ecosystem services that contribute to human wellbeing. Natural systems in the mountains provide an excellent opportunity for promotion of the recently emerging concept of the ‘green economy’.

Awareness of the value of ecosystem services has grown rapidly in recent times; the recent Convention on Biological Diversity Conference of the Parties (COP-10 in Nagoya, October 2010) led the global players to declarations on making the use of environmental goods part of the national accounts.While awareness of the value of mountain ecosystems is increasing, there is a need to develop sound methodologies for valuing them in order to realising the benefits. This paper aims to bridge this gap by outlining a general framework for economic valuation of ecosystem services focusing on mountain specific situations, which could be applied in the Hindu Kush-Himalayan region.