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The Ecosystem Approach Advanced User Guide

1. Introduction

The greatest threat to biological diversity lies in its replacement by alternative systems of land use. This often arises through market distortions, which undervalue natural systems and populations and provide perverse incentives and subsidies to favour the conversion of land to less diverse systems. Often those who benefit from conservation do not pay the costs associated with conservation and, similarly, those who generate environmental costs (e.g. pollution) escape responsibility. Alignment of incentives allows those who control the resource to benefit and ensures that those who generate environmental costs will pay.

Guidelines for answering this question
Develop an understanding of the social and economic context of the issue to which the ecosystem approach is being applied.
Apply appropriate practical economic valuation methodologies for ecosystem goods and services (direct, indirect and intrinsic values); and for the environmental impacts (effects or externalities).

Aim to reduce those market distortions that adversely affect biological diversity and align economic and social incentives to promote biodiversity conservation and sustainable use. Internalize costs and benefits in the given ecosystem to the extent feasible.
Evaluate the direct as well as indirect economic benefits associated with good ecosystem management including biodiversity conservation and environmental quality.
Enhance benefits of using biological diversity.
Ensure equitable sharing of costs and benefits.
Incorporate social and economic values of ecosystem goods and services into national accounts, policy, planning, education and resource management decisions.

Participatory methods (see Task 1)
Environmental Impact Assessment (EIA)
Environmental valuation methods
Development of markets for ecosystem services

Further explanation
Many ecosystems provide economically valuable goods and services and it is therefore necessary to understand and manage ecosystems in an economic context. Economic systems generally do not make provision for the many, often, intangible values derived from ecological systems. In this regard it should be noted that:
Ecosystem goods and services are frequently undervalued in economic systems.

Even when valuation is complete, most environmental goods and services have the characteristic of “public goods” in an economic sense, which are difficult to incorporate into markets.
It is often difficult to introduce new uses of ecosystems, even where these are less impacting or provide wider benefits to society, because economic and social systems exhibit significant inertia, particularly where strong existing interests are affected by and resist change.
Many stakeholders with strong interests in the ecosystem, but having limited political and economic influence, may be marginalized from the relevant economic systems.
Where those who control use of the land do not receive benefits from maintaining natural ecosystems and processes, they are likely to initiate unsustainable land use practices from which they will benefit directly in the short term.  To counter this more equitable sharing of benefits is advised.
International, national and sub-national policies, laws and regulations, including subsidies may provide perverse incentives for unsustainable management of ecosystems.  Economic systems therefore need to be redesigned to accommodate environmental management objectives.
Addressing the issue of market distortions that adversely affect biodiversity will require establishing dialogue with other sectors.

Deriving economic benefits need not be inconsistent with attaining biodiversity conservation and improvement of environmental quality, provided that incentives are properly aligned.