Ecosystem services — a useful concept for addressing water challenges?

Available online at www.sciencedirect.com

ScienceDirect Ecosystem services — a useful concept for addressing water challenges? Stefanie Engel and Marleen Schaefer

The concept of ecosystem services (ES) has gained high popularity as a bridging concept between societal and environmental systems, natural and social sciences. It is subject to considerable debate and controversy. We review whether and how the concept may be useful to address water challenges. We also highlight major controversies and common misunderstandings regarding the ES concept. The ES concept is not a panacea for solving global water problems, but it may be part of the solution. It can help to identify and negotiate trade-offs between different management options and to develop policies aligning private incentives with societal objectives. Challenges in application include the complexity of water-related ES, a lack of truly interdisciplinary studies and of a coherent ES framework, and the polarization of arguments. Addresses Institute for Environmental Decisions, Department of Environmental Systems Science, ETH Zurich, Switzerland Corresponding authors: Engel, Stefanie ([email protected])

Current Opinion in Environmental Sustainability 2013, 5:696–707 This review comes from a themed issue on Aquatic and marine systems Edited by Charles J Vo¨ro¨smarty, Claudia Pahl-Wostl and Anik Bhaduri

approaches integrating ES into current policy, institutions and practices [1]. In 2007, the G8+5 countries initiated a study on ‘The Economics of Ecosystem Services and Biodiversity (TEEB)’, the results of which were published in a series of reports targeting different decisionmakers at different levels, from business to local and national policy makers (e.g., [6,7,8]). In recognition of the importance of water-related ES and the threats they currently face, the Ramsar Convention Secretariat initiated a TEEB study specifically for water and wetlands [9]. The TEEB studies are structured in a three tiered approach to analyze and apply the ES concept: the ecology (recognizing value), economic valuation (demonstrating value) and policy design (capturing value) [6]. Below, in Sections ‘Recognizing the value of ES (The ecology)’, ‘Demonstrating value (economic valuation)’ and ‘Capturing value (policy design)’ we follow this structure to review whether and how the ES concept may be useful to address global water problems. Despite its popularity, the ES concept is subject to considerable debate and controversy. Section ‘Controversies and misunderstandings’ highlights major controversies and clarifies common misunderstandings related to the ES debate. Section ‘Conclusions’ concludes.

For a complete overview see the Issue and the Editorial

Recognizing the value of ES (the ecology)

Received 29 June 2013; Accepted 07 November 2013

Recognizing ES and ensuring the knowledge transfer from science to policy can be an important first step in integrating the ES concept into decision making [8]. The MEA [1] distinguishes three types of ES: provisioning, regulating and cultural services. ‘Supporting services’, a fourth type listed in the MEA, sustain the three ES types [10], but are not directly beneficial to humans and therefore are more appropriately termed underlying ecosystem processes [11,7], though confusion prevails on this issue in the literature [12].

Available online 21st November 2013 1877-3435/$ – see front matter, # 2013 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.cosust.2013.11.010

Introduction The concept of ecosystem services (ES) has gained high popularity over the past decade, among academics and in the policy arena. ES are commonly defined as the benefits humans obtain from ecosystems [1]. The concept links conservation and development objectives by relating environmental health to human well-being, and as such carries potential as a powerful strategy for protecting ecosystems and the services they provide [2]. While the ES concept dates back to the 1960s [3–5], attention increased sharply when the United Nations issued its prominent Millennium Ecosystem Assessment (MEA) report, concluding that two-thirds of global ES were in a state of overuse or degradation, due to unsustainable human practices, and emphasizing the need for new Current Opinion in Environmental Sustainability 2013, 5:696–707

The type of services related to water can be classified into three main areas: water provision (quantity), water regulation (timing) and water purification (quality) [13]. The first is a provisioning service, the other two are regulating services. There are also cultural services related to water, such as recreational uses or the mere appreciation that an ecosystem, for example, a biodiversity-rich wetland, is being conserved. One ecosystem can supply or influence several ES simultaneously, for example, wetlands purify and treat water [14–16], mitigate flooding [17] and store and infiltrate water [18]. Correspondingly, water is a link www.sciencedirect.com

Ecosystem services — useful for solving water problems? Engel and Schaefer 697

In this paper we focus on those threats that are directly affected by human activities, such as land use choices or land management practices. We thus exclude water challenges caused by climate change from the analysis, where the link to human activity is present but less direct. It is increasingly recognized that improving water security will require changes in human activities [23]. Human activity may enhance or reduce the supply of ES [18]. For example, afforestation can improve water quality, but may reduce water quantity, depending on ecological conditions [24,25]. Similar trade-offs often exist between the provision of different types of ES. Some, mostly provisioning services may be considered by land users as part of their private benefits. However, making use of provisioning services can lead to a decrease in other ES. For example, deforestation for agricultural production (a provisioning service) reduces hydrological services (both provisioning and regulating) provided by forest ecosystems. Recognizing ES and the trade-offs [26,27]1 between them can potentially lead to improved policy making and sustainable development through holistic resource management. An example is the Dutch ‘Room for the River’ policy, where the recognition of regulating services provided by landscapes with natural flooding regimes has induced a radical rethinking of flood management and a move towards integrating water management and spatial planning [22]. Sanon et al. [28] investigate how trade-offs influence decisions. They studied the change of services from clean drinking water to higher fish reproduction based on the reopening of a side-arm of the Danube. After a multicriteria analysis, they concluded that a scenario under which the quality of drinking water slightly declines, but the regeneration of nature significantly increases would be best suited and preferred by involved stakeholders [28].

land cover) on water quantity, quality, location and timing [2]. A good analysis of ES should clearly point to uncertainties about levels and stability of ES provision [2], highlighting threshold effects and irreversibilities where they apply. Spatial and temporal scales of ES provision and complex feedbacks need to be understood [29]. In this way trade-offs between different ES across time and/or space can be considered. To fully understand the services delivered by an ecosystem, relevant stakeholders benefitting or affecting the ecosystem must be identified and their impact on the ecosystem considered in the assessment [27]. To address ES degradation, we also need to understand which management options affect ES conditions and thereby ES provision. If these complexities are taken into account, applying the ES concept can support sustainable management of the land-water nexus. While an increasing number of ecological studies assess parts of these complexities, studies translating local ecosystem functions into ES at a scale relevant for human decision making are still scarce [30]. Moreover, there is a need for a coherent and standardized analytical approach for ES assessments, in order to deliver generalizable conclusions [31,32,33,34]. Recent initiatives to connect the field and different research styles and to summarize results in a manner accessible to policy makers appear promising (e.g., IPBES, Ecosystem Service Partnership, and the U.N. proposal for a common international framework of ecosystem goods and services (CICES)) [35–37].

Demonstrating value (economic valuation) Figure 1 presents a conceptual framework useful to illustrate the idea of ES and their economic value. Figure 1

Activity A (e.g. Deforestation or wetland conversion for agricultural use) Activity B (e.g. Forest or wetland conservation)

Eur/ha

Additional ES

between ecological, social and economic systems, both on local and global scales [19]. Threats to ecosystems on a local scale amplify and lead to global issues of water security [20], even more so as the human population continues to rapidly grow [21]. The most prominent threats are loss of wetlands and hydrological functions caused by land-use changes, scarcity and non-regular water availability, flooding, pollution and diminished water quality, salinization, as well as climate change causing hydrological alterations, for example, in precipitation patterns and stream flows [22,9,2].

Assessing ES is, however, a complex task. It requires understanding the effects of ecosystem conditions (e.g., 1

Cook and Spray [90] argue that the ES concept can enhance the negotiation of trade-offs between human and environmental needs to promote sustainability. In the ES terminology, ‘environmental needs’ translate into longer-run human benefits (such as regulating services), while ‘human needs’ translate into more immediate benefits from provisioning services. www.sciencedirect.com

Private returns

Private returns + additional ES not considered by the land user Current Opinion in Environmental Sustainability

Conceptual framework. Current Opinion in Environmental Sustainability 2013, 5:696–707

698 Aquatic and marine systems

Consider two land use/management activities A and B. For example, A could be deforesting land or draining wetlands for agricultural use, while B could be forest or wetland conservation. Each activity provides private net returns to the land user, represented by the black and dark grey areas. On the basis of this, the land user opts for activity A. Yet activity B provides additional ES (e.g., water quantity and quality regulation), which are not considered by the land user in his decision. From a societal perspective, the full range of benefits, including these ES, should be taken into account in decision making; it would be preferable to opt for activity B.2 Other examples include, intensive agriculture (A) versus organic agriculture (B) affecting water quality, or shrimp farming (A) versus mangrove conservation (B) affecting local fisheries and flood protection. As private returns consist largely of provisioning services that are valued in the market (e.g., timber, agricultural products), monetary values for these tend to be easily available. Valuing ES without readily available market prices (non-market values) may help to strengthen the argument for more sustainable activities (activity B in Figure 1) [7,38,39]. As Tuan Vo et al. [40] put it: ‘Society is governed by money and numbers, and if we do not put a value on ES, they might be ignored in favor of the quantifiable.’ Economic valuation can provide a metric to express and evaluate trade-offs in support of improved policy decisions [41,42]. Sometimes, expressing ES in monetary terms can also help to raise funds for ES provision (cf. next section). Hanley and Barbier [43] present an economic valuation analysis of mangroves in Thailand. They found that shrimp farming (activity A in Figure 1) yields private returns of up to USD 1220 per hectare (net of subsidies), while mangrove conservation (activity B in Figure 1) only yields private returns of approx. USD 584/ha. Yet, when including the value of ES from intact mangrove ecosystems, such as flood protection and the regeneration of fish populations, the total value of mangrove conservation rises to USD 12 392/ha. Thus, from a societal perspective, mangroves should be conserved. Different methods for valuing non-market benefits have been developed.3 For some ES, valuations can be based 2 The height of bars is chosen to illustrate the case where a less sustainable activity is privately optimal, but the more sustainable alternative is preferable from the societal perspective. The height of the bar reflects benefits from the activity minus costs of the activity. Benefits may include non-monetary benefits considered by the land user (e.g., a traditional preference for conventional agriculture). Costs may include a risk or ambiguity premium reflecting risk and uncertainty. 3 Hanley and Barbier [43] and the National Research Council [45] review the state of the art of valuation methods. Overviews of valuation methods are also provided by Atkinson et al. [96], TEEB [6], and Tuan Vo et al. [40], the latter focusing specifically on wetland and mangrove ecosystem valuations.

Current Opinion in Environmental Sustainability 2013, 5:696–707

on the cost of alternatives (replacement cost method), for example, using the cost of a water treatment plant to value the water quality regulation services, or on aversion costs (e.g., the costs of flooding avoided if mangroves would be conserved). The production function approach is a more sophisticated, increasingly applied approach, which explicitly models ES as an input into the production of marketed goods and services, or as a joint output in production. In other cases, valuations can be based on observed human behavior. For example, the travel cost method uses data on site visits to derive a demand curve for recreational services, for example, to value instream flows in rivers used for river drafting [44]. The hedonic value approach applies regression analysis to data on housing values to derive a willingness-to-pay (WTP) for scenic beauty. For other ES, such revealed preference methods are not applicable and valuations have to rely on stated preference approaches, such as contingent valuation or choice experiments. These are survey-based approaches, aiming to elicit a WTP for specified environmental changes by describing hypothetical scenarios (e.g., river restoration).4 Finally, a pragmatic approach often applied in practice is benefit transfer, in which WTP estimates from one site are used as proxies for another site. For all methods, an important step is the aggregation over individual-level WTP measures to compute an aggregate societal value for the considered environmental change. For the ES concept’s applicability the change in environmental quality also needs to be specified in terms of concrete changes in ES provision. Economic valuation methods, particularly stated preference methods, have been refined over decades of research in environmental economics, and recommendations have been put forth on how to conduct a methodologically solid valuation study (e.g., [45]). Furthermore, such recommendations emphasize the suitability of economic valuation methods only for valuing relatively small (marginal) environmental changes [46]; they are not suitable to value large changes or much less entire ecosystems [47,6]. Economic valuation has been and continues to be subject to significant critique (see [48,49]). It is useful to distinguish criticism of economic valuation per se from criticism on specific valuation studies. General criticism lies in the potential for biases in stated preference studies resulting from the hypothetical nature of the questions asked. Similarly, benefit transfer was shown to yield 4 Respondents are asked to state whether they would be willing to pay an amount x to support such change (contingent valuation) or to rank a number of alternative scenarios in order of their preference, where each scenario specifies different attributes of the environmental resource (e.g., water flow, impacts on fisheries or bird species, price x) in the case of choice experiments. By surveying a sufficiently large number of people in a representative sample and varying x across respondents, sophisticated statistical methods can then be applied to derive a value measure for the environmental change.

www.sciencedirect.com

Ecosystem services — useful for solving water problems? Engel and Schaefer 699

substantial errors even when sites and objects of valuation appear relatively similar [44]. Another valid critique point is that the calculation of an aggregate value masques potential distributional effects and requires an aggregation of individual WTP across individuals with potentially different incomes and thus ability-to-pay. In cases where groups of individuals with substantially different incomes are affected by the environmental change considered, simple aggregation may lead to the poorer group’s preferences being outweighed by those of the richer. To address this, higher weights can be given in aggregation to poorer groups5and it is important to provide compl ementary information on winners and losers. Some scholars also voice general ethical objections against putting a ‘pricetag’ on nature [51]. Many other criticisms highlight weaknesses of specific valuation studies. Unfortunately, many valuation studies do not follow the state-of-the-art recommendations, putting their results into question [47,52]. Problems with existing valuation studies on hydrological services, such as water quality, include the lack of integrating ecological or hydrological models, not accounting for multiple costs and benefits, and disregarding possible management or land-use alternatives [32,53]. The proposed valuation approach by Keeler et al. [32] provides a framework to avoid these problems. A review by Ferraro et al. [54] on valuation studies for forest services explains how especially the methods on valuing the hydrological factors in these ecosystems can have great impacts on the final derived benefits. Therefore, the selection of an adequate study scale, both spatial and temporal, is essential in capturing significant results [10]. Many valuation studies capture only part of the full range of ES [33], ignoring more difficult-to-measure ES such as cultural services [55]. It would be an illusion to think that valuation studies can yield a perfectly precise ‘true’ value. Depending on the ES to be valued and the method applied, the potential for errors can vary substantially and may be large. The question whether ‘some value’, though imprecise, is better than no value has been discussed for decades (e.g., [56]). The answer likely depends on the context and the purpose of the valuation study. As explained further below, valuation is not always necessary for policy making. If applying valuation, the following points appear particularly important. First, studies should follow stateof-the-art guidelines. Second, more integrated ecologicaleconomic analysis is needed to account for ecological complexities in an appropriate manner. Third, valuation studies should make their assumptions (e.g., on discount 5 A famous example of such an analysis is Stern’s analysis of the costs and benefits of climate mitigation, where he applies weighted aggregation to account for income disparities between high-income and lowincome countries [50].

www.sciencedirect.com

factors, spatial and temporal scales), prevailing uncertainties and omissions explicit. Fourth, valuation studies should be complemented with information on other decision criteria, such as distributional effects, thresholds and irreversibilities. They can then be used as one input among others in a multi-criteria decision analysis to support improved policy making.

Capturing value (policy design) As demonstrated in the previous section (cf. Figure 1), private decisions may differ from what would be best from a societal perspective. To address this problem and move towards better societal decisions on ES provision, a first important step is to understand the root cause of societally suboptimal private decisions. This is important in the case of water because water can be a private good, a common-pool resource or a public good, with different implications for policy making. Below we distinguish four cases: firstly, lack of information; secondly, external effects; thirdly, commons dilemmas; and finally, other causes. Lack of information/awareness

In some cases, a sufficiently large portion of ES are private benefits to the ES provider, but due to lack of information are not considered by private decision makers. For example, the fact that mangrove conservation enhances the productivity of local fisheries may in some cases imply that activity B is privately preferable over A in the longer run. In such cases it may suffice to provide information on such effects to resource users. Economic valuation may be useful in this case to convince resource users that activity B is in their own economic interest. External effects

In many cases, however, the ES provided by activity B in Figure 1 are external effects. That is, the benefits are to a significant extent incurred by people other than the land user. Flood prevention, water quality improvements for downstream populations, or the water quantity regulation from forest conservation upstream are all examples of such external effects. In these cases two subcases are possible. First, in very rare cases, it may still suffice to provide information on the ES and their values. An example is the case of Vittel. Realizing that farming in the area surrounding Vittel’s water source was negatively affecting the water quality, Vittel offered farmers payments for adopting more environmentally friendly production practices, thereby reducing nitrogen loads and reducing Vittel’s water filtration costs [57]. Note that this case is different from the one described under the case ‘Lack of information/awareness’ where it is privately profitable to the ES provider to change to the more sustainable behavior. Here the ES beneficiary is acting in response to information by voluntarily providing a monetary incentive to Current Opinion in Environmental Sustainability 2013, 5:696–707

700 Aquatic and marine systems

the ES provider. Such private negotiation solutions are called Coasean solutions in economics, named after Ronald Coase’s famous theorem [58]. Negotiation solutions require preconditions such as zero or low transaction costs, no free rider effects, perfect information, and clearly defined property rights [58]. Most real-world situations do not come close to fulfilling these conditions and negotiation solutions are unlikely to result. Moreover, creating a market for services or goods is difficult when they were previously free, as service beneficiaries are less willing to pay extra fees [59]. For example, in a Danish attempt at payments for ecosystem services (PES), waterworks companies failed to establish agreements with farmers to change their agricultural practices to ensure water quality [60]. Most negotiation solutions observed in practice involve one or several intermediary organizations. Sometimes civil society organizations (e.g., an environmental NGO) step in and facilitate a negotiation solution. An example is the case of payments for watershed and bird habitat protection in Los Negros, Bolivia [61]. Therefore, the more common, second case is that effectively addressing external effects requires some type of government or other third party intervention. Several government policy approaches exist, from standard command-and-control regulation mandating the adoption of activity B to more flexible approaches based on economic incentives. We focus our discussion below mostly on ‘Pigouvian6’ PES as an increasingly popular economic incentive approach often perceived as closely associated with the ES concept. We also briefly discuss environmental (‘Pigouvian’) taxes. Environmental (so called ‘Pigouvian’) taxes aim to address external effects by charging a price on the degradation of ES [62]. As shown in Figure 2, this would reduce the private returns from activity A (black area for A decreases), such that activity B becomes privately more profitable. Water charges, for example, for irrigation, and water pollution taxes are examples approximating this approach (see [63] for some examples from the U.S.).7 This approach follows the polluter-pays-principle: land users who reduce ES relevant to society, by choosing activity A over activity B, are charged for the reduction in ES provision. 6 Named after Arthur Cecil Pigou who was the first to develop the idea of environmental taxes and subsidies. 7 Note that it is often unclear whether environmental taxes and charges implemented in practice are chosen at the Pigouvian level, that is, so that their height reflects the value of the environmental externality at the optimum. Thus, observed environmental taxes can be rather seen as approximations of a Pigouvian tax. Note also that some literature distinguishes between charges and taxes, with the former referring to cases where revenues from the charge are earmarked to specific purposes, for example, recovering irrigation and management costs. Yet, conceptually, a charge can still be seen as an approximation of the idea of a Pigouvian tax.

Current Opinion in Environmental Sustainability 2013, 5:696–707

Figure 2

Activity A (e.g. Deforestation or wetland conversion for agricultural use) Activity B (e.g. Forest or wetland conservation)

Eur/ha

Private returns

Private returns with a tax Current Opinion in Environmental Sustainability

Addressing external effects through a Pigouvian tax.

Pigouvian payments for ecosystem services (Pigouvian PES) follow the opposite logic. They implement a ‘beneficiary pays’ or ‘steward earns’ principle by making payments to land users conditional on ES provision or on the adoption of an activity thought to yield such provision [58,64]. The idea is shown in Figure 3. The payment translates all or part of the ES into private benefits from activity B (black area for B increases), so that activity B becomes privately more profitable than A. The result is similar as in the Vittel case, but rather than representing a Coasean solution, government-operated PES resemble more a Pigouvian-type environmental subsidy [58,65]. A prominent example is Mexico’s program of Payments for Hydrological Environmental Services (PSAH), where water users pay a fee to the government, which then allocates payments to selected land owners with suitable forests [66]. China’s Sloping Land Conversion Program pays land users for afforestation [67–69]. In Costa Rica’s national PES program payments are made for forest conservation and other land uses thought to provide hydrological as well as other ES. It is financed in part through water charges levied on Costa Rican water users, but also from other sources, including a national fuel tax and contributions from international donor organizations and the private sector [70,71]. The Costa Rican case illustrates how a PES scheme can bundle different, jointly produced ES demanded by ES beneficiaries at various levels (from international to national to local, and from public to private). While the Mexican and Costa Rican examples address ES providers nationwide, more local examples include the New York water authority and the city of Munich in Germany, both of which paid farmers to change their polluting agricultural practices to increase www.sciencedirect.com

Ecosystem services — useful for solving water problems? Engel and Schaefer 701

Figure 3

Activity A (e.g. Deforestation or wetland conversion for agricultural use) Activity B (e.g. Forest or wetland conservation)

PES

Additional ES

Eur/ha

Private returns with PES

Minimum Payment (Opportunity Cost)

Maximum Payment (Value of ES to others)

Private returns + additional ES not considered by the land user Current Opinion in Environmental Sustainability

Addressing external effects through payments for ecosystem services (PES).

water quality [72]. Surveys of existing PES schemes, both Coasean and Pigouvian, show that water-related ES are, next to carbon mitigation, the most common objectives of PES [73,65]. A recent review found 200 existing water-related PES schemes in 30 countries in 2012 [74]. A side benefit of PES may be that a greater awareness of these services is built among all parties [53]. For a specific water-related PES scheme Bidaud et al. [75] found that its implementation improved the upstream and the downstream regions’ understanding of each other’s needs. A difficulty in current PES schemes is often the incomplete knowledge about the link between ecosystem property and the provision of the service, as well as difficulties establishing conditional relationships, as found, for example, by Cremaschi et al. [76] in an evaluation of four PES projects in the Philippines. For Costa Rica, several studies found a lack of additionality in the services provided, meaning that most forests conserved under the PES program would have been conserved also in the absence of payments [77,78]. Additionality is easier to assess when payments are made for the implementation of new activities (e.g., tree planting) rather than the maintenance of already existing land uses such as forest conservation. Other studies indicate that cost-effectiveness of current PES schemes could significantly increase through improved targeting, considering site-specific costs and benefits [79]. The findings of a meta-analysis of PES for watershed services by Brouwer et al. [80] also highlight that substantial room for improvement in PES design and implementation remains. www.sciencedirect.com

While most PES schemes are operating on a national or local scale, the idea of international transfers to reduce ES degradation such as REDD+ (reducing emissions from deforestation and degradation) could conceptually also be applied to water issues. One could imagine richer countries paying lower income countries to reduce the water footprints of internationally traded products. Commons dilemmas

For many though not all water-related ES it can be difficult for an ES beneficiary to exclude others from benefiting as well. In addition, benefits from the ES may be non-rival, meaning that consumption by one ES beneficiary does not reduce the availability of the ES to others. An example would be water quality regulation in commonly used groundwater basins or streams. This introduces incentives to free ride on others’ for the provision of the ES. As already stated above, free riding incentives make a negotiation solution such as Coasean PES unlikely. An exception may result in cases where one large actor, such as Vittel, a brewery or a hydropower plant, benefits disproportionately from hydrological services provided and may be willing to act unilaterally to engage in negotiations. Where this is not the case, several alternatives exist. First, a government agency or NGO can act as ES buyer on behalf of ES beneficiaries. An example is the famous case of the New York City Water Authority paying farmers in the Catskills mountains for adopting practices to reduce water pollution [81]. Second, the government can levy a user fee to assure common financing of ES, as in the example of the Costa Rican government raising funding for PES through a water Current Opinion in Environmental Sustainability 2013, 5:696–707

702 Aquatic and marine systems

charge. Third, the government can put a cap on ES degradation, as, for example, in the case of the U.S. Clean Water Act which mandates offsetting unavoidable damage to wetlands by restoring a comparable area. In some cases, community-based approaches are also successful to overcome commons dilemmas (e.g., the maintenance of irrigation systems) [82] through locally devised rules and sanctioning mechanisms [83]. An example of a policy that suffers from the commons dilemma is the case where labels provide information about ES impacts to consumers, for example, a label could specify the water footprint of products, including green, blue and grey water issues. While this may lead to some private WTP for reducing negative water-related impacts, consumers are likely to free ride on other consumers’ WTP, resulting in an underprovision of the water-related services. Other root causes

Another reason why private decisions may lead to societally suboptimal outcomes (in Figure 1: choosing activity A) includes the presence of subsidies on harmful activities or inputs. For example, shrimp farming in Ecuador was found to be heavily subsidized [84], or subsidies may prevail on fertilizers to the detriment of water quality. In such cases, removal of these subsidies would be the preferred policy choice. Where this is politically infeasible, subsidies could at least be redirected towards the provision of ES demanded by society. This is the idea underlying current debates on agri-environmental reforms aiming at redirection of agricultural subsidies into PES in the EU and elsewhere. Given the substantial volume of agricultural subsidies in the EU, this could be a major funding source for PES. Even though subsidy reforms are hard to accomplish, they are slowly under way [85], for example, a successful water subsidy reform in the Czech Republic [8]. A further root cause of suboptimal decisions may be exceedingly high discount rates applied by private decision makers in comparing initial investment costs of switching to activity B with longer-run benefits. This may be due to poverty or lack of access to credit markets. In such cases, poverty alleviation and microcredit programs may be promising solution approaches. In summary, economic incentives such as PES are clearly not a panacea to solve all environmental problems [58,86]. Policy choice needs to be guided by a deep understanding of existing context-dependent root causes of ES degradation, with each cause demanding a different policy approach. Often several underlying root causes coexist, requiring policy mixes to solve the problems [87,8]. External effects are a commonly observed cause of water-related problems. Choosing between alternative economic incentive instruments, such as Pigouvian taxes and PES, requires evaluating trade-offs with respect to Current Opinion in Environmental Sustainability 2013, 5:696–707

efficiency (tends to be higher for taxes, [88]), political feasibility, and equity and fairness considerations. The latter are an important argument for PES in developing countries where ES providers tend to be relatively poor, although the empirical evidence on the impact of PES on the poor is mixed and highly context-dependent [87]. For a more in-depth overview of market-based instruments targeted at improving and conserving ES see Pirard [89]. More ex post evaluations of actual impacts of implemented policies on ES provision would also be desirable [54]. Within the TEEB report on national and international policy making [8] good practice policies and recommendations are made, but further research should continuously aim at delivering data appropriate for basing policy decisions. Cook and Spray [90] emphasize a lack of integration of social and scientific knowledge as an unresolved challenge to ES-based governance. As described in a recent Polish study, the inclusion of ES principles in current government documents mainly focuses on services with market values, that is, tourism and fishing [91]. Nonetheless an Australian case study demonstrated how water policies could be successfully implemented even though uncertainties about the relationship between ecological processes and benefits, as well as uncertainties on water needs for an area prevailed [92].

Controversies and misunderstandings Applying the ES concept does not automatically imply economic valuation

Some critics of economic valuation appear to perceive the ES concept and economic valuation as synonyms and translate partly valid critiques of valuation into a general critique of the ES concept [93]. As described above, under some circumstances, the mere recognition of the ES can already promote improved decisions [6]. Capturing the broad scope of possible ES and recognizing all the key stakeholders may raise awareness for the complexity of the ecosystem and its importance and facilitate a more holistic approach taking trade-offs into account in the decision making process [6,94]. Moreover, scenario analysis and multi-criteria decision analysis represent alternative approaches to economic valuation for informing policy makers [21,2]. Because valuations simplify a complex concept into a single number [95], it seems recommendable to always at the least complement them with other decision criteria and approaches, including, for example, distributional effects (winners and losers) and information on risks, thresholds or irreversibilities. Valuation and markets alone do not solve the problem

Another misperception is that economic valuation will lead decision makers to address ES degradation [96]. As explained above, for private decision makers there are often underlying root causes for not considering all ES effects in their decisions. Only in cases of lack of information or in the rare cases where the preconditions for a www.sciencedirect.com

Ecosystem services — useful for solving water problems? Engel and Schaefer 703

Coasean negotiation solution are satisfied, may valuations lead to a change in the decisions of private actors like land users or companies. In the wide majority of cases, the presence of external effects or other root causes requires the intervention of governments or other third-party actors, like international or civil society organizations. In these cases, markets will fail to provide improved outcomes despite valuations. Valuations may help to promote government intervention by supporting the inclusion of natural systems into our anthropocentric management system [90], but party politics and lobbying pressures may still hamper improved policy making.

tween ES benefits and the resources required for ES provision. With respect to ES benefits, it should be noted that privatization is only feasible, in principle, for private goods, that is, for ES that are excludable and rival in consumption.9 The introduction of the ES concept aims to promote ES which had no market value beforehand; most of these ES have characteristics of non-excludability and/or non-rivalry. In the Vittel example, water quality improvements are likely to benefit also other water consumers in the area. The story may be different if the ES paid for has private good characteristics and the fact that an actor pays for the ES leads them to want to exclude others from benefitting.

Policy making does not necessarily require valuation

In general economic valuations can complement, support and initialize conservation [7,97], but are not essential for designing incentives for ES provision (see [28,50]). Figure 3 illustrates this fact for the example of PES. Valuation would yield a maximum value for the payment made. However, the minimum payment sufficient to induce a switch from activity A to B is given by the difference between the private returns from both activities (so-called opportunity costs, plus potentially some transaction costs). In practice, the actual payment made may lie anywhere in between these two extremes and is often based on estimates of opportunity costs [73]. As a side remark, this also implies that it is very misleading to interpret the observed payments as the value of ES. Choosing payment levels close to the minimum payment is more cost-effective given scarce public budgets [79]. Valuation is not required to compute this payment level; rather data on profits under alternative activities are required, which faces its own difficulties in data collection,8 but tends to be much less controversial than economic valuation of non-market benefits. Of course, valuation can be useful to assure that activity B is indeed preferable to activity A from a societal perspective and avoid that payments are made for suboptimal activities. But societal choice of preferred activities may be based on other methods or on a rough indication that the ES benefits outweigh the costs. It should also be noted that monetary valuations are especially limited when an ecosystem approaches a critical threshold and the impairment of the ecosystem can lead to irreparable damage [98]. Policies should then be guided by safe-minimum standards and a precautionary approach [6]. Introducing PES does not imply privatization of ES benefits, but may promote privatization of resources required for ES provision under weak property rights

Some critics raise the issue that PES induces a privatization of ES to the detriment of weaker sections of society [64,99]. This argument is somewhat fuzzy and needs to be disentangled with care. We need to distinguish be8

Common methods include, for example, farm budget calculations, land rents, or auctions [79]. www.sciencedirect.com

The concern about privatization becomes more relevant when we consider the resources required for ES provision [99]. For example, introducing payments for forest conservation may increase competition over forest lands. In situations of weak property rights, as often present in developing countries, this may lead formal land owners to protect forests at the cost of excluding customary users [100]. These concerns are substantiated by recent formal modeling [101]. Many authors emphasize that the inclusion of local communities and accounting for their needs to sustain and at best improve their livelihoods is essential [65]. Some studies indicate that policy design in situations of weak property rights, however, can be highly complex [101,102]. The example of mangroves in Ecuador is a case in point. International shrimp companies compete with local fishermen over the use of the mangroves. It would seem that if anyone is paid for mangrove conservation it should be local fishermen. Yet, these may be unable to enforce conservation vis-a´vis the companies [102].

Conclusions The concept of ES is clearly not a panacea for solving global water problems, but it may be part of the solution. ES can be seen as a bridging concept between societal and environmental systems and between natural and social sciences [103]. Applying the concept through a combination of quantitative and qualitative approaches can raise awareness about the roles and values of ES and thereby support learning processes. Demonstrating impacts of ecosystem change for human well-being can provide an important argument in policy debates and also for raising funds for measures that promote more sustainable action [104]. Given the alarming trends shown by Vo¨ro¨smarty et al. [20] in their analysis on the degradation of aquatic ecosystems and the implications of short-term strategies to enhance human water security such a more systemic approach is urgently needed. It helps to identify and negotiate trade-offs between different management options (e.g., short-run 9

Rival in consumption means that consumption of the good by one person reduces availability to others. Current Opinion in Environmental Sustainability 2013, 5:696–707

704 Aquatic and marine systems

agricultural production versus water quantity and quality regulation, as seen in the Netherlands) [103], and can be used to develop policies to align private incentives with societal objectives. In some areas the ES concept has led to successful projects and more adaptive and integrated policies, for example, the Coastal Management Plan of Louisiana [9]. This is a promising development. Recognition of the need to address ES is evident, for example, in the creation of the Intergovernmental Science-Policy Platform on Biodiversity and ES (IPBES) in April 2012 [35]. While the ES concept has shown a significant gain in popularity over the past decade, there is still a lack of a consistent framework applied across studies in different areas. Moreover, truly interdisciplinary projects combining natural and social science research on ES are similarly scarce. A promising development is the establishment of networks like the ES Partnership (ESP) to coordinate researchers from the ES field and develop a more holistic research approach, and to facilitate clear communication to policy makers. One outcome was the Salzau Message signed by ESP members in 2012, emphasizing that firstly, more integration of measurement, modeling, valuation and decision science is needed and finally, management should be adaptive and flexible to integrate new findings and changing institutional contexts [36]. Flexible, adaptive approaches are crucial to achieve a necessary compromise between the need for pragmatic policy solutions and the need to resolve prevailing major scientific uncertainties. Despite its promises, the ES concept remains controversial, particularly when combined with economic valuation. While some of this critique appears justified, there is a need for less polarization and more careful disentangling of the arguments. Clearly, the ES concept per se should be distinguished from economic valuation or privatization. Non-monetary assessments and alternative methods for decision support may suffice to motivate policy makers to act and design policies for more sustainable actions. Such policies need to be carefully chosen from a menu of possible approaches and based on a solid understanding of context-specific root causes of ES degradation. There is no blue-print, one-size-fits-all solution to address ES degradation. Moreover, upscaling of innovative, more recent approaches like PES should build on an increasing literature regarding lessons learnt from past PES schemes to prevent repeating major weaknesses of these. Where threshold effects and irreversibilities are important, precautionary approaches should be adopted setting boundaries within which other approaches, like economic incentives, may possibly apply [36]. An interesting area for future research is to analyze how ES assessments, valuation, and policies affect the more intrinsic motivations for ES provision [105]. Current Opinion in Environmental Sustainability 2013, 5:696–707

References and recommended reading Papers of particular interest, published within the period of review, have been highlighted as:  of special interest  of outstanding interest 1.

MEA [Millennium Ecosystem Assessment]: Introduction and Conceptual Framework. Ecosystems and Human Well-being: A Framework for Assessment. Millennium Ecosystem Assessment; 2005.

2. 

Brauman KA, Daily GC, Duarte TK, Mooney HA: The nature and value of ecosystem services: an overview highlighting hydrologic services. Annu Rev Environ Resour 2007, 32:67-98. With a focus on hydrological services, the authors show what instruments are suitable for assessing hydrological ES and how the ES concept can be applied in decision-making.

3.

King RT: Wildlife and man. N Y Conservationist 1966, 20:8-11.

4.

Helliwell DR: Valuation of wildlife resources. Reg Stud 1969, 3:41-47.

5.

Odum EP, Odum HA: Natural areas as necessary components of man’s total environment.Transactions of the 37th North American Wildlife and Natural Resources Conference, March 12–15. Washington, DC: Wildlife Management Institute; 1972, 178-189.

6. 

TEEB: The Economics of Ecosystems and Biodiversity: Mainstreaming the Economics of Nature: A Synthesis of the Approach, Conclusions and Recommendations of TEEB. 2010. Provides a useful summary of the economics of ES and bridges the ecology and economic perspective of ES to advise policy makers.

7.

TEEB: In The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations.. Edited by Kumar P. London and Washington: Earthscan; 2010.

8.

TEEB: In The Economics of Ecosystems and Biodiversity in National and International Policy Making. Edited by ten Brink P. London and Washington: Earthscan; 2011.

ten Brink P, Russi D, Farmer A, Badura T, Coates D, Fo¨rster J, Kumar R, Davidson N: The Economics of Ecosystems and Biodiversity for Water and Wetlands. Executive Summary. 2013. Applies the TEEB framework to wetlands.

9. 

10. Hein L, van Koppen K, de Groot RS, van Ierland EC: Spatial scales, stakeholders and the valuation of ecosystem services. Ecol Econ 2006, 57:209-228. 11. Boyd J, Banzhaf S: What Are Ecosystem Services? The Need for Standardized Accounting Units. Washington, DC: Resources for the Future; 2006, :. Discuss. Pap. 06-02. 12. Fisher B, Turner RK, Morling P: Defining and classifying ecosystem services for decision making. Ecol Econ 2009, 68:643-653. 13. Balmford A, Fisher B, Green RE, Naidoo R, Strassburg B, Turner RK, Rodrigues ASL: Bringing ecosystem services into the real world: an operational framework for assessing the economic consequences of losing wild nature. Environ Resour Econ 2011, 48:161-175. 14. Naiman RJ, Decamps H: The ecology of interfaces: riparian zones. Annu Rev Ecol Syst 1997, 28:621-658. 15. Sundaravadivel M, Vigneswaran S: Constructed wetlands for wastewater treatment. Crit Rev Environ Sci Technol 2001, 31:351-409. 16. Yamamuro M: Herbicide-induced macrophyte-tophytoplankton shifts in Japanese lagoons during the last 50 years: consequences for ecosystem services and fisheries. Hydrobiologia 2012, 699:5-19. 17. Nedkov S, Burkhard B: Flood regulating ecosystem services— Mapping supply and demand, in the Etropole municipality, Bulgaria. Ecol Indicat 2012, 21:67-79. www.sciencedirect.com

Ecosystem services — useful for solving water problems? Engel and Schaefer 705

18. Willaarts BA, Volk M, Aguilera PA: Assessing the ecosystem services supplied by freshwater flows in Mediterranean agroecosystems. Agric Water Manage 2012, 105:21-31. 19. Bogardi JJ, Dudgeon D, Lawford R, Flinkerbusch E, Meyn A, PahlWostl C, Vielhauer K, Vo¨ro¨smarty C: Water security for a planet under pressure: interconnected challenges of a changing world call for sustainable solutions. Curr Opin Environ Sustain 2012, 4:35-43. 20. Vo¨ro¨smarty CJ, McIntyre PB, Gessner MO, Dudgeon D, Prusevich A, Green P, Glidden PS, Bunn SE, Sullivan CA, Reidy Liermann C, Davies PM: Global threats to human water security and river biodiversity. Nature 2010, 467:555-561. 21. Pahl-Wostl C, Arthington A, Bogardi J, Bunn S, Hoff H, Lebel L, Nikitina E, Palmer M, Poff NL, Richards K et al.: Environmental flows and water governance: managing sustainable water uses. Curr Opin Sustain 2013, 5:341-351. 22. Heathwaite AL: Multiple stressors on water availability at global to catchment scales: understanding human impact on nutrient cycles to protect water quality and water availability in the long term. Freshw Biol 2010, 55:241-257. 23. Pahl-Wostl C, Jeffrey P, Isendahl N, Brugnach M: Maturing the new water management paradigm: progressing from aspiration to practice. Water Resour Manage 2011, 25:837-856. 24. Jackson RB, Jobbagy EG, Avissar R, Baidya Roy S, Barrett DJ, Cook CW, Farley KA, le Maitre DC, McCarl BA, Murray BC: Trading water for carbon with biological carbon sequestration. Science 2005, 310:944-1947. 25. Whitehead D: Forests as carbon sinks—benefits and consequences. Tree Physiol 2011, 31:893-902. 26. Rodriguez JP, Beard TD Jr, Bennett EM, Cumming GS, Cork S, Agard J, Dobson AP, Peterson GD: Trade-offs across space, time, and ecosystem services. Ecol Soc 2006, 11:28. 27. Seppelt R, Fath B, Burkhard B, Fisher JL, Gret-Regamey A, Lautenbach A, Pert P, Hotes S, Spangenberg J, Verburg PH, Van Oudenhoven APE: Form follows function? Proposing a blueprint for ecosystem service assessments based on reviews and case studies. Ecol Indicat 2012, 21:145-154. 28. Sanon S, Hein T, Douven W, Winkler P: Quantifying ecosystem  service trade-offs: the case of an urban floodplain in Vienna, Austria. J Environ Manage 2012, 111:159-172. In an applied study focused on the type of outcomes land management options can have on watershed functions, the authors show how economic and ecological thinking can improve policy and conservation. Nice example of a multi-criteria decision analysis. 29. Bastian O, Grunewald K, Syrbe RU: Space and time aspects of ecosystem services, using the example of the EU Water Framework Directive. Int J Biodivers Sci Ecosyst Serv Manage 2012, 8:5-16. 30. Norgaard RB: Ecosystem services: from eye-opening metaphor to complexity blinder. Ecol Econ 2010, 69:1219-1227. 31. Seppelt R, Dormann CF, Eppink FV, Lautenbach S, Schmidt S: A quantitative review of ecosystem service studies: approaches, shortcomings and the road ahead. J Appl Ecol 2011, 48:630-636. 32. Keeler BL, Polasky S, Brauman KA, Johnson KA, Finlay JC, O’Neill A, Kovacs K, Dalzell B: Linking water quality and well being for improved assessment and valuation of ecosystem services. PNAS 2012, 109:18619-18624. Focuses on ES and water and the difficulties involved with applying the ES concept to water issues in a way that decision makers profit from the results. Their recommended approach could bridge the gap from science to policy making. 33. Ojea E, Martin-Ortega J, Chiabai A: Defining and classifying  ecosystem services for economic valuation: the case of forest water services. Eviron Sci Policy 2012, 19–20:1-15. Using valuation studies in the water sector, the authors comprehensively depict the problems and possible sources for errors of these studies and recommend a more output based classification to avoid them. 34. Busch M, La Notte A, Laporte V, Erhard M: Potentials of quantitative and qualitative approaches to assessing ecosystem services. Ecol Indicat 2012, 21:89-103. www.sciencedirect.com

35. Perrings C, Duraiappah A, Larigauderie A, Mooney H: Ecosystem services for 2020. Science 2010, 330:323-324. 36. Burkhard B, de Groot R, Costanza R, Seppelt R, Jørgensen SE, Potschin M: Solutions for sustaining natural capital and ecosystem services. Ecol Indicat 2012, 21:1-6. 37. Haines-Young R, Potschin M: Proposal for a Common International Classification of Ecosystem Goods and Services (CICES) for Integrated Environmental and Economic Accounting (V1) 21st March 2010. Report to the European Environment Agency. 2010:. Available at: http://unstats.un.org/unsd/envaccounting/ceea/ meetings/UNCEEA-5-7-Bk1.pdf (accessed 18.03.2013). 38. Daily GC, Polasky S, Goldstein J, Kareiva PM, Mooney HA, Pejchar L, Ricketts TH, Salzman J, Shallenberger R: Ecosystem services in decision making: time to deliver. Front Ecol Environ 2009, 7:21-28. 39. de Groot R, Wilson MA, Boumans RMJ: A typology for the classification, description and valuation of ecosystem functions, goods and services. Ecol Econ 2002, 41:393-408. 40. Tuan Vo Q, Kuenzer C, Minh Vo Q, Moder F, Oppelt N: Review of  valuation methods for mangrove ecosystem services. Ecol Indicat 2012, 23:431-446. In a review on economic valuation studies for mangrove ecosystems, the authors demonstrate how valuations of ecosystem services are practically implemented and what needs to be considered for the results to be reliable and conclusive. 41. Barbier EB: Wetlands as natural assets. Hydrol Sci J 2011, 56:1360-1373. 42. Ring I, Hansju¨rgens B, Elmqvist T, Wittmer H, Sukhdev P: Challenges in framing the economics of ecosystems and biodiversity: the TEEB initiative. Curr Opin Sustain 2010, 2:1526. 43. Hanley N, Barbier EB (Eds): Pricing Nature — Cost–Benefit Analysis and Environmental Policy-Making. Edward Elgar Publishing; 2009. 44. Kirchhoff S, Colby BG, LaFrance JT: Evaluating the performance of Benefit Transfer: An empirical inquiry. J Environ Econ Manage 1997, 33:75-93. 45. National Research Council (Ed): Valuing Ecosystem Services. National Academies Press; 2005. 46. Parks S, Gowdy J: What have economists learned about valuing nature? A review essay. Ecosyst Serv 2013, 3:1-10. 47. Bockstael NE, Freeman AM, Kopp RJ, Portney PR, Smith VK: On measuring economic values for nature. Environ Sci Technol 2000, 34:1384-1389. 48. McCauley DJ: Selling out on nature. Nature 2006, 443:27-28. 49. Sagoff M: The quantification and valuation of ecosystem services. Ecol Econ 2011, 70:497-502. 50. Stern N (Ed): The Economics of Climate Change — The Stern Review.. Cambridge University Press; 2006. 51. Luck GW, Chan KMA, Eser U, Go´mez-Baggethun E, Matzdorf B, Norton B, Potschin MB: Ethical considerations in on-ground applications of the ecosystem services concept. BioScience 2012, 62:1020-1029. 52. Fisher B, Naidoo R: Concerns about extrapolating right off the bat. Science 2011, 333:287. 53. Muradian R, Rival L: Between markets and hierarchies: the challenge of governing ecosystem services. Ecosyst Serv 2012, 1:93-100. 54. Ferraro PJ, Lawlor K, Mullan KL, Pattanayak SK: Forest figures: ecosystem services valuation and policy evaluation in developing countries. Rev Environ Econ Policy 2012, 6:20-44. 55. Chan KMA, Satterfield T, Goldstein J: Rethinking ecosystem services to better address and navigate cultural values. Ecol Econ 2012, 74:8-18. 56. Diamond PA, Hausman JA: Contingent Valuation — is some number better than no number. J Econ Perspect 1994, 8:45-64. Current Opinion in Environmental Sustainability 2013, 5:696–707

706 Aquatic and marine systems

57. Depres C, Grolleau G, Mzoughi N: Contracting for environmental property rights: the case of Vittel. Economica 2008, 75:412-434.

76. Cremaschi DG, Lasco RD, Delfino RJP: Payments for watershed protection services: emerging lessons from the Philippines. J Sustain Develop 2013, 6:90-103.

58. Engel S, Pagiola S, Wunder S: Designing payments for environmental services in theory and practice: an overview of the issues. Ecol Econ 2008, 65:663-674.

77. Sills E, Arriagada R, Pattanayak S, Ferraro F, Carrasco L, Ortiz E, Cordero S: Impact of the PSA Program on Land Use. Paper presented at the Workshop on Costa Rica’s Experience with Payments for Environmental Services, San Jose´, 25–26 September. 2006.

59. Joppa LN: Ecosystem services: free lunch no more. Science 2012, 335:656. 60. Abildtrup J, Jensen F, Dubgaard A: Does the Coase theorem hold in real markets? An application to the negotiations between waterworks and farmers in Denmark. J Environ Manage 2012, 93:169-176. 61. Asquith NM, Vargas MT, Wunder S: Selling two environmental services: in-kind payments for bird habitat and watershed protection in Los Negros, Bolivia. Ecol Econ 2008, 65:675-684. 62. Convery FJ: Reflections — shaping water policy: what does  economics have to offer? Rev Environ Econ Policy 2013, 7:1-19. Takes a pure economics approach to shaping water policies, while giving direct suggestions to policy makers and giving an overview of valuating security in water issues. 63. Olmstead SM: The economics of water quality. Rev Environ Econ Policy 2010, 4:44-62. 64. Go´mez-Baggethun E, Ruiz-Pe´rez M: Economic valuation and the  commodification of ecosystem services. Progr Phys Geogr 2011, 35:613-628. Well-written criticism of the ES concept. 65. Schomers S, Matzdorf B: Payments for ecosystem services: a  review and comparison of developing and industrialized countries. Ecosyst Serv 2013 http://dx.doi.org/10.1016/ j.ecoser.2013.01.002. Detailed review of the PES research over the last decades. Highlights problems and success stories and provides some new insights. 66. Mun˜oz-Pin˜a C, Guevara A, Torres JM, Bran˜a J: Paying for the hydrological services of Mexico’s forests: analysis, negotiations and results. Ecol Econ 2008, 65:725-736. 67. Kolinjivadi VK, Sunderland T: A review of two payment schemes for watershed services from China and Vietnam: the interface of government control and PES theory. Ecol Soc 2012, 17:10. 68. Bennett MT, Mehta A, Xu J: Incomplete property rights, exposure to markets and the provision of environmental services in China. China Econ Rev 2011, 22:485-498. 69. Bullock A, King B: Evaluating China’s Slope Land Conversion Program as sustainable management in Tianquan and Wuqi Counties. J Environ Manage 2011, 92:1916-1922. 70. Pagiola S: Payments for environmental services in Costa Rica. Ecol Econ 2008, 65:712-724. 71. Le Coq JF, Froger G, Legrand T, Pesche D, Saenz-Segura F: The Governance of Costa Rica’s programme of payments for environmental services: a stakeholder’s perspective. In Governing the Provision of Ecosystem Services. Edited by Mradian R, Rival L. Springer; 2013:235-255. 72. Grolleau G, McCann MJL: Designing watershed programs to pay farmers for water quality services: case studies of Munich and New York City. Ecol Econ 2012, 76:87-94. 73. Wunder S, Engel S, Pagiola S: Taking stock: lessons learnt for the design of payments for environmental services programs. Ecol Econ 2008, 65:834-852. 74. Bennett G, Carroll N, Hamilton K: Charting New Waters: State of Watershed Payments 2012. Washington, DC: Forest Trends; 2013, :. Available online at http:// www.ecosystemmarketplace.com/reports/sowp2012. 75. Bidaud C, Me´ral P, Andriamahefazafy F, Serpantie´ G, CahenFourot L, Toillier A: Institutional and historical analysis of payments for ecosystem services in Madagascar. In Governing the Provision of Ecosystem Services, Studies in Ecological Economics. Edited by Muradian R, Rival L. Springer Science; 2013:207-234. Current Opinion in Environmental Sustainability 2013, 5:696–707

78. Pfaff A, Robalino JA, Sanchez-Azofeifa GA: Payments for Environmental Services: Empirical analysis for Costa Rica. Duke: Terry Sandford Institute of Public Policy; 2008, :. Working Paper Series SAN08-05. 79. Wu¨nscher T, Engel S: International payments for biodiversity services: review and evaluation of conservation targeting approaches. Biol Conserv 2012, 152:222-230. 80. Brouwer R, Tesfaye A, Pauw P: Meta-analysis of institutionaleconomic factors explaining the environmental performance of payments for watershed services. Environ Conserv 2011, 38:380-392. 81. Turner RK, Daily GC: The ecosystem services framework and natural capital conservation. Environ Resour Econ 2008, 39:25-35. 82. Lansing JS, Kremer JN: Emergent properties of Balinese water temples. Am Anthropol 1993, 95:97-114. 83. Ostrom E: Governing the Commons.. New York: Cambridge University Press; 1990, . 84. Sathiratha S, Barbier D: Valuing mangrove conservation in Southern Thailand. Contemp Econ Policy 2001, 19:109-122. 85. Schmid E, Sinabell F, Hofreither MF: Phasing out of environmentally harmful subsidies: consequences of the 2003 CAP reform. Ecol Econ 2007, 60:596-604. 86. Kinzig AP, Perrings C, Chapin FS, Polasky S, Smith VK, Tilman D, Turner BL: Paying for ecosystem services—promise and peril. Science 2011, 334:603-604. 87. Pagiola S, Platais G: Payments for Environmental Services: From Theory to Practice. Washington: World Bank; 2007, . 88. Williams RC: Growing state–federal conflicts in environmental policy: the role of market-based regulation. J Public Econ 2012, 96:1092-1099. 89. Pirard R: Market-based instruments for biodiversity and ecosystem services: a lexicon. Environ Sci Policy 2012, 19:59-68. 90. Cook BR, Spray CJ: Ecosystem services and integrated water resource management: different paths to the same end? J Environ Manage 2012, 109:93-100. 91. Piwowarczk J, Kronenberg J, Dereniowska MA: Marine ecosystem services in urban areas: do the strategic documents of Polish coastal municipalities reflect their importance? Landsc Urban Plann 2013, 109:85-93. 92. Garrick D, Siebentritt MA, Aylward B, Bauer CJ, Purkey A: Water markets and freshwater ecosystem services: policy reform and implementation in the Columbia and Murray-Darling Basins. Ecol Econ 2009, 69:366-379. 93. Plant R, Ryan P: Ecosystem services as a practicable concept  for natural resource management: some lessons from Australia. Int J Biodivers Sci Ecosyst Serv Manage 2013, 9:44-53. Investigate the applicability of the ES concept among policy makers. On the basis of interviews, they give a valuable insight into the integration of the ES concept into current policies. 94. Fisher B, Turner K, Zylstra M, Brouwer R, de Groot R, Farber S, Ferraro P, Green R, Hadley D, Harlow J et al.: Ecosystem services and economic theory: integration for policy-relevant research. Ecol Applicat 2008, 18:2050-2067. 95. Pritchard L Jr, Folke C, Gunderson L: Valuation of ecosystem services in institutional context. Ecosystems 2000, 3:36-40. www.sciencedirect.com

Ecosystem services — useful for solving water problems? Engel and Schaefer 707

96. Atkinson G, Bateman I, Mourato S: Recent advances in the valuation of ecosystem services and biodiversity. Oxford Rev Econ Policy 2012, 28:22-47.

101. Engel S, Palmer C, Pfaff A: On the endogeneity of resource comanagement: theory and evidence from Indonesia. Land Econ 2013, 89(2):308-329.

97. Go´mez-Baggethun E, de Groot R, Lomas PL, Montes C: The history of ecosystem services in economic theory and practice: from early notions to markets and payment schemes. Ecol Econ 2010, 69:1209-1218.

102. Engel S, Palmer C: Complexities of decentralization in a globalizing world Environmental and Resource. Environ Resour Econ 2011, 50:157-174.

98. Farber S, Costanza R, Wilson M: Economic and ecological concepts for valuing ecosystem services. Ecol Econ 2002, 41:375-392. 99. Corbera E: Problematizing REDD+ as an experiment in payments for ecosystem services. Curr Opin Environ Sustain 2012, 4:612-619. 100. Phelps JE, Webb L, Agrawal A: Does REDD+ threaten to recentralize forest governance? Science 2010, 328:312-313.

www.sciencedirect.com

103. Pahl-Wostl C, Nilsson C, Gupta J, Tockner K: Societal learning needed to face the water challenge. AMBIO 2011, 40:549-555. 104. Goldman RL, Tallis H, Kareiva P, Daily GC: Field evidence that ecosystem service projects support biodiversity and diversify options. PNAS 2008, 105:9445-9448. 105. Matzdorf B, Sattler C, Engel S: Institutional Frameworks and Governance Structures of PES schemes. Forest Policy Econ 2013 http://dx.doi.org/10.1016/j.forpol.2013.10.002.

Current Opinion in Environmental Sustainability 2013, 5:696–707