Economic valuation of environmental goods and services in the context of good ecosystem governance

A central concern of governments, societies and aid institutions is to support the development process in order to provide stability and raise the welfare of underdeveloped countries. Historically, development models have focused on capital injections for infrastructure, education and health in order to promote financial and social returns to society. Today, development concerns incorporate the paradigm of “sustainable development” and hence a new focus on the efficient and sustainable use of natural resources. Many of these resources are public goods and are difficult to capture in traditional economic models of development. Typically, they have been undervalued and overused. As natural resources become scarcer, governments, society and the private sector need to find interrelated solutions in order to manage them sustainably. Central to the effective management of these environmental goods and services is the role of good governance, defined here as an interplay between society, science and government. This paper considers the role of economics and value in the governance trialogue; it is based on the economic perspective and not that of political science. It focuses primarily on the role of economic valuation as a tool for addressing the inefficient use of environmental goods and services, and by doing so incorporates their “true” value in the decision-making process around environmental management, leading to good governance.