In an ambitious and controversial paper, Costanza et al. (1997) attempted to estimate the total economic value of the services provided by all ecosystems on earth. The paper received a great deal of attention, not all of it favorable. A follow-up briefing article in Nature the following year stated that “The paper was a box-office success but was panned by the critics” (Nature, 1998).

In the paper, Costanza et al. (1997) estimated values for 17 ecosystem services⁴ from 16 ecosystem types including wetlands, forests, grasslands, estuaries, and other marine and terrestrial ecosystems. To derive estimates of the economic value of ecosystem services, Costanza et al. (1997) began with existing estimates of the productivity of a hectare for each ecosystem type for each service and a willingness to pay estimate for the service. Multiplying these estimates generated a per hectare value of the ecosystem service for each ecosystem type. They then aggregated across all services to establish a value per hectare for each ecosystem type. Finally, they multiplied this per-hectare value by the number of hectares of each ecosystem type and summed across ecosystem types to derive the total value of ecosystem services. For the bottom line, they estimated that the annual value of ecosystem services for the earth ranged from $16 trillion to $54 trillion, with a mean estimate of $33 trillion. This value was notably higher than the value of global GDP (gross domestic product) at the time ($18 trillion).

Critics have pointed out a number of serious flaws that lead to conclusions that the estimate has little scientific merit (e.g., Bockstael et al., 2000; Toman, 1998) while some attacked the approach as a meaningless exercise. If the question is the value of the life support system of the planet, there can be only one of two answers depending upon whether a willingness to pay or a willingness to accept approach is used. Willingness to pay should be bounded by global ability to pay (i.e., global GDP, or $18 trillion). If willingness to accept is used, then as Toman (1998) concludes, $33 trillion is “a serious underestimate of infinity.”

Other criticisms focused on problems with the methods and assumptions used in the paper. The paper itself has a long list of “sources of error, limitations and caveat” (Costanza et al., 1997). Obviously, there will be large data gaps in any such exercise. In addition, aggregation issues pose particular trouble in this study. According to Bockstael et al. (2000),

Front Matter (R1-R12)

Executive Summary (1-16)

1 Introduction (17-32)

2 The Meaning of Value and Use of Economic Valuation in the Environmental Policy Decision-Making Process (33-58)

3 Aquatic and Related Terrestrial Ecosystems (59-94)

4 Methods of Nonmarket Valuation (95-152)

5 Translating Ecosystem Functions to the Value of Ecosystem Services: Case Studies (153-208)

6 Judgement, Uncertainty, and Valuation (209-238)

7 Ecosystem Valuation: Synthesis and Future Directions (239-260)

Appendix A: Summary of Related NRC Reports (261-265)

Appendix B: Household Production Function Models (266-269)

Appendix C: Production Function Models (270-273)

Appendix D: Committee and Staff Biographical Information (274-278)