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Connecting people to nature:

Importance of knowing Ecosystem

Goods and Services (EGSs)

Monday, 5 June 2017


World Environment Day provides a perfect platform to reflect on

our environment and initiate actions that would drive sustainable
solutions for major environmental issues of the world. This year
the theme is Connecting People to Nature. As suggested by
many environmental experts scientific advances as well as
growing environmental problems such as global warming are
helping us to understand the countless ways in which natural
systems support our own prosperity and well being.

Therefore it makes sense to go back and get connected with the

nature so it helps to better understand problems such as climate
change and come up with sustainable solutions. However, in order
this to happen it is important that we understand the incentives
that people have in order to get connected with the environment.
Since we are looking for sustainable solutions connection with the
nature cant be a one-time thing just for the World Environment
Day, rather it has to be a continuous activity.

Therefore the central thesis of the article is to explore different

incentives that people have in order to get connected with the
environment. The main hypothesis is that the incentives to get
connected with the nature would work better if they are based on
the concept of Ecosystem Goods and Services (EGSs).

Ecosystem Goods and Services (EGS) are products of healthy,

functioning ecosystems. These goods and services may be valued
in markets or may be considered outside of existing markets, but
their management constitutes an important investment in
environmental and social sustainability for current and future
generations (Roy et al, 2011). EGSs provide many incentives for
people to get connected with the nature. However these can be
categories in to several main categories: (1) Ecological incentives
(2) Social and Food safety incentives and (3) Financial incentives
(including budgetary incentives for the government). All these
incentives would push people (and hopefully the governments
when it comes to budgetary incentives) to be more involved with
the nature and reap the benefits of EGSs.

Ecological incentives
Ecosystems in nature are capable of providing many ecological
incentives: (1) clean water (2) clean air (3) ecological
balance/species diversity (4) soil fertility (5) scenic beauty and (6)
disaster management. Healthy ecosystems such as lakes, river-
associated and forest ecosystems are source of clean water.
These ecosystems not only provide clean surface water but they
are also capable of replenishing the ground water as well. Sri
Lanka is famous for many lakes and river associated ecosystems.

Though we are now polluting many of these

ecosystems, they were at one point providing clean water for all
of us. Currently it is not possible for us to use this water directly
for consumption. Some of these clean water sources are not even
good for bathing purposes. Its being more than 20 years since
my first visit to Singharaja forest. Those days we did not take
water bottles rather we enjoyed drinking clean water from flowing
streams inside the forest. Today one might think twice before
drinking water from these sources. While we have already lost
some of the best ecosystems that gave us clean water there are
few left. This World Environment Day 2017 will be a perfect place
to act on preserving the incentives of clean water from these
natural ecosystems.

Most of the land-based ecosystems in the world are associated

with greenery (except for the desert ecosystems and few others).
Almost all the land-based ecosystems in Sri Lanka are associated
with greenery. Green ecosystems are associated with production
of clean air, which is a basic function of plants. In this regard
forests stands above any other ecosystem. Sri Lanka has a rich
forest cover. Though we had a forest cover of more than 40%, this
has now significantly reduced.

By 2015 the forest cover of Sri Lanka was reduced below 28%.
Country is in a continuous dilemma in balancing off the
development and preservation of the natural forest cover. We only
have limited land, our population is increasing, more timber is
demanded for housing and other purposes and deforestation
(mainly illegal) is still an issue, therefore the probability of current
forest cover decreasing even lower is high.

Loggers have enough private incentives to keep on logging since

there is an increasing demand for timber. Therefore if the forests
cover to be protected from illegal logging the rules on such
activities have to be strong and properly implemented. I do not
see a lack of laws rather there is lack of enforcements. High
demand has created enough incentives to enforcing authorities to
keep allowing illegal logging. Therefore enforcing laws might not
be enough to protect forest ecosystems.

We need to look at other areas where incentives are created to

protect forest ecosystems in terms of clean air. More clean air
means less polluted air and preferably less CO2 (Carbon dioxide).
Sri Lanka is committed to Intergovernmental Panel on Climate
Change (IPCC), therefore as a country we have enough incentives
to reduce the CO2 emissions.

Many developed countries (who are committed to IPCC) are

already investing in reforestation and decrease in logging in
developing countries to compensate their CO2 emissions (this is
part of the climate financing process/REDD+). Sri Lanka would be
a suitable source for such activity. Therefore there are enough
incentives for the Government to promote reforestation and stop
illegal logging as a way of climate change mitigation. Sri Lanka
has not yet come to a situation like China or Singapore where
ordinary people has to wear breathing masks when they go out.

However, usually people would have enough incentive to prevent

such a situation from being a reality. Therefore we should take
steps to plant trees as much as possible while convincing
authorities to tight enforcements around illegal logging. This way
it will be possible to reap continuous incentives of clean air from
natural ecosystems.

Ecological balance/species diversity is very important to the

natural low and order of the ecosystem. It will define the strength
of the ecosystem in terms of its value and sustainability. An
ecosystem with higher species diversity would yield a higher
economic value in terms environmental valuation. A country with
ecosystems with higher species diversity would result in a higher
natural stock in terms of environmental accounts. Further it will
enhance the sustainability of food chains. Ecological diversity has
the ability to enhance the soil fertility as well. Soil fertility has a
direct link to the macro and micro, fauna and flora composition of
the ecosystem. This is more relevant for ecosystems that are
associated with agriculture and farming. Therefore taken the
species diversity and the soil fertility together we could say
farmers have the most incentives of species diversity and soil
Species diversity and soil fertility was one of the main features of
the ancient agricultural systems.

However with the introduction of chemicals in to agriculture

species diversity decreased rapidly and soil fertility deteriorated.
Though chemicals were a significant attribute in increasing the
agriculture production in early days (when the green revolution
started) it was not a sustainable solution. Most agricultural fields
have become unproductive and not responsive to fertiliser
(chemical or organic).
The Government is in full force promoting organic agriculture
among farmers. Therefore it might be the case that the
Government has realised the incentives from organic agriculture.
This is also a golden opportunity to convince farmers to adopt
organic agriculture in the name of EGSs. A farmer would evaluate
many things before shifting his cultivation, which we mainly
identify as opportunity cost of cultivation. But these opportunity
costs are direct and one could put a value on it.

By shifting to organic agriculture a farmer would attract EGSs that

are normally would not be valued by direct valuation methods and
species diversity and soil fertility are such those EGSs. Yet, these
EGSs, if valued would cover majority of the direct opportunity
cost. For example organic fertiliser and labour are two main
opportunity cost components in shifting to organic farming.
Species diversity and soil fertility would greatly reduce the need
of organic fertiliser and land preparation. Therefore
promotion/adoption of organic farming systems is a perfect
platform for farmers to harness the incentives of species diversity
and soil fertility.

Environmental economists are famous for putting values for

scenic beauty of natural ecosystems (they usually use methods
such as travel cost and willingness to pay). From these studies it
is clear that one of the most important features of a natural
ecosystem that people would value is its scenic beauty. Therefore
scenic beauty is a major EGS that people could receive from a
natural ecosystem (I am using the word natural ecosystem to
illustrate the default case, but there are man-made ecosystems
that would generate scenic beauty for people).

Scenic beauty of an ecosystem is a perfect platform to generate

income in terms of tourism. At the same time it could be the first
thing that would make the business go away. Ecosystems do lose
their scenic beauty to natural activities such as floods, droughts
and fires; however most of the time the causes are man-made.
Beaches are one of the natural ecosystems that Sri Lanka is
blessed with and which generates plenty of income in terms of

However over the last decade most of these beautiful beaches

lost their attractive features due to human activities. We have
only handful of places that would generate enough scenic beauty
(EGS) that would attract people. Most of these places were
founded by people and were populated by them as well. Most of
these beaches are public goods. There is no charge to visit these
beaches and enjoy the scenic beauty (unless the beach is part of
a privately managed hotel, then you would need to spend on the
hotel in order to access the beach).

At the same time public beaches provide the highest incentives

for people to pollute as well as conserve. Scenic beauty (EGS)
provides enough incentives for people to get connected with the
nature and enjoy life. However being a public good people will
bring food and other materials and would leave waste that would
damage scenic beauty (the initial damage is on the scenic beauty
however it will expand to deterioration and erosion).

Therefore property right structure might create incentives to

pollute a natural ecosystem. This is common for most other
ecosystems that generate scenic beauty, especially if they were
unrestricted to general public. Therefore in order to reap the
incentives of scenic beauty property rights might have to be
restructured. For example littering and waste management in
public beaches had to be taken seriously. It might be hard (or
even not possible) to change attributes such as property rights
structure of a natural ecosystem, however it is possible to
change how people would utilise EGSs of such an ecosystem.

After The Tsunami of 2004, many reports came out highlighting

that beach and brackish water ecosystems with dense ecological
diversity had the least damage. In fact most of those ecosystems
prevented the strong tides from bashing in to the land areas and
probably have prevented many deaths and property damage.
Therefore in my argument I stand strong that disaster
management is one of the significant EGSs generated by
ecosystems, especially beach and brackish water ecosystems.
For a person who is living in the hill country this EGS might have a
little significance. But for people who live close by to beach and
encountered the horror of the Tsunami 2004 would have a
different opinion. This is justified by the large number of beach
and brackish water ecosystem rehabilitation projects
implemented after the Tsunami of 2004 (Rodrigo and Deaton,

Social and food safety incentives

In order to address the question on what are social incentives of

EGSs one should try to answer the broader question, why people
should go out to nature?. There can be many answers: (1) It
makes me happy and is relaxing (2) It is our responsibility to
protect the nature (3) Its World Environment Day so we should do
this and the list could go on. However, in terms of EGSs, the
ecosystems provide an interactive platform to the society.
Therefore social incentives of EGSs are about receiving as well as
giving. Primarily EGSs of an ecosystem provides an opportunity
for the society to interact with key components of nature, reflect
on what has happened and realise what should be done to make
things better. This sounds broader but I argue that social incentive
of EGSs is one of the things that would be harder to put a
monetary value using modern day environmental valuation tools.

However the incentives of food safety are much straightforward.

Food safety has never attracted this much of an attention in the
recent years. With the increase attention on over-use of chemicals
on agricultural products more people are looking to consume toxic
free produce. EGS in terms of food safety is related to farming
ecosystems, and as discussed earlier the best places to generate
those are organic farming ecosystems. Food safety is something
beneficial for consumers as well as producers.
By eating toxin free produce people can eliminate the chance of
serious illnesses and forego any expenditure on medical care.
Consumers willingness to buy organic produce would depend on
cost of overcoming an ill state. This would be hard to estimate
unless the person has actually experienced an illness because of
such consumption. Therefore an indirect way of getting this
information is to ask, How much he would be willing to pay to
forego any illnesses that could be created by consuming toxin

Consumer will buy organic produce as long as the willingness to

pay to forgo illnesses is higher than the market price of the
organic produce. But this is a pure economic argument and would
not adequately justify the consumers decision on whether to buy
organic food or not. Since being organic is a quality parameter, a
consumer would need enough market signals to make sure of the
quality before making a decision to buy.

Therefore while there are clear evidences to show that organic

farming ecosystems produce enough incentives of food safety a
consumer might still not make a purchase since quality signals
are distorted. However promoting organic food consumption is
much easier among farmers since they have enough incentives to
consume what they grow (so that they dont have to spend
money in the market place). However convincing them to adopt
organic farming will not be easy unless they are compensated for
shifting from inorganic farming to organic farming (Those are the
opportunity cost components that I have discussed earlier in the

Financial incentives

Financial incentives of EGSs are applicable for general public and

governments. People who associated with natural ecosystems
have direct financial benefits. These ecosystems such as forests
ecosystems provide employment opportunities for communities.
Living harmony with your surrounding ecosystem has been the
practice forever. However with population increase and
technology development, many necessities came up and living off
the natural ecosystem was not enough.

With time farming communities developed and people destroyed

natural ecosystems so that they can cultivate and earn money
from harvest. However we still can see this co-existing nature in
some communities. Sri Lankan natives are still living in harmony
with the society and most of the time extracting resources and
gaining money through trade.

This does not have to be the way to live in the 21st century.
Societies do not have to fully depend on the environmental
resources to survive. However disconnect from the nature will
have its consequences. Brackish water fisheries is a natural
ecosystem that served food (mainly protein sources) to people for
a long time. This allowed people to extract natural resources such
as fish, crabs and mangroves.

However with increasing need for food these ecosystems were

turned in to larger production entities such as shrimp farms. Its
not a wrong thing to do if it was done in harmony with the natural
ecosystems. However commercial brackish water fisheries
blocked many natural storm water drainage systems, decreased
the species diversity in the ecosystem and increased the
probability of disease spread with monoculture. Such a situation
will lead to a financial loss rather than a gain.

I will use a specific example to illustrate how connecting with the

nature can save money for the Government. My emphasis is on
organic agriculture. Fertiliser subsidy (mainly for paddy) is a
significant input subsidy in the agriculture sector. It has helped to
increase the production since early 1960s. However many studies
have shown (Rodrigo and Abeysekara, 2016) that fertiliser
subsidy on paddy became insignificant over time, accounted for
over-use of fertiliser, land degradation, toxin produce and heavy
burden on the national budget.

Fertiliser was subsidised close to 90% (from the market price) and
it was absorbing a heavy percentage from the national budget.
Though this was a very clear situation, none of the previous
governments had the ability to abolish the fertiliser subsidy since
it was not an economic problem anymore, rather it was a
political economic problem. However the current government
made a decision to abolish the fertiliser subsidy and moved on to
a coupon system.

The coupon system does not utilise government expenditure as

much as the fertiliser subsidy. Yet I argue that the coupon system
also has to be a temporary solution. There are plenty of examples
from every region of the world on facing-out input subsidies. Sri
Lanka has to learn from these examples. Input subsides have to
be temporary boosters to production. Once targets are achieved
input markets must decide on the price and the quantity
(preferably through healthy competition).

Nature is essential for our survival. This isnt something that has
to be reminded on a special day and taught in schools. However
insatiable needs have pushed us to extract everything from the
nature and hardly give anything back. Because of that we have
lost the natural balance in our ecosystems. Think of the incentives
that you can get from engaging with ecosystems, and then
understand what needs to be done to make those incentives
continuous and sustainable.

(Dr. Chatura Rodrigo is an agriculture and environment

economist. He can be reached
at chatura_rodrigo@yahoo.com and +94 77 986 7007)
Posted by Thavam