Economic valuation of ecosystem services, the case of Lake Elliðavatn and Lake Vífilsstaðavatn

Abstract

Managing the environment is a complicated task constantly faced by decision-makersin all the world´s communities. In Iceland heated debates have been going on over therecent years concerning whether natural areas should be industrially developed orprotected for recreational purposes. The aim of this paper is to bring anotherperspective to the Icelandic debate, an economic valuation of ecosystem services. Theterm “ecosystem services” refers to the benefits human population derives fromecosystems. The ecosystem services provided by two lakes in the capital area ofIceland, Lake Elliðavatn and Lake Vífilsstaðavatn were assessed according to thecategorization scheme of the Millennium Ecosystem Assessment (MEA) published in2005. The MEA classifies ecosystem services into four categories; provisioningservices, regulating services, cultural services and supporting services. Services fromeach category were identified and valued with economic valuation methods; marketprice, defensive behavior, travel cost and factor income. The final result is that theannual value of ecosystem services provided by Lake Elliðavatn in 2009 is in therange of ISK 83.263.647 - 101.308.524 (constant ISK 2009). For Lake Vífilsstaðavatnthis value is in the range of ISK 5.713.925 - 5.981.560 (constant ISK 2009). It wasconcluded that although an economic valuation of ecosystem services can only serveas an indicator of a potential value of the ecosystem services provision, it stillprovides an important contribution to the debate of environmental manament inIceland.