Accounting for final environmental services is important to public policy because those services contribute significantly to human welfare and are not captured in existing welfare accounts. We come at ecosystem services accounting from an
economic perspective. Economic accounting requires an economically derived definition of ecosystem services. We
have articulated and defended such a definition in this article. Our economic definition of services employs two fundamental insights. First, that ecosystem services should be isolated from numerological contributions to final goods and services. Once ecosystem services are combined with other inputs, such as labor and capital, they cease to be identifiably “ecological.” For example, recreational benefits and commercial harvests are not ecosystem services because they arise from the combination of ecosystem services with other inputs. Second, that economic accounting is concerned with ecological end-products, not the far larger set of intermediate processes and elements that make up nature.
Relative to more eclectic definitions of services–which have an “everything but the kitchen sink” quality–our definition
yields a more concrete and parsimonious set of ecological elements to be counted. Moreover, our definition is motivated
by the economics of national welfare accounting and thus has practical implications for green GDP. Efforts to promote green GDP have stumbled because the definition of ecological factors to be measured have been unarticulated or flawed.
As a parting thought, we reiterate the fact that our definition of ecosystem is derived from a desire for consistency
between conventional market accounting units and ecosystem accounting units. Interestingly, this leads to measurement of units that are in fact biophysical, rather than social or economic in nature. An economic definition of service units
therefore leads naturally and necessarily to a bridge between economic and biophysical analysis. No ecologist should think that the economic definition of services leads away from biophysical analysis. In fact, the opposite is true.