Economic Valuation of Ecosystem Services

Ecosystem services include tangible goods such as food, water, timber, and fuel, as well as less visible but equally vital functions such as climate regulation, nutrient cycling, water purification, pollination, and cultural and spiritual enrichment. Despite their critical role in sustaining life and economies, many ecosystem services are not captured by market systems, resulting in their systematic undervaluation in land-use decisions, public investments, and economic planning. The economic valuation of ecosystem services seeks to address this imbalance by assigning monetary values to the benefits that ecosystems provide. This process makes the invisible visible, enabling environmental costs and benefits to be systematically integrated into national accounting, development planning, and environmental policy. In doing so, valuation provides a basis for revisiting and fine-tuning fiscal policies, such as taxes, subsidies, quotas and incentive schemes, thus encouraging more efficient and equitable resource use. Policymakers are increasingly turning to valuation and accounting of ecosystem services for improving cost-benefit analysis and policy appraisal. Such information helps guide decisions regarding the appropriate level of investment in natural infrastructure and supports the comparison of different land-use strategies or policy proposals. In this sense, ecosystem service valuation is fundamental to determining how much investment is required to sustainably manage landscapes and secure long-term ecosystem functionality. In the context of the Multifunctional Landscapes (MFL) Program, valuation is a central tool for guiding transitions toward more sustainable, inclusive, and resilient land-use systems. Landscapes in Tunisia are inherently multifunctional and dynamic, shaped by interactions among ecological processes, land users, and institutional frameworks. Recognizing and quantifying the full spectrum of ecosystem services at the landscape scale is essential to understanding how ecological, economic, and social functions are interlinked, and how they can be managed to generate multiple co-benefits for both people and nature. Within this context, ecosystem service valuation under Area of Work 3 (AoW3) “Markets and Business Models” goes beyond technical measurement. It is a strategic and participatory process that supports evidence-based policy design, empowers stakeholders, and catalyzes long-term stewardship of landscapes.