Ecological Society of America’s new policy statement on ecosystem services  Ecological Impacts of Economic Activities proposes:

To encourage decision makers to account for the environmental costs of growth, we propose the following four strategies:

1. Internalize externalities

Environmental impacts and resource shortages caused by economic activities often affect people far removed in space and time from those whose actions produced these problems. This separation of cause from consequence represents what economists refer to as externalities. Agribusiness, for example, benefits from using nitrogen fertilizers but does not bear the costs associated with oxygen-depleted “dead zones” that agrochemical runoff produces in aquatic ecosystems. Because the adverse environmental impacts of fertilizer use are not reflected in fertilizer prices, they do not affect decisions about how much fertilizer to use.

Resolving this disparity would drive more environmentally and socially sustainable investments, but only following significant changes to our existing economic framework. Environmental economists advocate a range of measures to internalize externalities. Examples include property rights for environmental assets, payments for ecosystem services, and liabilities for environmental damage. Developing effective incentives requires an in-depth understanding of the ecological implications of externalities.

2. Create mechanisms for sustaining ecosystem services

Environmental economists have long recommended creating markets for ecosystem services such as pest control and carbon sequestration. Such markets would provide incentives for environmentally sound investments, while allowing communities to be compensated for actions that benefit others. Whether this means clean air in Beijing, China or safe drinking water in Central Valley, California, people would be able to invest in their welfare and the welfare of their children, just as they are currently able to invest in more material forms of security.

Markets must often be coupled with other strategies in order to be effective. In the emerging market for carbon sequestration, for example, if sequestration is priced while other services like freshwater provisioning remain unpriced, negative ecological outcomes may ensue. Carbon markets need to be paired with other strategies, such as the regulation of land use, the direct protection of biodiversity, and the development of “green standards” to which projects must adhere.
3. Enhance decision makers’ capacity to predict environmental impacts

Society is growing increasingly aware of the economic repercussions of environmental change. Still, this linkage often only becomes apparent after the environment has been damaged, sometimes irreversibly. Routine assessments of environmental risks, such as environmental impact statements, play an important role in identifying short-term environmental damage, but they rarely account for impacts that take decades to emerge. For example, DDT, a synthetic pesticide, was widely used for almost 20 years before its harmful effects on human and bird populations were recognized. The resulting US ban on DDT led to marked recoveries in bald eagles and other impacted species, but not all environmental impacts can be reversed with such success. Similarly, deforestation in Panama displaced mosquito populations in the canopy, causing a dramatic increase in Yellow Fever cases. Such outbreaks of zoonotic diseases are rarely foreseen in routine environmental risk assessments but can quickly escalate to unmanageable proportions, leading to the loss of countless human lives as well as billions of dollars in damages, lost output, and livestock mortality.

Recognizing that environmental impacts are often highly uncertain, it is important to develop models better able to project the consequences of anthropogenic environmental change. Equally important are new monitoring systems to detect problematic trends before they surpass society’s ability to address them.

4. Manage for resilient ecosystems

When ecosystem thresholds are breached, undesirable and often irreversible change can occur. For instance, grassy savannas capable of supporting grazing and rural livelihoods can suddenly “flip” to woody systems with lower productive capacity. Many common management strategies move ecosystems closer to these thresholds. Ecosystem management strategies need to leave a “margin of error”, trading some short-term yield for long-term resilience that sustains a suite of services.