Environmental Functions as a Unifying Concept for

Ecology and Economics

R u d o l f S. de G r o o t * Agricultural University Wageningen,

R i t z e m a B o s w e g 32a,
6 7 0 3 A Z Wageningen, The Netherlands

Summary World Conservation Strategy, organised by IUCN,

In spite of the increased awareness about many United Nations Environment Programme (UNEP)
environmental problems, degradation and pollution and World Wildlife Fund (WWF) in Ottawa (31st
of the natural environment by human actions still May-5th June, 1986), on the progress in im-
continue on a large scale. Some of the main reasons for plementing the World Conservation Strategy.
man's continued abuse of the natural environment are The 'lack of appeal' of the Strategy with economists
the short-term nature of the economic planning and decision-makers may partly be due to a com-
process, which largely ignores the negative long-term munication problem, which in turn may be caused by
effects of economic production on the environment different interpretations of the key-terms used in the
(e.g. pollution), and the fact that the pricing system Strategy. Ecologists, conservationists and economists
mainly concentrates on man-made goods and services all have different views on the meaning of such terms
while considering most natural resources to be 'free as 'conservation', 'sustainable development' and
goods'. 'natural resources'. As tong as there is no agreement
This paper argues that environmental functions (i. e. on the definition of these terms there is a real danger
natural goods and services) are at least as important to that the conservation of natural resources (i.e. the
human welfare as man-made goods and services and maintenance of natural systems and biological di-
should, therefore, be included in economic accounting versity) will continue to be sacrificed for the sake of
procedures. To this end, it is suggested to replace the (economic) development, sustainable or non-
term 'natural resources" by the concept of environmen- sustainable. Since the compatibility of conservation
tal functions and, efforts should be undertaken to and development depends on the way the natural
increase our understanding of the ecological and environment is used as a resource, this paper suggests
socio-economic benefits of environmental functions to that the term 'natural resources' be re-defined as
human society. Only when ecological principles 'natural functions' (or, goods and services provided
become an integral part of economic planning and by the natural environment) and discusses the
political decision-making is there a chance of achiev- (potential) use of the function-concept in economic
ing a 'happy global village' based on harmony between planning and decision-making.
man and nature. The views and recommendations presented in this
paper are a synthesis of ideas obtained from various
Introduction literature references (e.g. Braat, et al., 1978; Huet-
ing, 1980 and 1984); of discussions with various
The publication of the World Conservation Strategy authors and participants of the Ottawa-conference
by the International Union for Conservation of (see above), and of original ideas resulting from
Nature and Natural Resources (IUCN), in 1980, has research by the author on a functional ecosystem
attracted much attention to the need for conservation evaluation method as a tool in environmental
and sustainable use of nature and natural resources. planning and decision-making (De Groat, 1986).
However, the Strategy still seems to lack appeal to
economists and policymakers and has not yet ade-
quately reached the general public, as was concluded S o m e Obstacles
by several speakers during the Conference on One of the main obstacles to the conservation and
Conservation and Development, Implementing the sustainable utilization of nature and natural resources
* Rudolf S. de Groat is an environmental consultant and a Ph.D is the fact that current economic planning and policy
candidate in environmental planning and management in the making only (or mainly) deal with man-made goods
Nature Conservation Department of the Agricultural University and services, in spite of the fact that most economic
Wageningen. As a memberof the IUCNCommissionon Environ-
mental Planninghe is involvedin the activitiesof the EuropeanCom- production processes heavily depend, in many ways,
mittee for National ConservationStrategies, to implement, monitor on natural processes and components. For example,
and update National and European Conservation Strategies. nature provides regulation processes to maintain

The Environmentalist, Volume 7, Number2, 105-109 (1987) 105

 clean air, water and soil, nature provides many economists, planners and decision-makers. This lack
resources (ranging from ore to wildlife products and of understanding and communication between 'con-
genetic material), nature provides space and a servationists' and 'developers' may be caused by
suitable substrate for many human activities (e.g. differences in the interpretation of some key-terms
agriculture, recreation, etc.) and nature provides such as 'conservation' and 'sustainable development',
opportunities for reflection, aesthetic enjoyment and leading to confusion and non-sustainable use of
spiritual enrichment. Thus, environmental functions nature and natural resources. Other obstacles to
(goods and services) clearly contribute as much (or conservation and sustainable development, such as
possibly, even more) to human welfare as man-made population growth, unequal distribution of wealth
goods and services and yet the present way of and resources and military conflicts, may be equally
economic accounting, as is reflected in the Gross important but these will not be discussed here.
National Product (GNP), still considers environmen-
tal functions as 'free goods', while disregarding the
negative impacts of the human production process on
the environment, such as, resource depletion, pollu-
tion and extinction, as 'external effects', for which 'Environmental Quality' and 'Quality of Life': New
there is no need to account. Paradigms in Conservation and Development
However, these so-called 'external effects' may The subtitle of the World Conservation Strategy
have very expensive secondary effects, such as the reads: "Living Resource Conservation for Sustain-
damage inflicted on buildings and agricultural pro- able Development". Although the integration of
duction by acid rain, and often the benefits of conservation in development planning is a very
environmental protection measures clearly outweigh sensible and necessary aim, unfortunately much
the monetary costs of environmental damage. In- confusion seems to exist with respect to the inter-
stead of employing often costly and inefficient pretation of the terms 'conservation' and 'sustainable
artificial measures needed to restore impaired en- development'. For example, economists use con-
vironmental functions (in so far as this is possible), it servation in the context of 'sustaining a regular yield
would be better to maintain environmental functions of a certain commodity at the highest level feasible"
as much as possible and prevent further damage. (Allaby, 1977, in: Cosijn, 1986). Conservationists,
Since most environmental degradation is caused by however, interpret conservation as the maintenance
economic production and development, ecologists or preservation of natural ecosystems and biological
and conservationists continuously attempt to make diversity. These different viewpoints also emerge
economists and decision-makers more responsive to with respect to the term 'sustainable development',
environmental concerns. A major effort in this i.e. do we want to sustain economic production
respect was the publication of the World Conserva- growth or maintain natural systems and biological
tion Strategy by the IUCN in 1980. This Strategy diversity? Both require quite different management
attempts to combine nature conservation (i.e. the strategies. To make matters even more complicated,
maintenance of natural systems and biological di- even among conservationists there seems to be a lack
versity) with economic development (i.e. the use of of consensus on the interpretation of the terms
species and ecosystems for economic production), by 'conservation' and 'sustainable development.'
stressing the need for "Living Resource Conservation The World Conservation Strategy seems to
for Sustainable Development". Although the World attempt to incorporate both the enonomic and
Conservation Strategy has attracted much attention ecological interpretations in its definitions: in the
to the need for conservation and sustainable use of Strategy, 'conservation' is defined as "The manage-
nature and natural resources, and has stimulated the ment of human use of the biosphere so that it may
beginning of a much needed dialogue between all yield the greatest sustainable benefit to present
parties involved in conservation and development, generations while maintaining its potential to meet
several speakers during the Conference on Conserva- the needs and aspirations of future generations".
tion and Development, in Ottawa, concluded that the 'Development' is defined as "The modification of the
World Conservation Strategy still lacks appeal with biosphere and the application of human, financial,
economists and policy-makers (Conference Recom- living and non-living resources to satisfy human needs
mendations, 1986). and improve the quality of human life" (IUCN,
Apart from political and economic motives (i.e. the 1980).
preference for short-term gains over long-term Since it is not clear whether the nature protection
benefits), the slow implementation of the principles aspect is also included in these definitions (i.e. is an
of conservation and sustainable development in intact natural environment also seen as a human need
economic planning and decision-making may be of future generations?), both definitions are striking-
caused by a lack of understanding and communica- ly similar. Indeed, the subtitle of the World Con-
tion between those who should work together to servation Strategy, which is often summarised and
implement the Strategy: ecologists, conservationists, quoted as 'Conservation for Development' suggests
106 The Environmentalist
 that conservation (including nature protection) is in Environmental Functions, a New Concept for Natural
principle compatible with economic development. Resources
Although there are certainly instances when (nature)
Natural resources, both living and non-living, are the
conservation and (economic) development can be
subject matter of both 'conservationists' and 'de-
mutually supportive, for example, the conservation
velopers' and the availability of these resources
of the natural vegetation on hillslopes for watershed-
largely determines environmental quality and the
protection, this is not always the case.
quality of life. A clear understanding of the concept
From the 'conservative' viewpoint, possibilities for of 'environmental resource' is, therefore, essential
sustainable use of natural ecosystems for economic and may help to solve the conflicting views of
production are very limited, since, in practice, economists and ecologists on the way the resource
sustainable development usually means conversion of should be managed. The economic definition of a
natural ecosystems into semi-natural systems in order resource by Allaby, 1977 (in: Cosijn, 1986) reads: "a
to sustain a "regular yield of a certain commodity", means that is available for supplying an economic
often at the expense of the natural integrity and want"; the ecological definition by Lincoln, et aL,
biological diversity. 1982 (in: Cosijn, 1986) reads: " A n y component of the
The ambiguous use of the terms 'conservation', environment that can be utilized by an organism".
'resource' and 'sustainable development', both by Thus, the 'old' paradigm of natural resources basical-
economists and conservationists, without clearly ly refers to the (potential) use of natural goods with
defining what is understood by them, leads to a direct utilitarian benefits. It is suggested here that the
dangerous situation where conservation in the 'con- new paradigm should adopt the broader concept of
servative' sense (the maintenance of natural systems goods and services (functions) provided by the
and biological diversity), is likely to be sacrificed for (natural) environment.
the sake of economic development, sustainable or
non-sustainable.
As a consequence of the lack of clear definitions,
criteria for measuring progress towards achieving NATURAL ~Z'~FUNCTIONA
PROCESSES L~ HUMAN
NEEDS
'conservation and sustainable development', which is AND ~NTERRELATIO~ AND
the main goal of the World Conservation Strategy, COMPONENTS ACTIVITIES
are lacking. If we assume that the ultimate (or
common) aim of both conservation and development
is a "happy global village" (to use the phrase of the The functional interrelations in this figure represent
President of IUCN, Dr Swaminathan, Ottawa Con- the goods and services provided by the natural
ference, May/June, 1986), the progress in achieving environment and, in the other direction, the impact
that goal should be measured by means of a of human activities on natural processes and compo-
'Quality-of-Life Index' which should include all nents.
factors that influence human welfare. At present,
economic planners and decision-makers crudely "The term 'goods and services' historically
measure human welfare by means of the Gross carries an economic connotation. The environmen-
National Product (GNP) which is mainly based on tal movement has added the concept of 'natural
economic production and income levels. The quality goods and services' or 'ecosystem values' (defined
of life, however, is determined by more than the as those goods and services that are provided by the
satisfaction of the needs of consumption alone, it also natural components and process of environments).
depends on other needs such as those of a healthy In many ways, no fundamental distinction can be
environment, future prospects and ethical considera- made between natural and economic goods and
tions. As long as the GNP disregards environmental services. Both types support human life quality.
goods and services, it will be inevitable that an Individual examples of each have value dependent
increase of GNP may occur at the expense of the on their utility and scarcety. Indeed, the major
natural capital and, consequently, may actually difference between them seems to be that econo-
reduce human welfare due to loss of environmental mic goods and services have been thoroughly
functions. Clearly, a more balanced indicator than discussed and studied while natural goods and
GNP is needed to measure the quality of life and services have not. But, that does not matter. Those
should include both man-made and environmental which remain non-priced but no less valuable have
goods and services. Thus, there is a clear need for new their identifiable constituencies who demand their
concepts in economic planning and decision-making. concern be included in development planning"
The use of 'environmental functions', instead of the (Saunier, 1986).
narrower concept of 'natural resource' may provide The first Dutch economist to introduce the func-
such a unifying principle, integrating 'environmental tion-concept in economic theory was Dr. R. Hueting,
quality' and 'quality of life.' economist at the Division of Environmental Statistics

Volume 7, Number 2 (1987) 107

of the Netherlands Bureau for Statistics. In the late and services, such as clean air, water and soil, in so far
1960s Dr. Hueting stressed the need to include scarce as this is possible. Yet, even today, non-sustainable
environmental goods and services in economic plan- (ab)use of environmental goods and services con-
ning and decision-making and he subsequently wrote tinues and somehow principles of conservation and
many publications on methods to incorporate en- sustainable development must be incorporated in
vironmental functions in economic accounting (Huet- economic planning and decision-making to stop the
ing, 1980, 1984, 1985). dangerous process of environmental deterioration.
By providing a better insight into the many Here too, the concept of environmental functions can
functional interrelations between man and the natu- prove to be useful since it links 'environmental
ral environment, the function-concept may also be quality' with 'quality of life', thus broadening the
useful in creating more awareness about the impor- subject matter of economics to all environmental
tant (and in many ways essential) contribution of goods and services that are relevant to human
natural and semi-natural ecosystems to human wel- welfare.
fare. That environmental functions (should) belong to
the subject matter of economics follows further from
The Use of the Function-concept in Environmental
Economics the fact that they satisfy human wants and, unfortu-
nately, are becoming increasingly scarce. Any in-
According to the subject matter of economics, formation on environmental goods and services,
economic planning and decision-making are con- therefore, is economic information and loss of
cerned with "making choices among scarce, alterna- environmental functions, formerly disregarded as
tively applicable means that satisfy classifyable 'external effects', form economic costs. It is, there-
human wants" (quoted from Hueting, 1980). From fore, essential to increase our understanding of the
this definition if follows that all scarce means (goods ecological and socio-economic benefits of environ-
and services) are part of the subject matter of mental functions to human society and, to find ways
economic theory, including (scarce) environmental and means to include these functions in economic
goods and services that satisfy human wants. Yet, accounting and .political decision-making.
many economists still assume that the production of The maintenance of environmental functions
material (artificial) goods is the only concern of (goods and services) may serve as a unifying concept
economics, and exclude environmental concerns to provide a common long-term goal for both
from economic planning and decision-making. For economists and conservationists and the function-
example, as E. P. Odum (1976) stated: "economists concept could be a useful instrument to merge
are fond of saying 'there is no free lunch', but in ecological principles and economic procedures.
practice natural land, water and air are considered
free until or unless they are converted into saleable
products. In their original state these resources are Towards a 'happy global village'
accorded no value whatsoever in current economic During the Conference on Conservation and De-
procedures, yet common sense tells us they are the velopment, in Ottawa, Dr Swaminathan used the
most important resources in the world". parable of a 'happy global village' as the ultimate aim
Another reason why environmental goods and of the World Conservation Strategy. If we assume
services are neglected in 'traditional' economic that the happiness of the inhabitants of this 'global
theory is the misconception that they are not scarce, village' depends on the satisfaction of all their needs,
and thus, can be considered as 'free' goods. Since it is including a healthy environment and future pros-
'good economic practice' to provide goods and pects, the function-concept can serve as an important
services as cheaply as possible, in order to be instrument for measuring the quality of life in the
competitive in the market place, the natural environ- global village since it translates environmental qual-
ment has been (and still is being) over-exploited, ities into functions that satisfy human needs.
degraded and polluted. In addition, the negative The conference in Ottawa also recognised that
impacts of the economic production process on the environmental planning and management are the key
natural environment are labelled as 'external effects', processes for implementing the aims of the World
and thus excluded from economic accounting. In this Conservation Strategy, i.e. conservation and sustain-
respect, it is curious to note that many efforts to able development. Considering the confusion which
restore impaired functions, such as water purification exists with respect to the interpretation of the terms
plants, are considered as 'economic production' and 'conservation' and 'sustainable development', it is
are thus added to the GNP. suggested that the objectives of the Strategy be
Slowly, it is becoming clear, however, that these re-defined as 'the maintenance and sustainable use of
so-called 'external effects' are not as external as we environmental goods and services for the benefit of
would like. The external effects of the past are costing present and future generations'.
billions of dollars today, in repairing, replacing During the Ottawa conference, several workshops
and/or neutralising the loss of environmental goods expressed the need for more functional information

108 The Environmentalist

 on goods and services provided by the natural ciples become an integral part of economic and
environment: " . . . techniques are needed for the political planning and decision-making is there a
sustained management of goods and services natural chance of achieving a 'happy global village' based on
forests can provide" (p. 3), " . . . a framework should harmony between man and nature.
be developed that accounts for all environmental
values" (p.5), "Governments and aid agencies Acknowledgements
should increase the realisation of the value of wild The hospitality of the Nature Conservation Depart-
plants and animal populations" (p. 8) (Conference ment of the Agricultural University of Wageningen,
Recommendation, 1986). Following these recom- which provided office space and many other 'goods
mendations, it is suggested that ecosystem evaluation and services' for the research from which this paper
methods should be elaborated that provide syste- draws most of its conclusions and recommendations,
matic information on goods and services provided by is greatly appreciated. I also wish to thank Prof. Dr.
natural and semi-natural ecosystems. These evalua- C.W. Stortenbeker, Dr. M. G. Wagenaar Humme-
tion methods should be backed-up by a data base on linck, Dr. R. Hueting and Dr. R. E. Saunier for their
ecosystem functions which could serve a wide variety support and/or comments on earlier versions of this
of potential users, ranging from environmental article. Financial support for this research and
planners and managers, to economists (for environ- for my participation in various conferences and
mental accounting purposes) and people working in workshops was provided by World Wildlife Fund-
the field of environmental education to increase Netherlands, Prince Bernhard Foundation, Dutch
awareness, not only among the general public but Ministry of Education and Science, Netherlands
also (or above all) politicians and other decision- Foundation for International Nature Protection (the
makers. Van Tienhoven Foundation), K. F. Hein Founda-
To ensure the implementation of ecosystem eva- tion, WWF Indonesia Advisory Committee, Com-
luation in development planning, environmental mission on Environmental Planning of IUCN,
planners and managers should become much more Netherlands National IUCN Committee, and is
involved in the decision-making process: many gratefully acknowledged.
development decisions are still made without consult-
ing environmental planners and managers, leading to
negative environmental effects that could have been References
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sustainable development (i.e. high short-term invest- Functions of the Natural Environment, an economic-ecological
ments for long-term benefits) and the fact that analysis. Inst. for Environmental Studies, Free University,
"sustainable development is imperilled by the current Amsterdam, Publ. hr. 79-9.
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economic system" (an observation of the workshop tion and Development - Implementing the World Conserva-
on 'Economics of Sustainable Development'), tradi- tion Strategy. Organized by IUCN, UNEP and WWF in
tional funding procedures by development banks will Ottawa, Canada, 31 May-5 June, 1986.
have to change. What is needed now is some kind of Cosijn, R. (1986) An analysis of the key terms of the World
'Environmental Marshall Plan,' financed by a World Conservation Strategy. Mededelingen No. 24, Netherlands
Commission for International Nature Protection,
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Finally, much more effort should be put into Nature Conservation Department, Agricultural University
Wageningen.
communicating the message of conservation and Hueting, R. (1980) New Scarcity and Economic Growth, more
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and to policy and decision-makers. By elucidating the Amsterdam/New York/Oxford.
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may help to spread this message. It may be concluded Bank, 5--8 November, Washington, D.C.
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Volume 7, Number2 (1987) 109