Nature is the source of much value to us every day, and yet it mostly bypasses markets, escapes pricing and valuation. It is well understood now that this lack of valuation is an underlying cause for the degradation of ecosystems and the loss of biodiversity. Most biodiversity and ecosystem benefits falls into the category of ‘public goods’ and hence have no price. These environmental goods which were once considered abundant and free have now become scarce and depleted due to rapid economic growth over the last few decades. According to the Millennium Ecosystem Assessment (2005), more than a billion people especially in the developing countries rely on fisheries as their main source of animal protein. Over fishing and excessive commercial exploitation of oceans have resulted in massive biodiversity losses and could lead to the collapse of fishing in less than 50 years.

Coral reefs are the most biodiversity rich ecosystem (in species per area) in the world. They are even more diverse than tropical forests. By one estimate, the total net benefits of coral reefs is around 30 billion US $ per year (Cesar et. al. 2003). The health and resilience of the coral reefs is declining because of over fishing, pollution, diseases and climate change.

There are a number of reasons for which valuing ecosystem services remains a complex exercise. Foremost among these is the ‘paradox of valuation’ where water which is so essential to life is so cheap while diamonds which have limited and largely ornamental uses are so expensive. This paradox is primarily because water is perceived to be generally abundant with respect to the uses it is put to, while diamonds are generally scarce relative to the demand for them.

Ecosystem approach is a strategy for the integrated management of land, water and living resources in an equitable and cost effective way. For example, an investment of USD 1.1 million on restoring nearly 12,000 hectares of mangroves in Vietnam is estimated to have saved USD 7.3 million per year in dyke maintenance while providing ecosystem services such as physical protection to coastal communities as well as productive fisheries (Reid, H and Huq, S. 2005, Climate Change). The Catskills Parable is one of the most often cited pieces of evidence for the importance of ecosystem services. In the late 1990’s, New York City sought to secure the safety of water provided from its reservoir in the Catskills outside the city. Economists Geoffrey Heal and Graciela Chichilnisky (1998) argued that the city had avoided substantial capital and operating costs of a new water treatment plant by devoting a fraction of their expense to the preservation of the natural habitat in the vicinity of the reservoir.

In a paper published in Nature in 1997 ‘The Value of the World’s Ecosystem Services and Natural Capital’, Costanza et al. suggested that a minimum estimate of such values was US $33 trillion. The Economics of Ecosystem and Biodiversity (TEEB) 2010 is about recognising, demonstrating, captur-ing and rewarding the benefits that ecosystems and biodiversity provide to society in general and to the poor people in particular. q