Developing an Institutional Framework to Incorporate 

Ecosystem Services into Decision Making—Proceedings 

of a Workshop

By Dianna Hogan, Greg Arthaud, David Brookshire, Tom Gunther, Stephanie Pincetl, Carl Shapiro, and 

Bea Van Horne

Open-File Report 2011–1221

U.S. Department of the Interior

U.S. Geological Survey
ii

U.S. Department of the Interior

KEN SALAZAR, Secretary

U.S. Geological Survey

Marcia K. McNutt, Director

U.S. Geological Survey, Reston, Virginia: 2011 

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Suggested citation:

Hogan, Dianna, Arthaud, Greg, Brookshire, David, Gunther, Tom, Pincetl, Stephanie, Shapiro, Carl, and 

Van Horne, Bea, 2011, Developing an institutional framework to incorporate ecosystem services into decision 

making—Proceedings of a workshop: U.S. Geological Survey Open-File Report 2011–1221, 9 p. Available at 

http://pubs.usgs.gov/of/2011/1221. 

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endorsement by the U.S. Government. 

Although this report is in the public domain, permission must be secured from the individual 

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iii

Contents

Introduction and Background......................................................................................................................................... 1

Institutions and Policy Tools .......................................................................................................................................... 2

Market and Nonmarket Techniques............................................................................................................................... 3

Considerations for the Scientific Evaluation of Ecosystem Services.............................................................................. 4

Considerations for Implementing Ecosystem Services Regulation, Mitigation, and Management ................................. 5

Incorporating Ecosystem Services into Decision Making............................................................................................... 6

Conclusion..................................................................................................................................................................... 7

References Cited........................................................................................................................................................... 7

Appendix 1. Participants in Preconference Workshop 3, Developing an Institutional Framework to Incorporate 

Ecosystem Services into Decision Making................................................................................................................ 8
1

Developing an Institutional Framework to Incorporate 

Ecosystem Services into Decision Making—Proceedings

of a Workshop

By Dianna Hogan,1 Greg Arthaud,2 David Brookshire,3 Tom Gunther,1 Stephanie Pincetl,4 Carl Shapiro,1 and Bea 

Van Horne1

This workshop was hosted by the Science Impact Laboratory for Policy and Economics (SILPE) 

University of New Mexico, Albuquerque, NM 

October 30, 2008

In association with

A Conference on Ecosystem Services (ACES)

ACES 2008: Using Science for Decision Making in Dynamic Systems

Introduction and Background

The routine and effective incorporation of ecosystem services information into resource 

management decisions requires a careful consideration of the value of goods and services provided by 

natural systems. A multidisciplinary workshop was held in October 2008 on “Developing an 

Institutional Framework to Incorporate Ecosystem Services into Decision Making.” This report5

summarizes that workshop, which focused on examining the relationship between an institutional 

framework and consideration of ecosystem services in resource management decision making. 

This workshop was the third in a series of three preconference workshops associated with ACES 

2008 (A Conference on Ecosystem Services): Using Science for Decision Making in Dynamic Systems. 

These workshops were designed to explore the ACES 2008 theme on decision making and how the 

concept of ecosystem services can more effectively be incorporated into conservation, restoration, 

resource management, and development decisions. Preconference workshop 1, “Developing a Vision: 

Incorporating Ecosystem Services into Decision Making,” was held April 15, 2008, in Cambridge, MA. 

In this workshop, participants addressed what would have to happen to make ecosystem services more 

routinely and effectively used in conservation, restoration, resource management, and development 

decisions, and identified some key challenges to developing the analytical framework (Hogan and 

others, 2009). Preconference workshop 2, “Developing an Analytical Framework: Incorporating 

Ecosystem Services into Decision Making,” was held July 28, 2008, in Naples, FL, and focused on the 

 1 U.S. Geological Survey, Reston, VA. 2 U.S. Forest Service, Washington, DC. 3 University of New Mexico, Albuquerque, NM. 4 U.S. Forest Service, Pacific SW Research Station, Riverside, CA; UCLA Institute of the Environment, Los Angeles, CA

5 The ideas presented in this report are based on contributions from participants at the workshop. Workshop participants are 

listed in appendix 1.
2

analytical process and identification of research priorities for ecosystem services, their production and 

use, their spatial and temporal characteristics, their relationship with natural systems, and their 

interdependencies (Hogan and others, 2010). The summary presented here synthesizes the discussion at 

workshop 3 and considers how institutional structures and policy instruments can be used to achieve the 

vision developed in workshop 1, while recognizing the analytical capabilities and limitations identified 

in workshop 2. 

Our purpose was to identify how to use ecosystem service information more effectively and 

broadly in resource management and development decisions. We recognized the need to facilitate an 

integrated understanding of (1) the natural capital that produces ecosystem services; (2) the geospatial 

and temporal aspects of ecosystem service production, values, and use; (3) the value of ecosystem 

services (monetary and nonmonetary); and (4) institutional instruments, processes, and structures 

(property rights, laws, governance structures, and courts, for example). Interdisciplinary collaboration 

and understanding is beneficial and needs to engage stakeholders. 

The appropriate use of institutional structures, including markets, to integrate ecosystem services 

into decision making depends on the players and characteristics of the specific situation (such as 

stakeholders, the ecosystem, resources, and the political environment). Incorporating ecosystem service 

values into decisions requires consideration of place-based social, cultural, economic, and landscape 

characteristics and institutions. Thus, a single, prescribed solution will not work—various institutional 

strategies must be used in different situations. Market-based approaches require appropriate regulations, 

monitoring, and enforcement, depending on the situation and place. Further, market approaches will 

need to be coupled with nonmarket approaches into an integrated institutional framework. 

Institutions and Policy Tools

Institutions can change to better recognize the value of ecosystem services and to incorporate 

those values in resource management decisions. Incorporating ecosystem services into decision making 

will involve a wide array of institutions and policy tools including regulations, taxes, incentives, 

markets, subsidies, and property rights delineation. These tools can be used to influence economic and 

social behavior to be consistent with environmental and other policy goals. Better geographic, 

ecological, and economic accounting of natural capital and resulting ecosystem services will be required 

for this effort.

Institutions will need to formulate and implement policies and develop structures that enable

decision makers to consider ecosystem services in decision making more effectively. Institutions that 

would be affected by consideration of ecosystem services in decision making include: 

• Institutions with direct interest in or control of natural resources. These institutions typically 

have goals of resource protection or allocation and can impose or reduce market constraints.

• Institutions with direct interest in or control of markets. The goals of these institutions are 

monetary and (or) distributional and are market oriented.

• Political institutions that express nonmarket values of affected populations, such as resource 

conservation, economic development, and social and cultural aspects.

An increasingly important role of government (Federal, State, and local) is to provide unbiased 

data and information on the quantity, production, value, and location of ecosystem services and to 

facilitate stakeholder participation in management, preservation, and restoration decisions. The Federal 

Government has recognized the need for ecosystem service measurement standards and a registry 

through the development of the cabinet-level Conservation and Land Management Environmental 

Services Board (http://www.fs.fed.us/ecosystemservices/pdf/farmbill/ESB_Charter.pdf). Many 
3

ecosystem services can reasonably be assigned economic value, but some cannot. Some of the most 

fundamental and challenging aspects of ecosystem services (for example, long-term resilience, 

ecosystem sustainability, and cultural sustainability) may or may not be quantifiable. 

The Federal Government, the largest land manager in the United States, has a substantial 

influence on the use of ecosystem services (for example, use of permits for resource extractions such as 

oil or gas on Bureau of Land Management lands). Further, Federal agencies have a range of tools (rules,

regulations, taxes, and other incentives) to encourage the sustainable use of ecosystem services. 

Decision makers at Federal, State, tribal, and local jurisdictions as well as private landowners will need 

to be included. 

The role of nongovernmental organizations (NGOs), academia, and the public and private 

sectors will vary depending on the ecosystem service(s) in question, the institutional structure in place, 

and the availability of ecological, economic, and geospatial information. The differences in goals, 

objectives, rewards, and disincentives between various types of research entities (academia, 

government, NGOs, and others) and decision makers (both public and private) can create conflicts for 

the process, timeliness, confidence in conclusions, and implementation. Including different stakeholders 

and institutions may, however, enhance the incorporation of ecosystem services into decision making.

Many ecosystem services have characteristics that benefit the public good; these characteristics 

can pose policy challenges when the ecosystem services are generated on private lands. Legal tools for 

the private sector may include regulations, taxes, and other incentives, or the creation of markets, 

including the right to create habitat and sell credits. Regulations to protect service values are useful 

when, for the public good, services need to be maintained at a certain level by private landowners. 

Markets can be used across an area in which the particular location within that area that produces a 

certain level of service is not important. Private landowners that generate services may look to 

government(s) to help create ecosystem service markets. However, the public may react negatively to 

paying for services that previously were free. Incentives are most useful when there is no strong 

minimal threshold value for a service but where value to users of the service is an increasing function of 

the amount of service available—that is, there is no danger of saturation. The use of an instrument may 

depend on land ownership; for instance, incentives may be appropriate for private lands, but may not be 

for public lands.

Culture, beliefs, knowledge, and experiences influence behavior. Environmental value is in 

many ways socially constructed and mediated by these influences. Understanding how stakeholders 

define their role in the environment is important to bringing the consideration of ecosystem services into 

decision making. 

Market and Nonmarket Techniques

Our focus is on the use of markets and other institutional approaches for facilitating the 

consideration of ecosystem services in decision making. Identifying the location, quantities, values, and 

production processes of ecosystem services is a prerequisite to creating the markets and other 

institutional structures necessary for their allocation. 

Creating new markets for ecosystem services will affect land use and management and requires 

improved landscape information, including detailed ecosystem and land use maps. New markets require 

an understanding of inputs and outputs from combinations of ecosystems and land use, and perhaps 

most importantly, an awareness of how ecosystems may be affected by a variety of anthropogenic and 

climatic futures. We also need to be aware that adding new markets may have both positive and 

negative implications, depending on what is included and what is left out.
4

Ecosystem services markets and other institutional approaches may require information 

including (1) interdisciplinary knowledge, including integrated hydrologic, engineering, physical 

science, biological, institutional, behavioral, and economic models; (2) defined, securable and tradable 

property rights; (3) reasonable transaction costs; (4) demand and production functions; and (5) 

consideration of third party effects. Natural and social science information plays a critical role in 

designing and driving ecosystem services markets because both inform the valuation process. 

An understanding of when changes in ecosystem services are likely to occur (for example, 

ecological tipping points) is also important. Goals for ecosystem services based on knowledge of change 

may be used to prevent or constrain the market, or the ecosystem service(s) may be assigned a trustee 

(for example, allocate water rights to an ecosystem trustee who is allowed to participate in market 

transactions) to maintain the ecosystem services at some level. 

The existence of well-functioning, transparent markets may create financial incentives for 

landowners to create and sell environmental credits, and may encourage a greater number of private 

sector conservation actions. This may result in the restoration of degraded habitats more rapidly and 

efficiently, may conserve quality habitats that are currently likely to be developed, and could help 

provide increased protection of contiguous, quality habitat. 

For a market exchange process to fully incorporate ecosystem values into decision making, 

nonmarket values must also be considered. This may be done by placing further constraints on the 

market or by including institutions that represent the non-market values in the market. Limiting 

ecosystem service value debates exclusively to monetary measures may cause substantial loss of 

information and resources.

Regulatory tools may be used in conjunction with market mechanisms. Resource banks for 

wetlands, grasslands, wildlife habitat, and other similar areas include credits as financial incentives for 

those who improve the condition of ecosystem services. These credits could be monetary, or could 

represent a given level of ecological services per acre (for example, service/acres/year), and would be 

granted within the regulatory process. This can enhance the value of ecosystem services or make them 

more available, or can require payment for the loss of services according to ecosystem status, service 

values (timing, location, distance to threshold), and (or) by comparison to reference sites (like 

wilderness areas). Bank credits are supplied by habitat restoration, improvement, preservation, or 

protection activities. Demand for credits is often generated by legal impact minimization or mitigation 

responsibilities and is subject to regulation linked to habitat type, the situation, and the expected 

performance of the mitigation action.

With respect to the use of resource banks and trades, it is important to consider the location of 

the mitigation and the development it offsets to avoid trading a resource out of the native place where it 

belongs (such as South America versus effects in North America) and to ensure that trading benefits the 

desired stakeholders and ecosystem(s) without harming others. Markets can be adjusted to satisfy 

different requirements (for example, disallow interbasin transfers of water). Markets can be initiated by 

a government entity serving as the dominant buyer, or they can be initiated by private entities. 

Considerations for the Scientific Evaluation of Ecosystem Services

Scale.—Ecosystem services are multiscalar and their value varies with the geographic and 

temporal scale at which they are assessed. Multiscale evaluations offer a more comprehensive 

identification and analysis of ecosystem services from source to users.

Indicators.—Ideally, the indicators of the extent and condition of ecosystem services need to be 

useful, small but sufficient in number, and easy and cost-effective to measure accurately. They should 

be developed with a clear knowledge of what they indicate and how they will be used, and how well 
5

indicator patterns correspond to what they are indicative of. In addition, indicators need to be sensitive 

to incremental effects, include socioeconomic and cultural values, and be able to identify and track 

tradeoffs and secondary effects of management actions. 

Model and data integration.—Models for measuring and valuing ecosystem services need to do 

a better job of forecasting changes in both supply and demand under alternative management scenarios 

in light of demographic, climate, land use, and other changes. 

Tradeoffs.—Management, more often than not, involves complex tradeoffs between and within 

the quantity and quality of different ecosystem services. For example, a forest may play a role in water 

supply regulation, water filtration, carbon sequestration, and wood products provision. Not all of these 

can be optimized simultaneously. More modeling capacity is needed to develop spatially explicit models 

that can be used to explore the effects of management actions on multiple ecosystem services. 

Understanding one ecosystem service may require considering and assessing it in the context of other 

ecosystem services. 

Considerations for Implementing Ecosystem Services Regulation, Mitigation, 

and Management

Issue: Information needed to facilitate consideration of ecosystem services in decision making 

is difficult to identify and gather. For markets, readily available information on monitoring, assessment, 

location, prices, availability, and conveyance of ecosystem services is essential for both buyers and 

sellers. 

Solution: Our understanding of the spatial distribution, quantities, values, and biophysical

production processes of ecosystem services is improving, but we need to identify the most important 

information needed to facilitate consideration of ecosystem services in decision making. Federal 

regulatory agencies with responsibility for ecosystem services should be clearly identified, and 

monitoring plans should be developed to adequately characterize the status and trends in ecosystem 

services, explore patterns of change, understand causal mechanisms, and look for associations with 

management and natural drivers.

Example: Several demonstration (place-based) studies are being implemented to provide 

information on key methods and data to help generate better maps and models of ecosystem services 

production for use by decision makers. Although the many areas and conditions require different 

approaches, knowledge gained in one area can be used to inform studies in another area. 

Issue: Structural market incentives may undermine ecosystem valuation efforts. For example, 

land close to urbanizing areas often has higher development value than land further from urban centers. 

Compensating land owners to maintain their ecosystem services closer to urban centers may not be 

sufficient to counteract the increase in market value for development.

Solution: Structural market incentives need to be identified and the economic, social, and 

environmental tradeoffs should be considered.

Issue: Management actions may inadvertently damage ecosystem services in areas adjacent, 

downstream, downwind, or simply outside of the action area.

Solution: Mitigation could be used to improve ecosystem services for the people whose services 

are damaged by management actions. Regulations could consider geographic areas of effect for damage 

to ecosystem services and for mitigation activities. 

Issue: Many ecosystem services are provided and consumed as common property resources (for 

example, natural flood control, water filtration, carbon sequestration, and pollination). As a result, too 

few services may be produced relative to demand. 
6

Solution: Regulating common property resources may be accomplished more easily by a group 

that is small enough to communicate easily and has the right to monitor and sanction actions. In 

addition, fostering a sense of place and ownership brings forth awareness, understanding, and public 

participation.

Example: Degraded water quality in the Chesapeake Bay is a cumulative result of the actions 

taken by numerous property owners in the watershed (such as private homeowners fertilizing lawns and 

gardens). Monitoring the effect of watershed management actions on Chesapeake Bay water quality and 

developing incentives may improve participation in cleanup efforts. 

Issue: In some cases, ecosystem services could be better protected if property rights were clear 

and enforceable. However, where property owners have clear rights, stakeholders may feel disconnected 

from the services their land produces. 

Solution: Use a shared responsibility governance approach with stakeholders and residents 

participating as local landscape stewards. 

Example: Using metrics of ecological integrity, aesthetics, quality of life, and a sense of place 

connects both landowners and other stakeholders to stewardship activities across the landscape.

Issue: Understanding one ecosystem service may require considering and assessing it in the 

context of other ecosystem services. There can be complex tradeoffs between different ecosystem 

services that need to be recognized in management decisions. 

Solution: Develop new, spatially explicit models that can be used to explore the effects on 

multiple ecosystem services of management actions, scale, and interconnectedness. 

Example: A forest may play a role in water supply regulation, water filtration, and wood 

products provision. Not all of these services can be optimized simultaneously.

Issue: Many people do not fully understand the various aspects of ecosystem services such as 

how clean water is supplied, the importance of pollinators, and how land use contributes to carbon 

sequestration. Improving communication of the existence and importance of ecosystem services would 

enhance the understanding of their value.

Solution: Collaborate with communication specialists to communicate the existence and 

importance of these services. 

Issue: The cultural context of ecosystem services is often not fully understood or appreciated. 

For example, prairie dogs provide burrows that are important for maintaining biodiversity and soil 

health in some regions. Landowners may find the presence of these burrows “messy” or indicative of 

lazy or poor agricultural practices.

Solution: A successful program must account for what is important to stakeholders.

Incorporating Ecosystem Services into Decision Making 

Research in the following areas will support improvements to incorporating ecosystem services 

in decision making.

• Develop a better understanding of (1) the role of ecosystem processes in producing ecosystem 

services, and (2) the influence of external drivers in the production of services.

• Develop better decision support tools. Reaching the goal of valuing and incorporating ecosystem 

services into decision making requires considering tradeoffs and making informed and balanced 

decisions. Markets, regulation, taxation, research, and incentives can be complimentary and 

interrelated tools, but communication, transparency, and education are paramount. Decision 

makers need the data, tools, and understanding to help them consider a combination of 

objectives. Decision support tools should be able to bridge communication gaps and promote 

transparency to provide a platform for rapid scenario screening, to educate and engage the public 
7

and decision makers in decision making and planning, and to provide a framework for integrated 

analysis of the diverse concepts and tradeoffs associated with different scenarios. 

• Improve monitoring in an adaptive management framework. Adaptive management is an 

iterative process of objective setting, monitoring, assessment, learning, and adapting based on 

what is learned, with the goal of improved understanding and management. Adaptive 

management techniques should be used to systematically test the efficacy of methods for 

mapping, assessing, and valuing ecosystem services in different regions to improve the tools and 

provide feedback on the effectiveness of alternative institutional structures, managed approaches 

and policies. By incorporating rigorous monitoring, adaptive management can expedite the 

learning process and reduce uncertainty. Guidelines for the use of different instruments such as 

payments, regulation, taxation, property rights, incentives, protection, or voluntary selfregulating behavior are needed.

Conclusion

Incorporating ecosystem services into decision making requires a variety of institutional 

approaches and structures that apply a combination of instruments. Pilot studies provide an opportunity 

to experiment with some alternative instruments. Candidate pilot prototype areas include the Rio 

Grande, Colorado River, San Pedro, Greater Everglades, Puget Sound, Great Basin, San Francisco Bay 

Delta, Mojave Desert, Southern California, Greater Yellowstone, Platte River, Prairie Potholes, Lower 

Mississippi Valley, Chesapeake Bay and watershed, Arid and semiarid lands, Bays and estuaries, and 

Midcontinent. These areas have developed substantial interdisciplinary datasets describing ecosystem 

condition, but only a few of them to date have focused directly on the production and analysis of 

ecosystem services.

Different approaches will be needed in differing situations to address diverse issues, goals, and 

stakeholder preferences. The use of place-based studies and demonstration areas is important to 

improving understanding and to testing techniques and analytical tools. Protection or restoration 

activities followed up with monitoring and assessment in an adaptive management framework will play 

a key role in improving our understanding and management capabilities and in developing new 

measurement tools and institutional arrangements. Finally, research is needed to link ecosystem change 

in structure, function, and processes to changes in ecosystem services and their values.

References Cited

Hogan, Dianna, Arthaud, Greg, Goodman, Iris, Pattison, Malka, Sayre, Roger, Shapiro, Carl, and Van 

Horne, Bea, 2009, Developing a vision—Incorporating ecosystem services into decision making; 

Proceedings of a workshop: U.S. Geological Survey Open-File Report 2009–1062, 8 p., available 

online at http://pubs.usgs.gov/of/2009/1062/.

Hogan, Dianna, Arthaud, Greg, Pattison, Malka, Sayre, Roger, and Shapiro, Carl, 2010, Developing an 

analytical framework—Incorporating ecosystem services into decision making; Proceedings of a 

workshop: U.S. Geological Survey Open-File Report 2009–1259, 6 p., available online at 

http://pubs.usgs.gov/of/2009/1259/.
8 

Appendix 1. Participants in Preconference Workshop 3, Developing an 

Institutional Framework to Incorporate Ecosystem Services into Decision 

Making

Cyndie Abeyta, Middle Rio Grande 

Coordinator/Hydrologist, USFWS, 

Albuquerque, NM 

Greg Arthaud, Acting National Program 

Leader: Economics Research, USFS, 

Washington, DC 

Craig Broadbent, graduate student, 

University of New Mexico, Albuquerque, 

NM

David Brookshire, Professor and Director of 

Science Impact Laboratory for Policy and 

Economics, University of New Mexico, 

Albuquerque, NM 

Tom Brown, Economist, USFS Rocky 

Mountain Research Station, Fort Collins, 

CO

Iris Goodman, Acting Deputy National 

Program Director for Ecology, EPA, 

Washington, DC 

Dave Goodrich, Research Hydraulic 

Engineer, ARS, Tucson, AZ 

Tom Gunther, Program Coordinator, USGS 

Enterprise Information, and Project Lead for 

Data Integration and Interoperability, USGS, 

Reston, VA 

Tim Hayden, Program Manager, U.S. Army 

Corps of Engineers, Champaign, IL 

Jim Henderson, Program Manager, U.S. 

Army Engineers Research and Development 

Center, USACE, Vicksburg, MS 

Dianna Hogan, Research Physical Scientist, 

Eastern Geographic Science Center, USGS, 

Reston, VA 

Bea Van Horne, Ecosystem Program 

Coordinator, USGS, Reston, VA 

Ron Huntsinger, National Science 

Coordinator, BLM, Washington, DC 

Malka Pattison, Program Analyst, Office of 

Policy Analysis, DOI, Washington, DC 

Edwin Pfeifer, Chief, USGS Southwest 

Geographic Science Team, USGS, Tucson, 

AZ

Stephanie Princetl, USFS, Riverside, CA; 

UCLA, Institute of the Environment, 

Los Angeles, CA 

Carol Raish, Anthropologist, USFS Rocky 

Mountain Research Station, Fort Collins, 

CO

Deanna Reynolds, USGS, Sioux Falls, SD 

(Workshop Facilitator) 

Darius Semmens, Research Physical 

Scientist, Rocky Mountain Geographic 

Science Center, USGS, Denver, CO 

Carl Shapiro, Senior Advisor, Geography 

Discipline, USGS, Reston, VA 

Benjamin Simon, Economist, Acting 

Assistant Director, Office of Policy 

Analysis, DOI, Washington, DC 

Jennifer Thatcher, University of New 

Mexico, Albuquerque, NM 
9

Vince Tidwell, Hydrologist, Sandia National 

Laboratory, Albuquerque, NM

Ken Williams, Biological Resources 

Division, USGS, Reston, VA

Rob Winthrop, Senior Social Scientist, 

BLM, Washington, DC