Valuation of Ecosystem Services, Karnataka State, India
Authors: Ramachandra T. V. , Shivamurthy Vinay , Settur Bharath , Aithal Bharath 
Published: August 2023

Humans depend on the environment for their basic needs, such as food, fuel, minerals, water, air, etc. Burgeoning unplanned development activities to cater to the demands of the increasing population have put tremendous pressure on natural resources with the diversion of natural ecosystems to other uses. Over the years, the unsustainable practices involved in extracting and overexploiting natural resources have led to their degradation and depletion.

India has been trying to accelerate economic growth and relax environmental laws. Hence, there is a pressing need to undertake the natural capital accounting and valuation of the ecosystem services, especially intangible benefits, provided by ecosystems in India. The value of all ecosystem services, including the degradation costs, needs to be understood for developing appropriate policies toward the conservation and sustainable use and management of ecosystems. Ecosystem services were quantified following the ecosystem services valuation protocol of the System of Environmental Economic Accounting (SEEA). This communication focuses on ecosystem services in forest and agricultural ecosystems in Karnataka state, India, for 2005 and 2019. A comparison of values of services in 2019 with 2005 (values adjusted through consumer price index) highlights that there has been a considerable decline in ecosystem services in Karnataka– a 28.5% reduction in provisioning services (51.6% reduction in forest ecosystems), a 21% reduction in regulatory services (mainly in forest ecosystems - 27.1% reduction), and a 1.9% reduction in cultural services.

Ecosystem services were aggregated to compute the Total Ecosystem Supply Value (TESV). The TESV of forest and agricultural ecosystems in Karnataka was 3620 billion INR in 2005 (forest ecosystems: 2841 billion INR and agricultural ecosystems: 779 billion INR). However, overall, TESV declined in 2019 to 2912 billion rupees, with forest ecosystems driving this decline with a 35% decline in TESV. The TESV was also compared to the GDP of Karnataka, which is about 10128 billion rupees. The TESV of the forest ecosystem is equivalent to 18.1% of the GDP, and the TESV from agriculture ecosystems is equivalent to about 10.6% of the GDP in Karnataka. The decline in the TESV highlights the degradation of forest ecosystem assets from 2005 to 2019 due to the reduction in ecosystem extent and ecosystem condition. The decrease in value is also demonstrated by a fall in the net present value (NPV) of expected future returns of the ecosystem services supplied by forest ecosystem assets. The NPV of the assessed ecosystems based on 2005 ecosystem flows is about 93130 billion INR (forest ecosystem: 73099 billion INR, agriculture ecosystem: 20031 billion INR). However, the NPV of ecosystems in Karnataka, based on 2019 flows, indicates 74938 billion INR (forest ecosystem: 47214 billion INR, agriculture ecosystem: 27724 billion INR). The analysis highlights that there has been a decline of 35.4% in asset value of forest ecosystems with an increase in NPV of agriculture ecosystems by 38% due to transitions of forest ecosystems to croplands or horticulture (agriculture ecosystems).

Ecosystem accounts make the value of ecosystem services visible, allowing them to be internalized into decision-making, enabling an assessment of trade-offs between economic development and environmental conservation and restoration, resulting in better-informed decisions. It also strengthens the economic case for conserving forests in states in India and developing countries where there is tremendous pressure to relax forest laws and divert forests to non-forest uses without proper consideration of the sustainability of such actions.