Standards-compliant accounting valuations of ecosystems
Authors: Ogilvy Sue , Vail Michael 
Published: April 2018

Purpose
There is a great deal of interest in ecosystem or natural capital accounting and in methods to estimate monetary valuations of ecosystems. This paper aims to explore methods that may assist agricultural (livestock grazing) enterprises to estimate the monetary value of the productive capacity of the ecosystems they use. Such estimations are expected to provide a more complete set of information about the performance of pastoral operations and may assist them to assure ecological and economic sustainability.

Design/methodology/approach
This paper applies five different methods for valuation of the productive ecosystems used in extensive agricultural (grazing) systems. The methods apply different approaches to valuation described in the United Nations System of Environmental-Economic Accounting (SEEA) and Australian Accounting Standards (AASs). To do this, the paper uses financial information drawn from the long-term performance of an economically and environmentally sustainable pastoral enterprise.

Findings
SEEA- and AAS-compliant methods to measure the value in use of provisioning ecosystems are practical and useful. The estimations contribute to a reasonable range of fair values required by AASs and improve the availability of information that would be useful in improving the performance of the operation and compare it to reasonable alternate management strategies.

Research limitations/implications
The SEEA is an international standard and AASs are closely aligned to the International Accounting Standards, so the methods described in this paper are likely to be generalisable to enterprises grazing low-rainfall rangelands in other countries. However, their ability to appropriately accommodate the extensive modifications to ecosystems caused by cultivation and fertilisation needs to be tested before they are applied to grazing operations in high-rainfall areas or other forms of agriculture such as cropping or horticulture.

Practical implications
The availability of standards-compliant methods for ecosystem valuation means that companies who wish to include ecosystems on a voluntary and informal basis as sub-classes of land in their general purpose financial reports may be able to do so. If these methods are SEEA-compliant, they could be combined with information about the ecosystem type, extent and condition to produce a set of national ecosystem accounts so that the contribution of ecosystems to the economy can be estimated.

Social implications
Many of the enterprises that rely on extensive agricultural ecosystems are unable to generate sufficient financial returns to cover their obligations to owners and creditors. The ability to determine the monetary value of the annual inputs provided by the ecosystems may assist landowners and citizens to detect and avoid depletion of their economic and ecological resources.

Originality/value
This paper applies an explicit interpretation of AAS and draws from valuation methods recommended in the SEEA to demonstrate that current accounting standards (national and corporate) provide a strong foundation for the valuation of the ecosystems used as economically significant factors of production.