Creating physical environmental asset accounts from markets for ecosystem conservation: A comment

In an article published in this journal (vol. 82: 114–122), Stoneham et al. (2012) propose to include the value of environmental assets in national accounts by using information generated by market-based instruments for purchasing ecosystem services. In this comment we show that, although the general approach proposed in their paper deserves to be pursued, the method by which they use competitive conservation tenders to derive the value of environmental goods and services — as well as their contribution to national GDP — is theoretically flawed. We provide and discuss an alternative, theoretically consistent method. Although in this case the contribution of auction-generated values to GDP turns out to be (much) smaller than calculated in their paper, the capacity of market-based instruments to add value to GDP is not called into question.