How can NESCS Plus help me?  Why Focus on “Final” Ecosystem Service (FES)?

To improve understanding and measurement of ecosystem services, an important distinction has been drawn between “final” versus “intermediate” ecosystem services. Ecosystems depend on, and perform a wide variety of, intermediate processes and functions, which contribute to final ecosystem services (FES). For simplicity, “intermediate” ecosystem services can be considered as input-output relationships. For example, plant transpiration can be represented as a process through which plants use soil moisture as an input and release water to the atmosphere as an output. While many input-output processes like these are ultimately important to humans, their outputs do not always flow directly to humans. Instead, they provide “intermediate ecosystem services” which are inputs to other ecological processes (e.g., cloud formation) that either directly or indirectly benefit humans. In contrast, “final ecosystem services” (FES) are outputs from nature that flow directly to and are directly used or appreciated by humans in diverse ways. For example, when water flowing in a stream is used for kayaking, this water provides a FES to recreational users. In this example, the FES is supported by a “causal chain” of multiple intermediate ecosystem services (plant transpiration, cloud formation, precipitation, etc.).  

The distinction between final and intermediate services is important for several reasons:

1.  Recognition of causal chain connections from ecosystems to human well-being. FES play a unique role in the steps of identifying connections from ecological changes to effects on humans. To fully understand any specific connection, it is often necessary to trace out a sequence of input-output relationships, connecting ecological inputs to those outputs that connect directly to people. These causal chains can vary in length and complexity, involving multiple intermediate ecosystem services and they can be quantified using ecological production functions as demonstrated in EPA’s EcoService Models Library (ESML; https://esml.epa.gov/). In the end, however, each individual chain must eventually lead to and contain a FES connection, where the output from nature represents a direct input to humans.
2. Useful way of communicating to the public how ecosystems contribute to human well-being. A focus on FES highlights the features of ecosystems that are most likely to matter to humans, which are also often the features that are most familiar to them.
3. Help identify environmental metrics and indicators that matter most to people. By focusing on the components of nature that are most tangible to the public (Boyd et al. 2016; USEPA, 2017), it can therefore improve efforts to monitor and measure changes in environmental conditions. These advantages of using FES for communicating and quantifying ecosystems also extend to economic valuation methods for ecosystem services. Whether eliciting preferences through surveys (a “stated preference” approach) or deducing preferences through observed behaviors (a “revealed preference” approach), it is important to use indicators that are most relevant to humans (Sinha et al. 2018).
4. Systems approach helps identify the full set of ecosystem services. In addition to helping to avoid double counting, a focus on FES can help address the potential problem of undercounting ecosystem services, i.e., not identifying, quantifying or assigning values to the full set of benefits. This can happen because of a limited number of biophysical models or metrics (e.g., Chestnut and Mills 2005), a limited ability to assign a value to a predicted biophysical change, or an oversight in identifying the full range of benefits or challenges associated with an environmental change. The classification system is expected to assist in addressing this problem by providing a complete list of the ways in which people benefit from ecosystems and, in the long run, encouraging the development of a broader set of biophysical models, metrics and indicators.
5. Avoid double counting in environmental accounting. Several studies have noted (Boyd and Banzhaf, 2007; Wainger and Mazzotta, 2011), the distinction between intermediate and final services is critical for many types of environmental accounting, such as cost-benefit analysis of environmental programs, natural capital accounting, and measurement of “green” gross domestic product (green GDP). A fundamental best-practice for any accounting process is to avoid double counting of constituent parts. Because an intermediate ecosystem service is an input to a final ecosystem service, it is embedded within the value calculated for that final service. Therefore, to avoid duplication (i.e., double counting) in environmental value accounting, the value of an intermediate service should not be added to that of a final service. Importantly, this focus on FES for environmental accounting does not mean that intermediate ecosystems services are of secondary importance. On the contrary, it recognizes that their contribution to human well-being is a major component of FES. It is also worth noting, however, that double counting of ecosystem service values is not necessarily a main concern for all types of ecosystem service analyses and applications.

For NESCS Plus, the focus on FES should also not be interpreted as a decision to ignore or minimize the importance of intermediate ecosystem services. Rather, it reflects a decision about where to draw boundaries on the scope of this classification system. In no way does it limit or preclude the development of complementary classification systems for intermediate ecosystem services. Moreover, a classification system focused on FES is not expected to address the needs of all ecosystem service analyses. Rather, NESCS Plus will need to be applied in combination with other tools, data, and methods, especially those used to describe and quantify ecological and economic production processes and human preferences. For example, the FEGS Community Scoping Tool, the Metrics Report, EcoService Models Library (ESML), and EnviroAtlas can be used together with NESCS Plus serving as a common language:

• The FEGS Scoping Tool (slides, recording) - The FEGS Scoping Tool is a decision support tool designed to help users identify and prioritize stakeholders, beneficiaries, and environmental attributes in a structured, transparent, repeatable process. The FEGS Scoping Tool uses a structured decision making (SDM) approach and the overall FEGS framework to identify the environmental attributes most relevant to the decision and valued by stakeholders in a transparent and structured fashion. The relevant and meaningful attributes can then be used to evaluate decision alternatives.
• The FEGS Metrics Report (workshop report) - The “Metrics for National and Regional Assessment of Aquatic, Marine, and terrestrial Final Ecosystem Goods and Services” report is designed to provide environmental professionals with the background and methods necessary to integrate FEGS metrics into environmental assessment and planning.
• EnviroAtlas https://19january2021snapshot.epa.gov/enviroatlas - EnviroAtlas is an interactive web-based tool that states, communities, and citizens can use to help inform policy and planning decisions that impact the places where people live, learn, work and play.
• EcoService Models Library (ESML) https://19january2021snapshot.epa.gov/eco-research/ecoservice-models-library - The EcoService Models Library (ESML) is an online database for finding, examining and comparing ecological models that may be useful for quantifying ecosystem goods and services.

Why is it important to have a classification system for ecosystem services?

Classification systems (or taxonomies) are used for a wide range of scientific applications, including for living organisms, land cover, human diseases, and economic sectors, to name a few of them. Many of the main objectives of these systems (Sokal, 1974; Bruno and Richmond, 2003) are also relevant for classifying final ecosystem services.

In the case of NESCS Plus, the main objectives of the classification system are the following:

1. Provide a common language and framework for describing and visualizing ecosystem services and the goods that provide them. Establishing a common language is particularly important for facilitating communication within the inherently interdisciplinary field of ecosystem services research. Ecologists, economists, and other disciplines all gain from having a common system that is clearly defined and structured. To address this objective, NESCS Plus provides a conceptual framework that describes key terms and concepts, and a classification structure for FES that is directly based on this framework. Together, these two features aim to clearly define what ecosystem services are and how they can be grouped according to key characteristics.
2. Provide a structure for identifying and comprehensively listing distinct FES and goods. In general, classification systems help to define, organize, and clarify the relationship between and among specific items, so that those with similar characteristics can be grouped together. This function is particularly important for systems involving large numbers of components. In the case of NESCS Plus, classification can help users to develop lists of the distinct types of FES that flow from specific environments and ecosystems to different sectors and beneficiaries. Classification can also be used to organize analyses that require identifying the different “causal chains” through which a management or policy action is expected to propagate through linked ecosystems and human systems to ultimately affect human well-being. The NESCS Plus can play an important role in these analyses because each pathway must include a distinct “point of hand-off” (i.e., FES flow) from ecosystems to human systems.
3. Provide a structure that helps to organize the measurement of FES and goods. For example, NESCS Plus can be used to organize the development of FES and goods, especially those that focus on the biophysical features of ecosystems that are most relevant for specific human uses or beneficiaries, such as waterfowl abundance for hunters or water quantity and salinity for agricultural irrigators.
4. Provide a structure that helps to organize the accounting and aggregation of FES and goods. In addition to measuring an individual FES, there is often a need to add up values (or changes) across multiple FES, as a way of measuring the combined contributions of multiple ecosystems services. For example, economic accounting practices such as cost-benefit analysis of environmental programs or natural capital accounting, typically require some aggregation of ecosystem service benefits. Similar to the economic classification systems (e.g., North American Industrial Classification System) that provide an essential foundation for national income accounting, NESCS Plus can provide a foundational structure for the systematic accounting of ecosystem service benefits.
5. Provide a structure that helps to organize, catalogue, and retrieve information about FES, similar to a library, filing, or meta-data system. This function can include organizing information on:
   1. The different types of ecosystem services addressed by existing empirical analyses;
   2. The different types of metrics and indicators used to quantify ecosystem services, including monetary (e.g., willingness-to-pay estimates) and non-monetary (e.g., number of wildlife sightings per visit) metrics;
   3. The different empirical estimates of ecosystem services generated in these analyses, including monetary values and non-monetary values; and
   4. The different types of models used to quantify ecosystem services (e.g., fish population dynamics or economic valuation models).

Additional explanations with examples of how NESCS Plus can be used to address these objectives are provided in the “NESCS Plus: Example Applications” section.

How is NESCS Plus different from other classification systems?

Existing literature on ecosystem services proposes various definitions and classification approaches for ecosystem services (e.g., Finisdore et al. 2018). Although there is broad consensus that ecosystems are natural assets that support human welfare, a convergence of views has not been reached on the best conceptual approach for describing and classifying the diverse processes, functions, stocks, flows, goods, services, and benefits embedded within or provided by ecosystems. This lack of consensus can create confusion in the application of the term ecosystem services (Nahlik et al. 2012), which makes it more difficult to organize a wide array of information in support of policy analyses.

The widely cited Millennium Ecosystem Assessment (MA, 2003, 2005) divides ecosystem services into supporting, provisioning, cultural, and regulating service. However, the Millennium Ecosystem Assessment report emphasizes that “the purpose [of these categories] is not to establish a taxonomy but rather to ensure that the [MA] analysis addresses the entire range of services” (p. 38 MA 2003).

A more fully developed classification system is the Common International Classification of Ecosystem Services (CICES; Haines-Young and Potschin, 2013, 2018). The CICES adapts and expands the Millennium Ecosystem Assessment approach to provide a more detailed classification system. It includes more attention to the differentiation between ecosystem services and the ecological processes that contribute to them. The CICES does not include supporting services as an ecosystem service category. However, overlaps still exist among the three remaining categories of ecosystem services (regulating, provisioning and cultural). A lack of explicit partitioning between final and intermediate services in CICES limits its usefulness as a foundation for accounting or for benefits analysis.

The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) has also developed a framework centered around the concept of “Nature’s contributions to people” (NCP). The stated objective of this framework is to include a “wider range of values (e.g., relational and intrinsic values), valuation methods (e.g., socio-cultural methods), and worldviews [e.g., indigenous and local knowledge (ILK) systems]” and provide an approach for assessing the value of NCPs (Christie, et al (2019), IBPES (2018)). The IPBES approach includes two different perspectives, one more typical of biophysical and economic sciences and the other typical of local and indigenous knowledge. The first (“generalizable”) perspective identifies eighteen categories of NCPs that are organized into three partially overlapping groups: regulating, material and non- material. Under the second (“contextual”) perspective, NCPs are not classified. Therefore, although the concept of NCPs is similar to that of ecosystem services, IPBES does not attempt to distinguish between final and intermediate; rather, it explicitly includes overlapping categories.

Several key themes and implications for ecosystem service classification emerge from the existing literature. First, if one wishes to support ecosystem service accounting or benefits analysis, it is important to distinguish between final ecosystem goods, final ecosystem services, and the multitude of ecological processes that contribute to them (i.e., intermediate services). As previously noted, failing to make a clear distinction between intermediate and final ecosystem services can be particularly problematic for ecosystem service valuation and accounting because it increases the likelihood of either incomplete or double counting. Duplication can occur because the value of the intermediate ecological processes is embedded within the value for final ecosystem goods or services. This potential for double counting is a well-recognized and demonstrated drawback of the Millennium Ecosystem Assessment framework (Ojea et al., 2012; Fu et al., 2011). For example, the Millennium Ecosystem Assessment framework includes both regulating services, such as the process of water purification, and provisioning services, such as freshwater supplies. The problem is that if both regulating and provisioning services are valued, and then those values are added up, the value of water regulation to water provisioning would be double counted. Similarly, IPBES includes regulating NCPs (e.g., regulation of air quality, climate, freshwater quantity and quality and soil) as well as material NCPs (e.g., food and feed, medicinal resources). If these NCPs are all added up, this would result in double counting. Despite distinguishing between intermediate and final services in its documentation, the CICES classification also includes regulating and provisioning services that are potentially overlap between intermediate and final services groupings. For example, CICES includes categories for seed dispersal and control of erosion rates. The value of these services are at least partly embedded within the value of other (final) service categories such as wild plants used for nutrition.

Second, to reduce the risk of double counting it is also important to distinguish between ecosystem goods and services and economic goods and services. For instance, the Millennium Ecosystem Assessment and CICES frameworks include categories describing goods that are typically produced by humans (using human labor, capital, and ecological inputs) and often sold in markets, such as food (MA, 2005) and “Cultivated terrestrial plants (including fungi, algae) grown for nutritional purposes” (Haines-Young and Potschin, 2018). Treating these types of economic goods as ecosystem goods or services again runs the risk of double counting, because ecosystem service values (e.g., from water inputs to agricultural production) are embedded within the value of the economic goods.

Two recent efforts initiated by the EPA to develop classification systems that address these issues include the Final Ecosystem Goods and Services Classification System (FEGS-CS; Landers and Nahlik, 2013) and the National Ecosystem Services Classification System (NESCS; USEPA, 2015). To avoid double counting ecosystem goods and services, both FEGS-CS and NESCS focus on final ecosystem goods and services. Although conceptually and structurally similar, the two systems have different features and advantages. For example, FEGS-CS defines ecosystem goods and services as “components of nature,” which implies they are countable stocks in nature (such as lakes, forests, and fish populations) that can be measured at a specific point in time. In contrast, drawing mainly on economic approaches, NESCS treats services as flows, conceptual flows of value between ecosystems and humans generated when an EEP is used.

Therefore, the aim of NESCS Plus is to provide a new system that: (1) improves on existing classification approaches; and (2) combines the desirable features of FEGS-CS and NESCS.

Are the products of human-managed ecosystems EEPs or economic goods?

One important feature of the system is the need to isolate the ecosystem products from products that combine ecosystem and non-ecosystem inputs (such as capital and labor). Thus, putting the concept of FES and final ecosystem goods into practice requires drawing a line between what ecosystems produce (ecological production) and what humans produce (economic production). This line establishes where the “final” link from ecosystems to humans occurs. However, this line is often blurred, particularly when natural systems are heavily managed by humans but not intended for sale in markets. For example, publicly owned and managed natural systems such as reservoirs and renourished beaches can provide EEPs despite the human contribution to their existence or condition. Drawing the line between natural and human systems will therefore often require subjective judgment on the part of the user of NESCS Plus. The following principles can help to clarify some of these issues in identifying EEPs and FES:

1. If something is produced by humans for sale in a market, it is an economic good or service, not an EEP. For example, agricultural crops, commercially produced Christmas trees, and maintained trails in a privately-owned nature park that charges an entrance fee are not EEPs.
2. If a natural feature is created by humans, but it is not connected to the lithosphere or hydrosphere and is isolated from more natural systems, then it is not an EEP. For example, aquariums and indoor botanical gardens do not qualify as EEPs.
3. If a human production of an economic good or service incidentally creates natural features that are non-marketed “public goods,” than these by-products may be EEPs. For example, if a farm creates an appealing vista than the resulting landscape can be considered an EEP. If a tree plantation provides habitat for birds that are then enjoyed by birdwatchers, then the birds can be considered EEPs.

Why is there no EEP class for water quality, air quality, or other types of environmental quality?

Although water, air and other environmental quality characteristics certainly affect the level of ecosystem services provided by EEPs, they are not treated as categories of EEPs. This same principle is applied when classifying economic goods and services. For example, safety and gas mileage are important quality characteristics of motor vehicles, but they are not treated as categories of motor vehicles. For this reason, NESCS Plus categorizes environments and biophysical components of nature, but it does not treat quality as a type of ecosystem service. Arguably, the best way to address quality differences would be through the quantification (i.e., with indicators and metrics) and valuation of ecosystem services rather than through the classification system itself. For example, just as quality differences between economic goods and services are often captured with indicators such as safety ratings or quality scores (e.g., stars for movies or restaurants), quality differences in ecosystem services provided by ecosystem goods can be often be quantified using quality measures or indicators (e.g., Secchi depth for water clarity).[1]  Similarly, just as the quality of market goods and services is often reflected in their market prices, quality differences in EEPs can in many instances be captured through differences in their estimated values (i.e., using non-market valuation methods).

Why is carbon sequestration not listed as a class of ecosystem service in NESCS Plus?

By providing a sink for greenhouse gasses and thus helping to limit climate impacts, carbon sequestration can be very beneficial to society. However, it is also a clear example of an “intermediate” ecological process that is several steps removed (along a causal chain) from several EEPs and direct uses that define FES. For example, it reduces acidifying deposition to oceans, which then reduces damages to coral reefs, which then improves habitat for fish, which are then used for recreational diving and commercial fishing. The relevant EEP class in this case is fish (fauna) in the ocean environment and the direct uses are for recreation by households and for extraction and distribution by commercial fishers. Although the act of sequestering carbon (or purchasing carbon offsets) may provide an individual with direct benefit, the ultimate FES provided the action is several steps “downstream.”

Why is biodiversity not listed as an EEP class in NESCS Plus?

Protecting or increasing biodiversity can increase human well-being in several ways, including by providing more broad-based sources of nutrition and by contributing to the existence values held by some individuals. However, rather than being a type of EEP, biodiversity is better described as a characteristic (similar to an environmental quality indicator) of an environment class (e.g., forests) or an EEP (e.g., flora or fauna).

How are the spatial and temporal scales of FES addressed in NESCS Plus?

The NESCS Plus is intended to provide a system that is flexible and adaptable enough to classify any type of FES, regardless of its spatial or temporal scale. For this reason, the classification structure does not specify or limit the spatial or temporal scale of any the FES components (i.e., environments, EEPs, direct uses, etc…). Instead, it allows the system user to specify these dimensions, based on their own needs and context. For example, the NESCS Plus Environment classification divides the earth’s surface into areas with similar characteristics, such as Deciduous Forest, but it does not classify them according to the size or spatial extent of the areas covered. It is left to the system user to specify the Deciduous Forest areas that are of interest to him or her as a source of FES.