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Valuing the Arctic in economic decision making: it is not about putting a price on the Arctic’s nature!

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The Economics of Ecosystems and Biodiversity (TEEB) presents an approach that can help decision-makers recognize, demonstrate and capture the values of ecosystem services and biodiversity. Tomas Declercq asks whether we have considered the true value of the critical Arctic services we are all so eager to plunder.

The Arctic constitutes about 6% of this planet’s surface and is home to around four million people. For thousands of years Indigenous peoples have subsisted on its natural resources such as fish, soils for reindeer herding and the great Siberian rivers flowing into the Arctic Ocean that provide fresh water. Livelihoods now also rely on income from tourists visiting its incomparable landscapes and participating in activities such as dog-sledding and ice fishing. The Arctic continues to provide inspiration for culture, peace and serenity. Some worship the Arctic for its wide landscapes, with millions of nomadic animals spread out in a vast expanse of wilderness.

However, the Arctic is heating up at about two to three times the global average and its sea ice is retreating and thinning at a rapid pace. Before mid-century it will have a nearly sea ice-free ocean in early autumn months making coastlines vulnerable to possible storm surges. Habitat important for reindeer herding and for key Arctic species such as seals and polar bears is being destroyed. The Arctic also plays a key role in some planetary boundaries that are being crossed – in terms of climate change, biosphere integrity, land system change and ocean acidification. As the ice cap recedes and technologies improve, the Arctic is increasingly seen as the solution to satisfy future strategic oil, gas and mineral needs. Access to the opening Northwest Passage and especially the Northern Sea Route, with tankers, refrigerated vessels carrying fish and cruise liners is sought while commercial fishing in Arctic territories is advocated as crucial to global food security.


Why are we degrading some of Arctic´s critical ecosystems unabatedly?

For the rest of the world the Arctic is sometimes seen as a tool for growth and development in terms of Gross Domestic Product (GDP).The Arctic’s abiotic natural capital – oil, gas, minerals and metals – are being privatized. But would we make the same economic decisions if we were to incorporate the real value of Arctic ecosystem services that may be degraded as a consequence? Do we know what it really costs to replace the Arctic services provided for free? Have we weighed the risks of losing some of the Arctic’s irreplaceable services, such as climate regulation?

Arctic waters provide habitat for fish that are caught to be sold for local subsistence and even for food security beyond the Arctic. But some commercial fisheries are treating these waters like a free lunch. The total landed value of marine species in the Arctic region may not represent a critical share of an Arctic country’s GDP, but it is a fundamental revenue share for the coastal communities and subsistence fishers. By-catch of king salmon in the Bering Sea, for example, affects Yupik fishermen on the Yukon River. This may take away their basic livelihood and even deny some fundamental human wellbeing dimensions such as freedom of choice and the right to food.

Valuation as a tool to make the invisible use of nature visible

There is an impressive amount of Arctic cooperation, both at the science and the policy level. Governments work together across borders to implement changes in policy and regulatory frameworks. Providing a bridge between policy and science, valuation can be used as a policy tool to demonstrate to governments that the paradox between nature and development is a false one. While the Arctic should not be completely reduced to measuring its economic value, TEEB – The Economics of Ecosystems and Biodiversity– is finding a way to use valuation as a policy tool and therefore address some of concerns.

A first concern is that people put a price on the Arctic and treat it as a commodity. The following distinction should be communicated clearly: value does not necessarily equate price. For example, Indigenous Peoples in the Arctic also value nature and consider their natural surroundings as a source of inspiration. Pricing this cultural value is simply impossible and undesirable. But at the same time, the cultural values that approximately 400,000 Indigenous Peoples hold for their nature should be included in policy decisions. Therefore, the open architecture of the TEEB approach advocates plenty of mechanisms for valuing in non-monetary terms such as multi-criteria analysis and participatory appraisal. Valuation as such is also not related to putting blind faith in market mechanisms. The result of a valuation exercise also does not necessarily lead to the introduction of market mechanisms. And even if valuation would be informing a market mechanism, did you know that most payments for ecosystem schemes are between governments?

A second concern is how to deal with an uncertain ecological future due to crossing of imminent ecological thresholds and ´tipping points´, beyond which the capacity to provide useful services may be drastically reduced. For example, the Arctic is increasingly releasing stored carbon as permafrost thaws, leading to feedback loops. Rich Arctic fish stocks may rapidly decline due to interactions among several forces and cumulative impacts. Nobody knows what irreversible damage an oil spill in ice conditions may cause to ecosystem services provisioning. Once this floor or ceiling is reached, the Arctic will change the rules of the game. In these circumstances of radical uncertainty, economic valuation tends to be less useful. Please do not wait for perfect information to act and call upon complementary approaches such as ´safe minimum standards´ and the ´precautionary principle´.

Third, how do we include the plurality of ethical and cultural worldviews of the people that call the far north home in valuation exercises? TEEB considers valuation to be a human institution, largely dictated by socio-cultural values, norms and beliefs. As such, different interpretations of ´value´ will exist, none of which should be perceived as either incorrect or invalid. A valuation exercise at local scales may be easier to deal with in terms of plurality of ethical and cultural standpoints.

A last concern is that certain values simply cannot be measured in the same units; they are incommensurable. Monetary estimates should therefore clearly distinguish which dimensions they do and do not cover. You would for example not claim that reindeer herding is worth X US Dollars in ecosystem services provisioning. Instead, you would communicate that land-use planning and ecosystem-based management of reindeer herding could result in an increase in food provisioning of X USD compared to other scenarios; and you would showcase in non-monetary terms its cultural value for conserving or restoring traditional ecological practices

The Arctic is becoming the symbol of the age of the Anthropocene, with humans as a determinant species for its future. This is an extraordinary responsibility to define the life of future generations. But this vast region should be valued for what it is —irrespective of its current or future use by humans. Monetary values can be a complementary rationale and should not in any way undermine the recognition of the Arctic’s intrinsic values.

The way forward for Valuing the Arctic: Valuing the Unseen

Economic valuation can help the Arctic find the optimal solution for specific policy questions, but it is not a precondition for capturing values. It may be sufficient for some policy questions to only take qualitative values into account. In this regard, economic valuation is never an end in itself and the selected methodologies will be in line with the particular needs of the Arctic. A comprehensive and policy focused valuation exercise can act as a catalyst to accelerate the development of a new economy in the Arctic: one in which its values are fully reflected in public and private decision-making and a broadened focus from short-term stability to long-term resilience.


This blog piece is written in the margin of the TEEB for the Arctic scoping study. This study, currently under review by the Arctic Council, provides general information and discussion on Arctic ecosystem services, policy context and governance aspects. As such it represents a first important step towards further policy refining and appropriate scope and boundary setting for valuation.

Tomas Declercq works for the TEEB Secretariat at the United Nations Environment Programme. He has provided guidance to the development of the TEEB Arctic scoping study.

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