Ecological production based pricing of biosphere processes

Ecological pricing theory and method is reviewed, and then applied to the valuation of biosphere processes and services. Ecological pricing values biosphere processes, on the basis of biophysical interdependencies between all parts of the ecosystem, not just those that have direct or obvious value to humans. The application of the ecological pricing method to the biosphere for 1994, indicates that the total value of primary ecological inputs (services) to be nearly $US 25 trillion. This compares with $US 33 trillion obtained in the Costanza et al. (1997) study. Our analysis also indicated a good correspondence between the shadow ecological price and the observed market price for all marketable goods, except fossil fuel which was undervalued by the market. (C) 2002 Elsevier Science B.V. All rights reserved.