Flows from Environment to Economy

1. Outcome

This Circular provides comprehensive guidance on compiling accounts for flows from the environment to the economy in the context of ocean accounting. These flows encompass ecosystem services--the contributions that marine and coastal ecosystems make to benefits used in economic and other human activity--as well as natural resource inputs extracted from the ocean environment. Understanding and measuring these flows is essential for three interrelated purposes: revealing the economic dependencies on ocean ecosystems, informing sustainable management of marine resources, and integrating environmental considerations into economic decision-making^[1].

For policy analysis, these accounts answer questions such as: What is the annual value of coastal protection provided by coral reefs and mangroves? How much fish biomass is being extracted relative to the ecosystem's capacity to supply it? What proportion of national tourism activity depends on marine ecosystem services? Which industries and communities are most dependent on flows from marine ecosystems, and therefore most vulnerable to ecosystem degradation? By compiling the accounts described in this Circular, countries can systematically measure the flows that connect ocean ecosystems to economic production and human well-being, enabling indicators such as ecosystem dependency ratios (see TG-2.3 Social and Livelihood Dependencies) and environmental goods and services indicators (see TG-2.4 Ecosystem Goods and Services).

This Circular covers the classification and measurement of provisioning, regulating, and cultural ecosystem services in marine contexts; the treatment of natural resource inputs such as fish, water, and energy; the compilation procedure for physical supply and use tables (PSUTs) for ecosystem services; worked examples with synthetic data for coastal zones; and approaches to the monetary valuation of flows from environment to economy. For the treatment of flows from economy to environment (residuals, emissions, waste), see TG-3.4 Flows from Economy to Environment.

2. Requirements

This Circular requires familiarity with:

• TG-0.1 General Introduction to Ocean Accounts -- for the conceptual framework connecting ecosystems to economic activity
• TG-3.1 Asset Accounts -- for understanding the relationship between ecosystem assets and the services they supply

For detailed guidance on valuation methods referenced throughout this Circular, see TG-1.9 Valuation. For guidance on ecosystem condition and its relationship to ecosystem service supply, see TG-0.7 Quality Assurance.

3. Guidance Material

Flows from the environment to the economy represent the central mechanism through which ocean ecosystems contribute to human well-being and economic production^[2]. The SEEA framework distinguishes two main categories of such flows: ecosystem services, which are the contributions of ecosystem assets to benefits; and natural resource inputs, which are physical materials extracted from the environment for use in economic processes^[3]. For ocean accounting, both categories are essential: marine ecosystem services include fish provisioning, coastal protection, carbon sequestration, and recreation; natural resource inputs include harvested fish, abstracted seawater, and extracted seabed minerals.

This section examines ecosystem services in the marine context (Section 3.1), natural resource inputs (Section 3.2), the structure and compilation procedure for physical supply and use tables (Section 3.3), worked examples for coastal zone accounts (Section 3.4), and approaches to monetary valuation of flows from environment to economy (Section 3.5). The methodology presented here provides the basis for understanding the full range of contributions that ocean ecosystems make to the economy and society. It enables the compilation of accounts that directly support indicators of ecosystem dependency (TG-2.3 Ecosystem Dependency Indicators) and analysis of ecosystem goods and services (TG-2.4 Ecosystem Goods and Services). Understanding these flows requires grounding in the spatial data sources described in TG-4.1 Remote Sensing Data and the survey methodologies presented in TG-4.2 Survey Methods.

3.1 Ecosystem Services

Ecosystem services are the contributions of ecosystems to the benefits that are used in economic and other human activity^[4]. The SEEA Ecosystem Accounting framework defines ecosystem services as flows between ecosystem assets and economic units, where economic units encompass businesses, governments, and households^[5]. In the marine context, ecosystem services include the provision of fish and other harvested biomass, the regulation of climate through carbon sequestration, the protection of coastlines from storms and erosion, the filtration and purification of water, and the provision of recreational and cultural experiences.

Classification of ecosystem services

The SEEA EA presents a reference list of ecosystem services organized into three main sections^[6]:

1. Provisioning services -- ecosystem contributions to the growth of biomass and other materials that can be harvested or extracted for use in economic activity
2. Regulating and maintenance services -- ecosystem contributions that regulate or maintain environmental conditions that benefit people
3. Cultural services -- the experiential and intangible contributions of ecosystems that support physical, intellectual, and spiritual well-being

This classification builds upon and is compatible with the Common International Classification of Ecosystem Services (CICES)^[7], which provides a hierarchical structure for ecosystem service classification. For ocean accounting, each category has particular relevance. A summary of key marine ecosystem services and their classification is presented in Table 1.

Table 1: Selected marine ecosystem services by category (adapted from SEEA EA Table 6.3)^[8]

For the full list of marine-relevant ecosystem services, compilers should consult SEEA EA Table 6.3. Table 1b below provides an expanded reference mapping all SEEA EA services to ocean relevance.

Ecosystem services by ecosystem type: a worked example

To illustrate how ecosystem services vary across marine and coastal ecosystem types, Table 1a presents a worked example mapping selected ecosystem services to four representative ecosystem types. Compilers are encouraged to develop similar mappings for their accounting area, following the SEEA EA Technical Recommendations guidance to "create a table showing which ecosystem services are likely to be supplied from different ecosystem types for their country or target ecosystem accounting area"^[9]. The services listed below follow the three categories defined in SEEA EA Table 6.3: provisioning services, regulating and maintenance services, and cultural services^[10].

Table 1a: Illustrative ecosystem services by marine ecosystem type

Table 1a: Illustrative ecosystem services by marine ecosystem type, following SEEA EA Table 6.3 categories. A dash (--) indicates the service is not typically supplied by that ecosystem type.

Abiotic flows from the marine environment--such as seawater abstraction for desalination and cooling, extraction of seabed minerals and aggregates, and capture of offshore wind, wave, and tidal energy--are recorded separately as contributions from the environment following the SEEA EA framing in Table 6.1^[11]. These abiotic flows are distinct from ecosystem services: they arise through abstraction and extraction of resources from geophysical or geological sources rather than being underpinned by ecological characteristics and processes. Compilers are encouraged to record abiotic flows alongside ecosystem services to enable joint analysis of environmental trends, but they should not be classified within the three ecosystem service categories.

Expanded reference: SEEA EA ecosystem services and ocean relevance

Table 1b provides an expanded reference mapping the ecosystem services from SEEA EA Table 6.3 to their relevance for ocean and coastal accounting. This table is intended to assist compilers in identifying which services from the reference list are most pertinent to their marine accounting area and in selecting appropriate measurement priorities^[12].

Table 1b: SEEA EA ecosystem services and their ocean relevance

Table 1b: SEEA EA ecosystem services mapped to ocean accounting relevance, based on the reference list in SEEA EA Table 6.3.

Provisioning services in marine ecosystems

Marine provisioning services encompass the ecosystem contributions to the growth of biomass and water supply that can be harvested for human use^[13]. Key provisioning services in the ocean domain include:

Fish provisioning services represent the ecosystem contributions to the growth of wild fish and other aquatic organisms that are harvested^[14]. This service reflects the role of marine ecosystems in supporting fish populations through provision of habitat, food, and suitable environmental conditions. The SEEA EA notes that "provisioning services are recorded in contexts both of cultivation and of non-cultivation"^[15]--for wild-capture fisheries, the ecosystem provides the service, while for aquaculture, the ecosystem contribution is distinguished from cultivated inputs. For detailed guidance on fisheries stock assessment and the relationship between ecosystem services and fish harvests, see TG-6.7 Fisheries Stock Assessment.

Aquaculture provisioning services represent ecosystem contributions to the growth of cultivated aquatic organisms^[16]. Marine aquaculture depends on ecosystem services including water quality maintenance, nutrient cycling, and waste assimilation. The distinction between wild-capture and aquaculture is important: for aquaculture, part of the biomass growth results from cultivated inputs (feed, seed stock) while the ecosystem provides supporting services. The SEEA EA describes this as distinguishing "the contributions made by cultivated inputs from the contributions made by ecosystem assets"^[17]. Detailed treatment of aquaculture accounts is provided in TG-3.9 Aquaculture Accounts.

Other biomass provisioning services include contributions to the growth of seaweed, shellfish, and other harvestable marine organisms^[18]. Seaweed harvesting, for example, depends on ecosystem services that support algal growth, including nutrient availability and suitable water temperature and light conditions.

Water supply services in the marine context relate primarily to the abstraction of seawater for desalination, cooling, and other industrial uses^[19]. While seawater itself is typically treated as an abiotic flow rather than an ecosystem service (see Section 3.2), the quality of seawater--including its temperature, salinity, and freedom from pollutants--may be influenced by ecosystem processes.

Regulating and maintenance services in marine ecosystems

Marine regulating and maintenance services are particularly significant for ocean accounting, as they encompass many of the "invisible" contributions that ecosystems make to human well-being^[20]. Key categories include:

Global climate regulation services represent ecosystem contributions to the regulation of the global climate through carbon sequestration and storage^[21]. Marine ecosystems play a critical role in the global carbon cycle: the ocean absorbs approximately 25--30% of anthropogenic CO2 emissions, while coastal ecosystems such as mangroves, seagrass meadows, and salt marshes sequester carbon at rates far exceeding terrestrial forests^[22]. This "blue carbon" function is increasingly recognized as a critical ecosystem service. The SEEA EA states that "global climate regulation services represent a final ecosystem service with the user typically recorded as the global community or, where the focus is on a national ecosystem accounting area, the rest of the world"^[23].

The treatment of global climate regulation services raises important questions about national attribution. Following SEEA EA para 6.60, when compiling national accounts the service is recorded as supplied by domestic ecosystems and used by the rest of the world (RoW), with the entry in the use table appearing in the RoW column. Countries may additionally record domestic benefits from climate regulation where quantifiable, but should avoid double counting between global and local climate regulation services.

Coastal protection services are the ecosystem contributions to reducing the impacts of coastal hazards including storms, waves, and erosion^[24]. Coral reefs, mangroves, seagrass beds, salt marshes, and coastal dunes all provide natural flood and storm protection. The SEEA EA notes that "ecosystem services encompass services that are both predominantly biotic (e.g. air filtration services provided by forests) and predominantly abiotic (e.g. coastal protection services provided by sand dunes)"^[25]. For ocean accounting, coastal protection represents one of the most economically significant regulating services, with global estimates suggesting that coral reefs alone provide flood protection benefits exceeding USD 4 billion annually^[26]. Thematic guidance on coral reef ecosystem services is provided in TG-6.1 Coral Reef Accounts; for mangroves in TG-6.2 Mangrove and Wetland Accounts; and for seagrass in TG-6.3 Seagrass Accounts.

Water purification services represent ecosystem contributions to the removal or breakdown of pollutants and other substances from water^[27]. Coastal wetlands, mangroves, and seagrass beds filter nutrients, sediments, and pollutants from water flowing from land to sea, maintaining water quality that benefits both marine ecosystems and human uses such as recreation and aquaculture.

Nursery population and habitat services are the ecosystem contributions to the maintenance of populations of species through provision of critical habitat^[28]. Many commercially important fish species depend on coastal ecosystems such as mangroves, seagrass meadows, and estuaries as nursery habitat. The SEEA EA treats nursery services as potentially intermediate services: "the nursery population services supplied by seagrass meadows are an input to the supply of fish biomass provisioning services, which in turn contribute to the benefit of marketed fish"^[29]. This treatment highlights the importance of recording both final and intermediate ecosystem services to fully capture the contributions of coastal ecosystems to commercial fisheries.

Pollination and seed dispersal services in marine contexts include the dispersal of marine plant propagules and the maintenance of genetic connectivity among populations^[30]. While less prominent than in terrestrial ecosystems, these services contribute to the resilience and productivity of marine ecosystems.

Soil and sediment retention services represent ecosystem contributions to preventing erosion and maintaining sediment stability^[31]. In coastal areas, vegetation such as mangroves and seagrasses stabilize sediments, reducing erosion and maintaining the physical integrity of coastal ecosystems.

Cultural services in marine ecosystems

Marine cultural services reflect the experiential, spiritual, and intellectual contributions of ocean ecosystems to human well-being^[32]. These include:

Recreation-related services encompass the ecosystem contributions to recreational activities such as swimming, diving, snorkelling, fishing, and wildlife watching^[33]. Coral reefs, beaches, and marine protected areas attract tourists and recreational users, generating significant economic activity. The SEEA EA notes that "recreation-related services are considered final ecosystem services since they are directly enjoyed by people"^[34]. For guidance on marine tourism and recreation accounts, see TG-2.11 Maritime Accounts.

Visual amenity services represent the contribution of ecosystems to aesthetic enjoyment through scenic views and landscapes^[35]. Coastal seascapes and marine environments contribute to the amenity value of coastal properties and destinations.

Education, scientific, and knowledge services encompass ecosystem contributions to research, education, and the generation of knowledge^[36]. Marine ecosystems are sites of scientific discovery and environmental education, and they hold traditional knowledge and cultural significance for coastal communities.

Spiritual, artistic, and symbolic services represent contributions to cultural identity, spiritual practices, and artistic inspiration^[37]. For many coastal and island communities, the ocean holds profound cultural and spiritual significance. The SEEA EA notes that recording these services may involve "indicators of the physical characteristics associated with the supply of the service" rather than direct measurement of service flows^[38].

Figure 3.2.a below illustrates the fundamental structure of flows between the environment and the economy as presented in the 2025 SNA. Natural inputs flow from the environment to the economy; residuals flow from the economy back to the environment. Economic units within the economy produce and consume products. Understanding this bidirectional flow structure is essential for compiling comprehensive ocean accounts^[39].

Figure 3.2.a: Flows between the environment and the economy (adapted from SNA 2025 Figure 35.4)^[39:1]

3.2 Natural Resource Inputs

Natural resource inputs are physical flows from the environment that are moved from their location in the environment as part of economic production processes^[40]. The SEEA Central Framework describes natural inputs as encompassing "all physical inputs that are moved from their location in the environment as a part of economic production processes or are directly used in production"^[41]. For ocean accounting, key natural resource inputs include:

Aquatic resources extracted through capture fisheries represent the primary natural resource input from marine ecosystems^[42]. The SEEA CF recommends measuring extraction as gross catch--the total live weight of fish caught, including discarded catch but excluding pre-catch losses--to capture the full impact on marine resources^[43]. The relationship between natural resource inputs (recorded in physical flow accounts) and changes in aquatic resource stocks (recorded in asset accounts as described in TG-3.1 Asset Accounts) provides an important consistency check. Specifically, extraction flows recorded in the PSUT should equal extraction entries in the asset account.

Water abstraction includes the removal of seawater and coastal water for use in economic processes^[44]. While seawater stocks are not recorded in asset accounts due to their scale, abstraction flows are relevant for understanding industrial use of marine resources, particularly for desalination and cooling. The SEEA CF notes that "the focus of the SEEA is the inland water system, with provision for the inclusion of sea or ocean water abstracted for production and consumption"^[45].

Mineral resource extraction encompasses the removal of sand, gravel, and other seabed materials, as well as extraction of oil, gas, and deep-sea minerals^[46]. These extractions are recorded as natural resource inputs in physical flow accounts and correspond to reductions in mineral asset stocks. Detailed guidance on offshore energy accounting is provided in TG-3.10 Offshore Energy Accounts.

Energy from natural inputs includes energy captured from marine renewable sources such as tidal, wave, and offshore wind^[47]. The SEEA Energy framework describes energy from natural inputs as comprising "flows of energy from the removal and capture of energy from the environment by resident economic units"^[48]. These flows are recorded in the physical supply and use tables for energy and represent a growing component of ocean-based economic activity.

Relationship to ecosystem services

The relationship between natural resource inputs and ecosystem services requires careful treatment to avoid double counting^[49]. The SEEA EA clarifies this relationship:

• Natural inputs in the SEEA CF include inputs of timber, aquatic resources (e.g. fish), and other biological resources "but only in cases where the production process does not entail cultivation or is unmanaged since cultivated biological resources are produced within the economy"^[50].
• Provisioning services in the SEEA EA are recorded in both cultivation and non-cultivation contexts, reflecting the ecosystem contribution to biomass growth^[51].

For fish, for example, the natural resource input is the harvested catch (a physical flow of biomass from environment to economy), while the ecosystem service is the contribution of the marine ecosystem to the growth of that fish population^[52]. The two perspectives are complementary: the natural input approach focuses on extraction flows, while the ecosystem service approach focuses on the ecosystem's productive contribution. The SEEA EA states that "natural resource residuals represent those flows of natural resources that are extracted or harvested and immediately returned to the environment. Examples include discarded catch in fishing"^[53].

The distinction between gross catch and other catch measures is critical for accounting consistency. Figure 3.2.0 illustrates the hierarchical relationships among catch concepts as defined in the SEEA CF, showing how gross removal is progressively refined through each stage to arrive at nominal catch^[54].

Figure 3.2.0: Catch concepts hierarchy (adapted from SEEA CF Annex A5.4)^[54:1]

Figure 3.2.1: Dual recording of fish harvest--natural resource inputs (SEEA CF) and provisioning services (SEEA EA)

3.3 Physical Supply and Use Tables: Structure and Compilation Procedure

Physical supply and use tables (PSUTs) provide the accounting structure for recording flows from the environment to the economy in physical terms^[55]. The SEEA Central Framework describes the PSUT as organizing information on "the extraction or capture of inputs from the environment, the flows of products within the economy, and the flows of residuals to the environment"^[56].

Structure of PSUTs

The general structure of a PSUT for ecosystem services follows the supply and use framework of national accounts, extended to incorporate ecosystem assets as suppliers^[57]:

Supply table -- records the supply of ecosystem services by ecosystem type and the supply of products by economic units. For ecosystem services, supply is attributed to the ecosystem assets that generate the services.

Use table -- records the use of ecosystem services by economic units (industries, government, households) and the use of products as intermediate consumption and final demand. Users of ecosystem services include the economic units that directly benefit from or incorporate the services into their production or consumption activities.

The SEEA EA describes the ecosystem services supply and use account structure as having multiple "quadrants" that capture^[58]:

• Supply of ecosystem services by ecosystem type (ecosystem assets as suppliers)
• Use of ecosystem services by economic units (businesses, governments, households)
• Supply of products by industries (standard SNA scope)
• Use of products by economic units (standard SNA scope)

Table 2 presents a simplified structure of an ecosystem services supply and use table.

Table 2: Simplified structure of ecosystem services supply and use table (adapted from SEEA EA Figure 7.1)^[59]

Ecosystem services supply-use table: worked template

Table 2a provides a detailed supply-use table template that compilers can adapt for their ocean accounting area. The supply side records ecosystem service quantities by marine ecosystem type; the use side records which economic units benefit from each service. Total supply must equal total use for each service (the accounting identity).

Table 2a: Ecosystem services physical supply-use table template

SUPPLY TABLE (Physical units by service type)

USE TABLE (Same physical units)

Table 2a: Ecosystem services physical supply-use table template for ocean accounts (adapted from SEEA EA Table 7.1)^[60]

The supply-use accounting identity (Total Supply = Total Use for each service) provides a built-in quality check. Compilers should begin with provisioning services where data are most readily available, then progressively extend to regulating and cultural services as methods and data improve.

Compilation procedure

The following step-by-step procedure guides the compilation of ecosystem services supply and use tables for ocean accounts:

Step 1: Define the accounting area and period. Specify the spatial extent (e.g., EEZ, coastal zone, sub-national region) and the accounting period (typically one year). Identify the marine and coastal ecosystem types present in the area, drawing on the ecosystem extent account (see TG-3.1 Asset Accounts).

Step 2: Select ecosystem services to be measured. Based on Tables 1a and 1b, identify which ecosystem services are relevant to the accounting area. Prioritize services with data availability, policy relevance, and economic significance. Begin with provisioning services (fish harvest, aquaculture), then expand to regulating services (coastal protection, carbon sequestration) and cultural services (recreation).

Step 3: Measure supply by ecosystem type. For each selected ecosystem service, estimate the physical quantity supplied by each ecosystem type during the accounting period. Data sources may include:

• Fish provisioning: fisheries statistics (gross catch allocated to fishing grounds by ecosystem type)
• Carbon sequestration: biophysical models applied to ecosystem extent and condition data (see TG-6.4 Blue Carbon Accounts)
• Coastal protection: spatial analysis of coastal properties protected by different ecosystem types (see TG-4.1 Remote Sensing Data)
• Recreation: visitor surveys and site counts allocated to ecosystem types

Record supply quantities in the supply table. Ensure that units are consistent across ecosystem types for each service.

Step 4: Identify users of ecosystem services. For each ecosystem service, identify the economic units that use the service. Users are the direct counterparties in the interaction with the ecosystem:

• Fish provisioning: fishing industry (by ISIC division)
• Aquaculture provisioning: aquaculture industry
• Coastal protection: coastal property owners, local governments, households
• Carbon sequestration: rest of the world (following SEEA EA para 6.60)
• Recreation: households, tourism industry

Step 5: Estimate use by economic unit. Quantify the use of each ecosystem service by each user. Where direct measurement is not feasible, apply allocation methods:

• Provisioning services: use equals the quantity harvested by each industry (from production statistics)
• Coastal protection: allocate protected coastline to users based on property value, population, or area protected
• Recreation: allocate visitor-days to households and tourism businesses based on survey data

Record use quantities in the use table.

Step 6: Check accounting identity. For each ecosystem service, verify that Total Supply = Total Use. If the identity does not hold, review data sources and allocation assumptions. Common sources of discrepancy include:

• Unidentified users (e.g., recreation by non-residents not captured in surveys)
• Incomplete spatial coverage (e.g., fishing grounds extending beyond the mapped ecosystem extent)
• Measurement errors in supply or use estimates

Step 7: Document methods and assumptions. Record all data sources, allocation methods, and assumptions in metadata accompanying the accounts. Note areas where measurement quality is limited and where future improvements are planned. This documentation is essential for quality assurance and for interpreting the accounts in policy applications.

Step 8: Compile monetary accounts (if applicable). Apply valuation methods (see Section 3.5) to the physical supply and use tables to derive monetary accounts. The monetary valuation should be compiled separately from physical accounts to maintain transparency and enable users to assess the robustness of valuation assumptions.

Compiling the supply table

The ecosystem services supply table records the physical quantities of ecosystem services supplied by different ecosystem types^[61]. For each ecosystem service, the entry reflects the total flow over the accounting period (typically one year), measured in appropriate physical units.

Key considerations for compiling the supply table include:

Attribution to ecosystem types -- Provisioning services are relatively straightforward to attribute to specific ecosystem types (e.g., fish provisioning to marine shelf ecosystems). However, "for some services, particularly regulating services such as carbon sequestration, the same service will be supplied by more than one ecosystem type"^[62]. The SEEA EA recommends that compilers "create a table showing which ecosystem services are likely to be supplied from different ecosystem types for their country or target ecosystem accounting area"^[63].

Spatial allocation -- For ecosystem services whose supply depends on interactions among multiple ecosystem types, "some allocation of ecosystem service flow between ecosystem types will be required"^[64]. This is particularly relevant for coastal protection and climate regulation services that may be supplied by a mosaic of ecosystem types.

Measurement units -- Physical units vary by service type: tonnes for biomass provisioning, tonnes of carbon for climate regulation, hectares protected for coastal protection, visitor-days for recreation^[65]. The SEEA EA provides guidance on possible metrics for each service type.

Compiling the use table

The ecosystem services use table records the use of ecosystem services by different economic units^[66]. The SEEA EA notes that "the focus of the use table is on the link between ecosystem services and different types of users, while the supply table focuses on the supply from ecosystem types"^[67].

Key considerations for compiling the use table include:

Identifying users -- Users are the economic units that directly interact with or benefit from the ecosystem service. For provisioning services, users are typically the industries that harvest or extract the resource. For regulating services, users may be more dispersed--coastal protection benefits property owners, local governments, and the broader community. The SEEA EA distinguishes between "users" (direct counterparties in the interaction with the ecosystem) and "beneficiaries" (the broader set of economic units that ultimately receive benefits)^[68].

Location of users -- "While the supply of ecosystem services can be directly linked to a spatial area (e.g. to an ecosystem asset), there is no requirement that the location of the user is the same as the location of the area from which the ecosystem service is supplied"^[69]. This is especially relevant for regulating services and cultural services, where benefits may accrue to distant populations.

Supply equals use -- In accounting terms, total supply must equal total use for each ecosystem service^[70]. This accounting identity ensures consistency and completeness and provides a basis for quality assurance of ecosystem service accounts.

Physical units and measurement

The SEEA EA recommends that ecosystem services be measured in physical terms before monetary valuation^[71]. Physical measurement provides the foundation for understanding the actual flows between ecosystems and the economy, and supports the application of different valuation approaches.

For marine ecosystem services, relevant physical units include^[72]:

• Fish provisioning: tonnes of biomass harvested (gross catch)
• Global climate regulation: tonnes of carbon sequestered (annual sequestration flow)
• Coastal protection: hectares of coastline protected, or metres of coastline; alternative metrics include population or assets protected
• Water purification: volumes of water filtered (cubic metres), or pollutant loads removed (tonnes)
• Recreation: visitor-days, or area available for recreation (hectares)

For guidance on spatial data sources and methods for measuring ecosystem service supply, see TG-4.1 Remote Sensing Data and TG-4.2 Survey Methods.

3.4 Worked Example: Coastal Zone Ecosystem Services Account

This section presents a worked example of ecosystem services supply and use tables for a hypothetical coastal zone, using synthetic data to illustrate the compilation procedure described in Section 3.3. The example demonstrates how to organize data, apply allocation methods, and verify accounting identities.

Accounting context

The hypothetical accounting area is a 50km coastal zone with four ecosystem types: mangroves (500 ha), coral reefs (1,200 ha), seagrass meadows (800 ha), and open marine shelf (5,000 ha). The accounting period is one year (2025). Three ecosystem services are measured: fish provisioning (tonnes harvested), carbon sequestration (tonnes C per year), and coastal protection (km of coastline protected). Three user categories are identified: fishing industry, coastal properties, and rest of world (RoW).

Step 1: Supply table compilation

Fish provisioning (tonnes): Gross catch statistics show 2,400 tonnes of fish harvested from the zone. Spatial analysis of fishing grounds and ecosystem productivity estimates allocate catch as follows:

• Mangroves: 400 tonnes (nursery habitat for inshore species)
• Coral reefs: 600 tonnes (reef-associated species)
• Seagrass meadows: 300 tonnes (seagrass-associated species)
• Open marine shelf: 1,100 tonnes (pelagic and demersal species)

Carbon sequestration (tonnes C/yr): Biophysical models estimate annual carbon sequestration rates per hectare for each ecosystem type, then scale by extent:

• Mangroves: 500 ha × 2.5 tC/ha/yr = 1,250 tC/yr
• Coral reefs: limited sequestration (calcification offsets), estimated at 50 tC/yr
• Seagrass meadows: 800 ha × 1.5 tC/ha/yr = 1,200 tC/yr
• Open marine shelf: phytoplankton sequestration estimated at 500 tC/yr for the shelf area

Coastal protection (km): Spatial analysis identifies 30 km of coastline within the zone. Coastal protection service is attributed to ecosystems based on their position and protective capacity:

• Mangroves: 8 km (direct frontal protection)
• Coral reefs: 12 km (offshore wave attenuation)
• Seagrass meadows: 5 km (supplementary wave dampening in shallow areas)
• Open marine shelf: 0 km (no direct coastal protection function)
• Overlap: 5 km protected by multiple ecosystem types (mangroves + coral reefs). This is allocated 3 km to coral reefs (primary protection) and 2 km to mangroves (secondary protection) to avoid double counting.

Adjusted total: Mangroves 10 km, Coral reefs 15 km, Seagrass 5 km.

Supply table (Table 3a)

Table 3a: Supply of ecosystem services by marine ecosystem type (hypothetical coastal zone, 2025)

Step 2: Use table compilation

Fish provisioning (tonnes): All 2,400 tonnes are used by the fishing industry. Production statistics show industrial fishing operations harvest 1,800 tonnes and small-scale fishing operations harvest 600 tonnes.

Carbon sequestration (tC/yr): Following SEEA EA para 6.60, global climate regulation services are attributed to the rest of world (RoW). All 3,000 tC/yr are recorded as used by RoW.

Coastal protection (km): The 30 km of protected coastline benefits coastal properties (residential, commercial, and government infrastructure). Survey data indicate that 25 km protects private properties and 5 km protects public infrastructure (recorded under government/households).

Use table (Table 3b)

Table 3b: Use of ecosystem services by economic unit (hypothetical coastal zone, 2025)

Step 3: Accounting identity verification

For each service, Total Supply = Total Use:

• Fish biomass: 2,400 = 2,400 ✓
• Carbon sequestration: 3,000 = 3,000 ✓
• Coastal protection: 30 = 30 ✓

The accounting identity holds for all services, confirming internal consistency.

Interpretation for policy analysis

These accounts provide the foundation for deriving indicators that support policy questions:

Ecosystem dependency: The fishing industry depends entirely on marine ecosystem services for its inputs (2,400 tonnes of fish). This dependency can be expressed as a ratio of ecosystem service input to industry output value, revealing vulnerability to ecosystem degradation (see TG-2.3 Social and Livelihood Dependencies).

Coastal protection value: The 30 km of protected coastline can be valued using replacement cost or avoided damage cost methods (see Section 3.5). If the average cost of engineered coastal protection is USD 5 million per km, the ecosystem service provides an annual flow value of approximately USD 150 million (assuming a 20-year infrastructure lifespan and 5% discount rate, yielding an annual equivalent of USD 5 million × 0.08 = USD 0.4 million per km, totaling USD 12 million per year; alternatively, avoided damage costs may be estimated from storm surge modelling).

Carbon sequestration contribution: The 3,000 tC/yr sequestered by coastal ecosystems can be valued at the social cost of carbon (e.g., USD 50 per tonne CO2-equivalent, or approximately USD 183 per tonne C), yielding an annual service value of approximately USD 550,000. This service flows to the rest of the world, representing a contribution to global climate regulation.

Cross-stack linkages: These flow accounts connect downward to TG-4.1 Remote Sensing Data (ecosystem extent mapping), sideways to TG-3.1 Asset Accounts (ecosystem condition and capacity), and upward to TG-2.4 Ecosystem Goods and Services (indicator derivation). They inform sustainable yield calculations for fisheries (TG-6.7 Fisheries Stock Assessment), blue carbon policy (TG-6.4 Blue Carbon Accounts), and coastal zone management (TG-1.2 Marine Spatial Planning).

3.5 Monetary Valuation of Flows

The monetary valuation of ecosystem services enables comparison across different service types, aggregation with other economic flows, and integration into economic decision-making^[73]. However, since most ecosystem services are not traded in markets, valuation requires estimation using a range of methods. For comprehensive guidance on valuation methods, see TG-1.9 Valuation.

Valuation principles for accounting

The SEEA EA establishes that monetary valuation for ecosystem accounting should be based on the concept of exchange values--the prices at which goods or services would be exchanged between buyers and sellers in market transactions^[74]. This concept aligns ecosystem service values with the treatment of other goods and services in national accounts.

The SEEA EA describes a preference ordering for valuation methods^[75]:

1. Prices directly observable -- market prices where ecosystem services are traded
2. Prices from similar markets -- prices adjusted from related transactions
3. Prices embodied in market transactions -- resource rent, hedonic pricing, productivity change methods
4. Prices from revealed expenditures -- averting behaviour, travel expenditures
5. Prices from expected or simulated expenditures -- replacement cost, avoided damage cost, simulated exchange value

Table 3c summarizes the applicability of these methods to different marine ecosystem service types.

Table 3c: Valuation methods by ecosystem service type (adapted from SEEA EA Chapter 9 and Valuation Guidelines)

The SEEA EA describes monetary valuation principles as "internationally recognised statistical principles and recommendations" (SEEA EA Preface, para 8) rather than a full international statistical standard. Compilers should document the methods, assumptions, and uncertainties involved in their valuations.

Valuation of provisioning services

Provisioning services are generally the most amenable to valuation because they contribute to marketed goods^[76]. The resource rent approach is commonly applied, estimating the ecosystem service value as the residual after deducting costs of labour, produced assets, and intermediate inputs from the value of output^[77].

For fish provisioning services, the resource rent is calculated as^[78]:

Resource rent = Output value - Intermediate consumption - Compensation of employees - Consumption of fixed capital - Return on produced assets

This residual represents the return attributable to the natural resource input and the ecosystem's contribution to fish growth. The SEEA EA notes that "exchange values for provisioning services are likely to be estimated based on observed market transactions"^[79]. The SEEA Valuation Guidelines elaborate that "the residual value and resource rent methods estimate the value for an ecosystem service by first taking the gross output value of the final marketed good to which the ecosystem service provides an input, and then deducting the cost of all other inputs"^[80].

Valuation of regulating and maintenance services

Regulating and maintenance services present greater valuation challenges because they typically contribute to non-marketed benefits. Several approaches may be applied^[81]:

Replacement cost method estimates the cost of replacing an ecosystem service with an engineered or artificial substitute^[82]. For coastal protection, this might involve comparing the protection provided by a coral reef or mangrove with the cost of constructing a sea wall or breakwater. The SEEA Valuation Guidelines note that "mangroves may be planted or restored as a 'green infrastructure' alternative to 'hard' engineered flood defences"^[83]. The validity of the replacement cost method depends on three conditions: "the substitute can provide exactly the same function of the good or service substituted for; the substitute is actually the least-cost alternative; and evidence indicates an actual demand for the substitute"^[84].

Avoided damage cost method estimates value based on the damages that would occur in the absence of the ecosystem service^[85]. For coastal protection, this involves estimating the expected damages from flooding or erosion that are prevented by the ecosystem. The SEEA Valuation Guidelines state that "the validity of the avoided damage cost method depends on conditions including that the damages avoided can be related to a specific service; and that people would be willing to pay an amount to actually avoid the damage"^[86].

Productivity change method estimates value based on the contribution of ecosystem services to the productivity of economic activities^[87]. This approach can be applied where ecosystem services (such as nursery habitat for fish) enhance the productivity of commercial fisheries.

For global climate regulation services, valuation typically applies the social cost of carbon or market prices from carbon trading systems^[88]. However, the SEEA EA notes that "global climate regulation services represent a final ecosystem service with the user typically recorded as the global community"^[89], raising questions about attribution of values to national accounts. For guidance on carbon accounting and valuation in the marine context, see TG-6.4 Blue Carbon Accounts.

Valuation of cultural services

Cultural services, particularly recreation, can be valued using travel cost and consumer expenditure methods^[90]. The travel cost method estimates demand for recreation sites based on the costs visitors incur to reach them. The consumer expenditure method uses actual expenditures (travel, accommodation, entry fees) as a proxy for willingness to pay^[91].

The SEEA Valuation Guidelines describe the travel cost method as "based on measuring the costs incurred (and the foregone income) by households or individuals to reach a site and hence receive an ecosystem service from the site, usually in the context of recreation activity"^[92]. For marine recreation, this method has been applied to value diving and snorkelling at coral reefs, coastal fishing, and beach visits.

Hedonic pricing may be applied to visual amenity services, estimating the premium on property values attributable to proximity to or views of marine environments^[93]. The SEEA Valuation Guidelines note that "applications of hedonic pricing have grown substantially in recent years" for nature views, open spaces, and water quality^[94].

Integration with ecosystem asset valuation

The monetary value of ecosystem services provides the basis for valuing ecosystem assets themselves. Under the net present value (NPV) approach, ecosystem asset value equals the discounted stream of expected future ecosystem service flows^[95]:

Ecosystem asset value = Sum of (Expected future ecosystem service flows / (1 + discount rate)^t)

This creates an important link between flow accounts (ecosystem services) and stock accounts (ecosystem assets) as described in TG-3.1 Asset Accounts.

Changes in ecosystem service flows--whether due to changes in ecosystem extent, condition, or external factors--directly affect ecosystem asset values. The concept of degradation in SEEA EA captures the loss in asset value attributable to decline in ecosystem condition and associated reduction in ecosystem service supply^[96]. The SEEA EA describes degradation as involving "measuring the value of degradation in terms of loss in future value of ecosystem services due to a decline in ecosystem condition"^[9:1]. This linkage between flow and asset accounts ensures consistency in the accounting framework and supports analysis of the sustainability of ecosystem use.

4. Acknowledgements

This Circular has been approved for public circulation and comment by the GOAP Technical Experts Group in accordance with the Circular Publication Procedure.

Authors: Maria Alarcon (GOAP Secretariat)

Reviewers: Laura Friedrich, Jessica Andrews, Kirsten Oleson