Ecosystem services as substitute inputs: Basic results and important implications for conservation policy

In recent decades conservation advocates have often emphasized the contributions of ecosystem services to the production of other products. A demonstration of the value of ecosystems as inputs into production would motivate their conservation. Such arguments often offer the observation that ecosystem services can substitute for purchased inputs, and thus reduce costs. If this is true, however, it has another important implication: a producer who is preserving local ecosystems so as to maximize her own profit will produce less output if she further increases her reliance on ecosystem services. This may induce “leakage,” by which one producer's greater reliance on ecosystem services indirectly motivates others to preserve fewer natural ecosystems. I demonstrate this result in a simple but canonical model, and calibrate my findings to a celebrated example to show they could be quantitatively significant. My results suggest another reason that appeals to ecosystem services as a motivation for conservation should be made with care. At the most basic level, they emphasize the importance of being clear about what we mean by conservation: do we want to save some diversity in many places, or nearly all indigenous diversity in a few places?