http://eartheconomics.org/A_New_View_of_the_Puget_Sound_Economy.pdf
Executive Summary
Our economy is built upon the land and waters of the Puget Sound Basin. Ecosystems within the Puget
Sound Basin provide between $7.4 and $61.7 billion in benefits to people every year. If the “natural
capital” of the Puget Sound basin were treated as an economic asset, the asset value would be at least
$243 billion and $2.1 trillion. Natural assets, such as our forests, wetlands, lakes, rivers, shorelines and
Puget Sound produce economically valuable goods and services. Natural goods include fish, timber, water
and agricultural products. Ecosystem services include flood protection, drinking water quality, climate
stability, recreation, aesthetic value and others. The natural assets of the Puget Sound basin are
tremendously valuable economic assets that are being lost and degraded.
As we lose these natural services ecosystems provide for free and in perpetuity, we suffer damages or
have to pay for built capital replacements, such as levees to replace natural flood protection. Unlike
natural capital, which is self-maintaining, built capital requires maintenance and depreciates.
In the last three years, Pierce County, King County and Lewis County have all received record flooding,
demolishing parts of the Mt. Rainier National Park, flooding homes, farms and businesses, closing I-5 and
damaging the regional economy. These floods have exacted great economic costs and are tied to the loss
of natural flood protection in our watersheds and to climate change. This is not an isolated case. The
Puget Sound Basin is seeing higher costs due to a loss of natural capital including damage to human
health due to air, water and soil pollution, loss of water quality, more endangered species, rising costs for
storm water systems, climate change impacts, and the loss of aesthetic and recreation value, all of which
degrade our economy and our quality of life. Our rainwater once flowed into Puget Sound through natural
systems recharging our groundwater. Impermeable surfaces and other structures now prevent water from
recharging the aquifer. We have chosen to replace natural systems with storm water systems with vast
long-term costs replacing what natural systems once did for free. This is an expensive way to handle
water but this is how we do things at present. Replacing natural capital with built capital requires raising
taxes, grand construction projects, ongoing maintenance budgets and bureaucracies. These solutions often
provide fewer and far less reliable benefits than the natural systems they replace. Investing in the
restoration of natural systems often provides more benefits, more reliably, over a longer period and at far
less cost.
This is the most comprehensive valuation of Puget Sound basin ecosystem services to date. Yet, it is a
partial value, giving a mere glimpse of the value of ecosystem services provide to people and our
economy. Since this study did not value some ecosystem services, the high and low estimates are
underestimates of the true values of the Puget Sound Basin natural capital. Yet a partial value is better
than no value. If the value of natural capital is not considered in public and private investment decisions,
we may lose more value than we gain with those investments. For example, investing in another asphalt
parking lot may cause more damage in water contamination, habitat loss, storm water taxes and
construction, flood damage and downstream levee construction costs than it provides in benefits for
parking.
What is at stake is nothing less than our economic prosperity and quality of life. Our quality of life is
excellent by any standard. Yet, while the Puget Sound Basin boasts more houses, cars, roads, buildings
and other elements of “built capital” every year, most of our natural systems are deteriorating from the foothill forests to the waters of Puget Sound. These natural systems are valuable and vital economic
assets. True economics provides a better view of our full suite of economic assets including the economic
benefits of natural systems which provide for our common wealth including the air we breathe, the water
we drink, hospitable climate regulation, aesthetic beauty, and protection from flood and storm.
Part 1 of this study discusses the Puget Sound economy based on an understanding of the economic value
of natural capital. Part 2 discusses the value of some, but not all, of the Puget Sound Basin’s ecosystem
services.
The study utilized current geographic information system data for mid succession forests, late to old
growth forests, riparian forests, riparian shrub, freshwater wetlands, grasslands, agricultural lands,
pasture, rivers and lakes, urban green-space, beach, estuary, salt marsh, eel grass beds, and marine waters.
Peer reviewed primary valuation journal articles were used to peg the low and high values per acre for
some ecosystem services in each of the vegetation types. Ecosystem services valued include gas and
climate regulation, disturbance regulation, water flow regulation, water quality, water supply, habitat,
pollination, soil and erosion control, soil formation, biological control, nutrient cycling, and aesthetic and
recreational value.
While this study stands as the most comprehensive valuation to date, it is also dramatically incomplete.
Of the 23 identified categories of ecosystem services, only 12 could be valued and of these 12, none were
fully valued across all ecosystem types. For example, only five of 12 ecosystem services were valued for
forests. This reflects the dearth of primary ecosystem service valuation studies. Valuing nature’s
contribution to the economy is a relatively new research area. A better understanding of the natural capital
value of Puget Sound requires more primary ecosystem service valuation studies. Overall, there are few
ecosystem service valuation studies from the Puget Sound Basin. Gaps exist for all ecosystem categories;
there are no studies of the value of snow pack in the Puget Sound Basin, no studies for many near shore
and marine ecosystem services.
Natural capital is fundamentally different from built capital. Natural capital, when it is healthy,
appreciates and produces benefits for free and in perpetuity. Tacoma’s water supply is filtered by forests,
for free, saving taxpayers approximately $150 million in construction costs for water filtration plant and
operating and maintenance costs. If kept healthy, these same forests will filter water for our great, great
grandchildren. Built capital is important but it depreciates, falls apart, and requires maintenance. Like all
built capital, a filtration plant requires constant maintenance and periodic reconstruction, forests don’t.
One of the most important concepts to understand is that healthy natural systems provide highly valuable
and often irreplaceable economic benefits for free or at a minimal restoration cost. Natural systems
provide a foundation of services upon which every economy depends. The ozone layer protects humanity
from ultraviolet light without charge. Plants produce oxygen. A healthy Puget Sound provides a host of
economically valuable and vital benefits for people.
This pioneering report yields preliminary numbers, yet provides unmistakable conclusions:
1. Our quality of life and our economy are dependent upon “natural capital.”
2. Puget Sound Basin ecosystems provide economically valuable services, including flood
protection, water supply and filtration, food, habitat, waste treatment, climate regulation,
recreation and other benefits. A partial valuation of these services shows a range of economic
benefits between $7.4 billion to $61.7 billion/year.
3. Vegetation types examined here that provide ecosystem services include forests, riparian areas,
wetlands, streams, rivers, lakes, farm land, urban forests, wetlands, beaches, eelgrass beds, and
open water that is estuarine and marine.
4. The flow of annual benefits from these lands provides a vast amount of value to people across
time. The present value of the benefits from these 12 ecosystem goods and services provided by
Puget Sound is at least $243 billion to $2.1 trillion. This can be considered as analogous to a
capital asset value.
5. There are tremendous gaps in data. Many ecosystem services easily identifiable as economically
valuable have no values because no primary valuation study has been completed.
6. This analysis is static but more powerful tools for understanding the value of the natural capital in
the Puget Sound Basin are being developed. These include systems and Bayesian models.
7. Large scale investments and better land use, to protect and restore the ecological capital and
processes of the Puget Sound Basin are clearly justified to maintain and expand the vast value of
Puget Sound natural assets.
