The Economic Value of Soil Carbon - Soil Carbon: Science, Management and Policy for Multiple Benefits - page 179

15 The Economic Value of Soil Carbon

Unai Pascual*, Mette Termansen and David J. Abson

Abstract
Soil carbon has an economic value insofar as it is associated with an asset that provides benefits for
humans. Demonstrating and measuring the economic value of soil carbon can provide valuable infor-
mation for policy making. It makes explicit that soil carbon is not freely available. It signals the scar-
city of the resource from a social point of view and also the extent to which investment in soil carbon
should be prioritized relative to other investments. It also helps policy makers determine what type of
economic instruments or incentives are necessary to align privately and socially optimal soil conser-
vation decisions. In other words, the economic valuation of soil carbon provides information to help
assess how efficiently a particular land management can reallocate the goods and services from soil to
different and often competing uses. The chapter stresses the importance of the context of value forma-
tion by linking human preferences, knowledge and institutions to soil carbon. Then, by means of a
conceptual framework, the chapter links the types of ecosystem services (supporting, regulating, provi-
sioning and cultural services) derived from soil carbon to economic value components using the total
economic value approach. Mapping the ecosystem service values of soil carbon needs to account for
who appropriates the different values (private versus social values), whether the values are direct or
indirect, so as to avoid double counting. Emphasis is given to the natural insurance value of soil carbon.

Introduction

valuation of soil carbon can be used to dem-
onstrate that soil carbon is scarce, and thus
not freely available, and that its deaccumu-
lation or depreciation has societal costs.
If these costs are not taken into account,
the decisions of social actors, including
individual land managers and policy makers,
would be misguided. As a result, subopti-
mal decisions on soil carbon would be most
likely, which would make society worse off
compared to the outcome of better-informed
decisions.

Economics is about choice. Every economic
decision is based on the weighing of values
among different competing alternatives
(Bingham et al ., 1995). Economics can also
be instrumental in understanding the bene-
fits and costs to society of alternative deci-
sions on soil carbon allocation. First of
all, economics can provide land users and
society at large with information about the
level of scarcity of soil carbon. Economic