Valuation Approaches for Soil Carbon - Soil Carbon: Science, Management and Policy for Multiple Benefits - page 214

18 Valuation Approaches for Soil Carbon

David J. Abson*, Unai Pascual and Mette Termansen

Abstract
Valuation of soil carbon can be understood as the process for assigning 'weights' to soil carbon when
these are inadequately represented in decision making processes. There are different types of weights
or 'values' that can be assigned to soil carbon. One approach is to assign monetary weights to such re-
sources using economic valuation models. The total set of such monetized weights is referred to as total
economic value (TEV). The different components of the value of soil carbon differ both conceptually
and with respect to how they can be measured or manifested. There are various methods for quantifying
soil carbon values that differ with respect to the types of values they are suitable or able to assess. This
chapter reviews the various valuation approaches that can be applied to estimate different components
of the TEV of soil carbon. In this respect, it discusses how soil carbon values can be estimated through
both stated and reveal preferences methods, and places particular emphasis on the production function
approach. In addition other approaches are presented, including the preventive or mitigation expend-
iture (marginal abatement costs) approach and the social cost of carbon approach. Lastly, the chapter
addresses the question of how economic values can be included in economic decision making processes.
Three main alternatives are explored in terms of their advantages and disadvantages: cost-benefit
analysis (CBA), multi-criteria analysis (MCA) and cost-effectiveness analysis (CEA).

Introduction

be valued in a similar manner to other eco-
nomic goods and services (e.g. Fisher et al .,
2008; Gómez-Baggethun et al ., 2010; Balm-
ford et al ., 2011). However, attempting to
measure and value many environmental as-
sets is problematic compared to conventional
economic or financial assets (e.g. Limburg
et al ., 2002; Barbier, 2007; Farley, 2008; Span-
genberg and Settele, 2010).
Many of the benefits that humans re-
ceive from soil carbon can be categorized as
intermediate ecosystem services (Boyd and

'The fundamental challenge of valuing eco-
system services lies in providing an explicit
description and adequate assessment of the
links between the structure and functions of
natural systems, the benefits (i.e. goods and
services) derived by humanity, and their
subsequent values' (Heal et al ., 2005, p. 2).
Many authors argue that natural ecosystems
are assets that produce flows of beneficial
goods and services that, in principle, should