Valuation Approaches for Soil Carbon - Soil Carbon: Science, Management and Policy for Multiple Benefits - page 215

Banzhaf, 2007) - also referred to as indirect
ecosystem services (Kaiser and Roumasset,
2002), or supporting ecosystem services
(MA, 2005). Intermediate ecosystem ser-
vices are not directly appropriated by hu-
mans in order to increase human well-being;
rather, they contribute to directly appropri-
ated (or final) goods and services. Examples
of final goods and services supported by soil
carbon include the provision of food and
fibre via improved nutrient cycling (e.g. Rei-
cosky, 2003; Lal, 2004) or soil erosion con-
trol (Kibblewhite et al ., 2008) and flood
control (Urban et al ., 2010; Hopkins and
Gregorich, 2013), water quality via improved
soil structure (Aitkenhead et al ., 1999; Rawls
et al ., 2003) and air quality (Qian et al .,
2003), and climate regulation through the
sequestration of atmospheric carbon (Lal,
2004). The often 'hidden' nature of the ser-
vices provided by soil carbon provides sig-
nificant challenges in attempts to evaluate
their contribution to human well-being.

applied directly to value the ecosystem ser-
vices associated with soils.
Similarly, revealed preference methods -
which use related, surrogate market values
(often land value, or housing prices) as prox-
ies with which to identify the value of a good
or service that does not have a market price
(Phaneuf et al ., 2008) - are difficult to apply
to the valuation of soil carbon. The benefits
that flow from soil carbon are not always re-
ceived directly by the individuals making
economic choices regarding management of
this ecological good. For example, the bene-
fits of flood control or water-quality regulation
often accrue to individuals who have made
no economic choice in the management of
soil carbon. Therefore, proxy market values,
such as agricultural land values, provide
no information regarding those individual's
preferences for flood control or water-quality
regulation. However, for some ecosystem
services related to soil carbon, insights can
be gained from observations of the value of
the final services and their association with
soil carbon as an input factor. Such valuation
approach is often termed the production
function approach.

Valuation of Intermediate
Ecosystem Services

Many standard economic methods for valu-
ing ecosystem services are inappropriate or
difficult to apply directly to the valuation
of soil carbon. Stated preference methods -
which seek to elicit values through the
direct questioning of individuals' willing-
ness to pay (WTP) or willingness to accept
(WTA) some marginal change in the object
of choice (Boxall et al ., 1996) - cannot be
used easily to value changes in soil carbon,
as individuals are generally insufficiently
informed to ascribe monetary values mean-
ingfully to such hidden services (Abson
and Termansen, 2010). Moreover, a general
problem with stated preference methods is
that they are not based on the observed be-
haviour of individuals and are therefore
open to methodological bias (e.g. Murphy
et al ., 2005). While it has been suggested
that stated preference methods can be ap-
plied to value ecosystem functions (Bark-
mann et al ., 2008), these methods have,
with a few exceptions (e.g. Colombo et al .,
2006; Takatsuka et al ., 2009), rarely been

The Production Function Approach
to Valuing Soil Carbon

Valuing carbon based on the value of the
final marketed goods produced (Chee, 2004;
Gómez-Baggethun et al ., 2010) may also be
challenging because of the intermediate na-
ture of many of the services provided by
soil carbon. Soil carbon often represents a
single factor, among many in the provision
of ecosystem goods and services that are
directly valued in the market. For example,
agricultural productivity may be increased
via careful management of soil carbon (Lal,
2004), but the actual productivity of a given
agricultural field depends on many other
management decisions such as labour in-
puts, application of fertilizers, herbicides
and pesticides, appropriate choice of culti-
vars, etc. Using the market value of the final
services appropriated by humans (such as
the market value of agricultural crops) runs