Using Ecosystem Services as a Means to Diffuse Political Land Use Decisions in Peri-Urban Regions

Our research in Western Sydney (Technical Report No. 08/08) identified the need for greater innovation in water use by moving from a substantially regulatory system to a more market driven system which expands the range of water related services that can achieve economic value through an environmental services market concept. The need for such a market approach reflects the current political economy of Natural Resource Management (NRM) decision making in peri-urban Australia, which results in continued resource depletion and degradation; institutional barriers to innovative solutions; and high transaction costs in affecting change. An environmental market driven system would ideally shift decision making from the political economy to a market economy and result in a lessening of transaction costs and facilitate greater innovation. For such a market to exist requires firstly the environmental goods and services (or commodities) clearly identified; and secondly the required market structure to enable trade. Martin et al. (2007) proposed an environmental business model for providing the groundwork for an environmental market structure to enable trading. What is missing to complement this market structure is a consistent methodology and classification system to identify ecosystem services as viable commodities. This technical report provides a conceptual framework for identifying and valuing ecosystem services in peri-urban Australia using South Creek sub-catchment in Western Sydney as a case study.