Although not designed for this purpose, the main indicator of the national accounting system, Gross Domestic Product (GDP), is widely misused to represent societal progress on a mono-dimensional and monetary scale. Awareness of the major constraints of GDP in this respect and of their policy consequences has given rise to a wide range of approaches, many of which are based on the idea of ‘correcting’ GDP: “genuine” income (in the sense of well-being or sustainability) and inclusive wealth, able to include the monetary expression of values not considered in the aggregates of national accounts, amongst which are the ecological ones. Ecological economics, on the other hand, have placed the pluralism of values amongst its conceptual foundations (Martinez-Alier et al. 1998) and state that it is not possible to trace back the erosion of the natural, non-produced physical basis of production (and of life) to a single and all-encompassing monetary measure. Although not necessarily linked to the tradition of ecological economics*2, numerous initiatives, more and less recent, adopt a substantially multidimensional vision (de Groot et al. 2006, Kosoy and Corbera 2010, Farley 2012, Kumar 2012) and go in the direction of expanding the sets of indicators for measuring well-being and sustainability. Amongst the most significant ones, the Sustainable Development Goals (SDGs), adopted by the United Nations in 2015, the Stiglitz-Sen-Fitoussi Report (Stiglitz et al. 2010) and, in the Italian context, the 'Equitable and Sustainable Well-being’ (BES) system regularly implemented by Istat since 2013. While supporting a powerful biophysical analysis, when it comes to monetary values, the SEEA EA implements a monodimensional approach, by looking for the economic value of ESs, homogeneous to that of commodities.

The fact that nature, artificial capital and other forms of wealth (social, human, institutional, cultural, spiritual) are all called "capital" does not necessarily make them substitutes and, obviously, they are not in the real world even when they are all valued according to the same monetary meter. The assumption of substitutability, on the other hand, is rooted in neoclassical economics (Solow 1974, Hartwick 1977, Solow 1986, Pezzey and Toman 2002, Arrow et al. 2004), for which other forms of ‘capital’ can be substituted for ‘natural capital’. This reduces the sustainable management of environmental resources to that of aseptic financial investments, in the context of models that lead to decisions regarding the extraction and consumption of resources on the sole basis of economic convenience. Although formally extended to a wide time horizon, they assume the perspective of a given moment in time (the present). These models do not contemplate decision-making processes similar to the real ones, which are based on the consideration of a plurality of values, but apply the exclusive criterion of maximizing utility, regardless of the actual ecological status and the specific future consistency of the residual stock of natural capital. Therefore, such abstract models cannot provide correct guidelines for environmental policies concerning the future or large-scale ecosystem changes. By focussing on value in exchange (i.e. on substitutability in economic agents' utility functions), the SEEA EA, when it comes to economic monetary values, clearly embodies a weak sustainability perspective. We deem that it should also be able to connect to the rich political economy tradition, according to which it is more useful and robust for the sustainability of the economic process and long-term social well-being, to constrain the objective of maximising economic convenience in the use of nature and its services to non-declining stocks and ecological quality of nature over time.

Failure to recognise the benefits deriving from ecosystems and the costs deriving from their loss is not simply a market failure, whether this is strictly understood as the non-existence of markets for natural public goods accessible to all and free of charge or as imperfection of existing markets: it is also a broader institutional failure. Many of our institutions have proved unsuitable for managing the social costs of economic activity and unable to rationalise access to natural public goods to the necessary extent. Policies often aggravate the problem by subsidising people and businesses more to exploit nature than to protect it, by not limiting access to essential resources that should not be compromised and by giving priority in the allocation of public resources to unsustainable economic activities. A conservative estimate of the global total cost (Dasgupta 2021) of subsidies that harm nature is around $4-6 trillion annually. Institutional arrangements (IAs), fit to protect global public goods, are lacking. Nature needs to enter economic and financial decision-making and, to do so, it is useful to broaden economic measurements in a multidimensional direction. In fact, in the face of significant risks and uncertainties about the consequences of ecosystem degradation, economic rationality itself suggests the preference for quantitative restrictions in use rather than mechanisms of pricing the use of nature itself. After all, it is almost obvious that it is cheaper to preserve nature than to restore it once it has been damaged or degraded, assuming that this is possible. By relying exclusively on the results of price formation dynamics that reflect the scarcity of the resource, there is no a priori guarantee that goods essential to survival are not consumed beyond their natural regeneration capacity anyway, nor that access to essential resources does not occur mainly on the basis of wealth (i.e. with scarce ESs becoming luxury goods). In this regard, it should be remembered that politics and institutions can decide - as in fact they often do - to artificially create the scarcity of the resources to be protected by establishing appropriate IAs. This can be done not just by creating markets, but also by regulating access to resources with quota mechanisms, which seems appropriate, especially for ESs essential to human existence.

The SEEA EA aims at consistency with SNA principles and concepts. The SNA is all built around actual EVs, i.e. the “values at which goods, services, labour or assets are in fact exchanged or else could be exchanged for cash” (SNA, 3.118) under the current (and not some hypothetical alternative) IAs (SNA 3.119; SEEA EA 8.15, 9.30). We adhere to the view that EVs can only arise in voluntary transactions, i.e. between willing parties (the expression "willing sellers and buyers" is recurrent in the SNA, for example, 3.199). In this view, when EVs are concerned, reference cannot be made to something that nature and humans exchange, i.e. to ESs as such, but necessarily to something that may circulate within the economy, i.e. between economic agents, namely the right to use ESs. Recognising the social relationship nature of this exchange, whether actual or hypothetical, is crucial to properly understanding the meaning of valuation and of its results. We are aware of the existence - and even of the dominance - of different views, dealing with the ecosystem as if it were an autonomous agent able to take decisions of its own or assuming that exchange value can arise within a single agent (in its direct relationship with nature) , but we trust that the illogicality of such a position (no matter how widely accepted) emerges to anyone who is open-minded to "philosophical" (basic epistemologic, deeply scientific) issues such as the pre-existence of the social institution "market" as a precondition for the existence of whatever exchange value, the difference between market/exchange value and welfare values and the importance - for the very arising of exchange value - of the two agents of the Edgeworth box being sentient (if not human) beings with a utility function and decisional autonomy.

“ESs are the contributions of ecosystems to the benefits that are used in economic and other human activity” (6.9 SEEA EA). “Benefits are classified as either SNA benefits or non-SNA benefits.” (6.17).

It is important to recognise that the prevailing IAs (property right regimes, laws and regulations, cultural approaches and customs etc.) determine both the EVs that can be observed in actual transactions and those that can be estimated for imputation purposes. ESs scarcity, on which their prices depend, may itself be ‘natural’ or ‘artificial’. In the latter case, it is due to restrictions to access imposed by public or private control. The rent that can be derived by controlling ES is, in general, not connected to their real economic importance, nor to their natural scarcity, but to the “institutional arrangements surrounding the use of the ecosystem” (SEEA EA 9.37). NAs take the current IA, 'as-is', as the reference IA, from a neutral perspective, refraining from all judgement on it or on the ideal context for the measurement of EVs. The prices used in NAs reflect the current IAs, regardless of all possible bias given by externalities, legal and regulatory dispositions and market imperfections, including rents from dominant position. If it were not so, the NAs would be a normative instrument and not a cognitive one. Such ‘agnosticism’ extends from the existence of markets to their competitive structure (perfect competition, monopoly, oligopoly, protected or contestable, subsidised or taxed…) and price formation mechanisms (SNA 3.119). This absence of preference raises the issue, for any valuation diverging from the rent calculation, of which market structure is implicit in the choice of the method or should be adopted when expressly required (as in the SEV method). This problem may also arise in the SNA context, but in the case of goods produced and/or for which market exist, in general, makes the issue much less relevant, with non-hypothetical transactions in actual markets (of inputs or similar products) supporting valuation. It can also be noted that, in the most important case of SNA imputation - GG output - valuation of the output is necessary in order to include public employees wages in VA (without which, SUTs would not be balanced).

SNA-consistent valuation, i.e. assessment of the rent commanded through ESs control, does not allow to capture ESs' generation costs, nor their economic importance from a social point of view, nor the dependence of economies from them, but only their ‘particular’ EV. In this sense, valuation is bound to fail vis-a-vis its main rationale, i.e. demonstrating nature's economic value. Again, the specificity of ESs' with respect to other assets' services, follows from their being non-produced, which implies that only scarcity and IAs play a role in determining their rents. The under-representation of a produced asset "real value" in the SNA may be dramatic, but in the case of ecosystems, it is fatal, as it concerns something that cannot even be reproduced.

The 'particular' EV of ESs is determined – beyond their usefulness – by the perceptions that able-to-pay economic agents have about scarcity and, therefore, ultimately by IAs, market structure, demand elasticity. Rent is the accounting reflection of a social relationship established by property rights on ESs, which contributes to the wider income distribution situation. Its measure only provides information about the allocation of income amongst economic agents, namely on the EV that can be subtracted to other production factors, thanks to the negotiating power provided by exclusive access to and ‘extraction’ of ESs*3. The dependence of the measure of nature’s contribution from the almost arbitrary appropriation of a share of added value by ‘landlords’, poses problems that trespass into the ethical field, in the sense that rents are the result of a negotiating 'confrontation' between conflicting particular interests, rather than reflect the importance of the element being valued. Again, the fact that this may apply to other prices as well does not detract from the importance of highlighting this in the specific case of nature, also considering the main rationale of valuation hinted to above.

After recognising the concept of (resource) rent as the reference one for an SNA-consistent valuation of non-produced resources such as ESs, its inapplicability in the case of non-SNA benefits, the fact that many of the techniques proposed in the SEEA EA do not provide estimates of the rent and are, therefore, not fit for SNA-consistent valuation (as explained above), that SNA-consistent values crucially depend on IAs and only provide information about income allocation, we need an alternative for properly highlighting not just the EVs of ESs, but also their wider economic importance. To this end, we put at the centre of the stage the specific meaning, information value and usefulness for decision-making of each of the numerous estimates, offered by the different methods put forward for valuation.This only requires resisting the ‘imputation’ temptation, i.e. to the arbitrary assumption that all of these values express a generic, homogeneous, additive and direct measure of ESs value. Indeed, decision-makers need a range of information on the potential effects of the different policies, including on how changing the institutional context may influence the nature (monetary/non) and entity of the values at stake.

One important distinction here is between: a) ESs as such (non-produced physical contributions to benefits); b) the right to use “a)” (to which transactions may refer); c) ES as (part of) a product, i.e. good and services incorporating “a)”. The latter embraces a range that covers all products, going from those in which the human contribution is hardly identifiable, the name of the product is that of the ES itself and the difference with “b)” is doubtful, to those where the presence of “a)” is so little that it is usually not recognised and is hardly quantifiable.

The methods presented in the SEEA EA under this title include those “based on estimating the expenditure that would be expected to be made if the ES were no longer provided or were, in fact, sold on a market” (9.49). The relation to our framing of monetary values connected to ESs is direct and explicit.

This method “estimates the price and the quantity that would prevail if the ES were to be traded in a hypothetical market”. It “requires combining the information on the demand function with a supply function and an appropriate market structure (institutional context)” (SEEA EA 9.55). The arbitrariness of the hypothetical institutional context is evident, in the very simulation of the existence of a market – a quite specific institutional context itself – and then in the assumptions on the market structure (how competitive it is, i.e. how distributed the hypothetical ownership rights are assumed to be). The latter influences the estimates in a crucial way, as for example, perfect competition would mean EV = costs = null, i.e. the current situation. The simulated market may be, for instance, that of the fresh and purified air of a public park. The information provided by the method in this example would be about the expected reduction in visitors’ number and the income from an entry fee that could be imposed, through which part of the currently existing consumer surplus would be extracted. If applied to ESs which supply SNA benefits, it should, in principle, give the actual rent of the current economic owner.

Besides the methods discussed so far, the SEEA EA introduces “a range of valuation methods that are found in the environmental economics and ESs valuation literature” (9.56). We will not discuss them here, but for noting that - as the SEEA EA itself highlights - for some of them, the methodological status of their results with respect to the NA exchange value concept is not fixed in general. Such an approach, particularly interesting in a non-valuation, policy-orientated, perspective on economic values connected to ESs, is the “restoration cost-based” approach (SEEA section 12.3.2). Information about the economic resources necessary “to re-establish pre-existing structure and function, including biotic integrity” (10.18) surely is important. The SEEA EA itself considers this approach an attempt to “measure the cost of degradation directly”, rather than the value of ESs, “since there is no particular reason that the estimated restoration costs will align with the estimated loss of future flows of ESs” (12.41). The cost of degradation approach is a particularly interesting one in a perspective of integration of environment-connected values in the SNA (Vanoli 2017).

Other methods – as, for instance, stated preferences – give welfare values, which make them incompatible with the SNA, but not with our inclusive, multicriteria, framing of monetary aggregates connected to ESs. Their usefulness for policy decisions should be addressed on a case-by-case basis and having regard to stakeholder's involvement processes more than for the valuation results in themselves.

Table 1