Ecosystem prices: activity analysis applied to ecosystems

In this paper a method is developed to derive prices for natural goods from information about material and energy hows within ecosystems. The derivati on is based on an analogy between ecological and economic systems: both sys tems are characterized by flows of material and energy. To derive ecosystem prices the mathematical structure of Koopman's economic linear production model - his activity analysis - is applied to a material flow model of ecos ystems. The ecological interpretation of these prices is discussed and the uniqueness of the price system is investigated. An algorithm for price calc ulation is derived and demonstrated with a numerical example. Finally, it i s discussed whether ecosystem prices may be suitable as surrogates for econ omic valuations of natural goods. (C) 2000 Elsevier Science B.V. All rights reserved.