Economic Valuation of Forest Ecosystem Services: Methods, Applications, and Policy Implications

Abstract

Forests deliver essential ecosystem services that support ecological stability and human well-being, yet their economic value remains underrecognized in policy and planning. This narrative review synthesizes literature on the economic valuation of forest ecosystem services, with a focus on methodologies, key service categories, and regional disparities. Using Scopus, Web of Science, and Google Scholar, studies were selected based on keyword combinations and inclusion criteria targeting empirical analyses on valuation methods and service outcomes. Findings show that Contingent Valuation, Travel Cost, and Replacement Cost methods are widely used to assess both market and non-market values, with each method demonstrating specific strengths and limitations. Carbon sequestration, recreational benefits, and clean water provisioning emerge as the most commonly valued services, with regional studies attributing between 10% to 55% of total forest value to these categories. Systemic factors such as institutional capacity, environmental policy integration, and socio-economic conditions significantly influence valuation implementation and quality. Countries with developed governance structures yield more robust valuation frameworks compared to those in resource-constrained regions. The review highlights the necessity of combining valuation techniques, enhancing data infrastructure, and engaging local stakeholders to address current gaps. By embedding economic valuation into policy mechanisms such as Payments for Ecosystem Services (PES), governments can improve forest management outcomes. These insights advocate for a more inclusive, context-sensitive valuation approach to align conservation goals with economic development needs.