A guiding framework for ecosystem services monetization in ecological–economic modeling

• We differentiate the suitable domain for using biophysical and monetary data.
• This helps to reconcile monetization techniques with ecological–economic ones.
• We shift the traditional focus of monetary valuation from individual preferences towards the analysis of production sectors and final demand.
• The monetization frontier is defined by ecosystem, market and technical criteria.

Monetary valuation techniques are often used for evaluating the effect of a change in ecosystem services on components of human wellbeing, even though they face several drawbacks. This paper seeks to reconcile monetary valuation techniques with methods that address ecosystem–economy interactions by developing a guiding framework that limits the use of monetary valuation to various market simulations. Simulations of scenarios of environmental measures are carried out with a semi-dynamic hybrid input–output model. The guiding framework ensures that monetary valuation techniques contribute to the understanding of the impact of economic activities on changes in ecosystems services and the feedback impact of these changes on economic activities. The framework operates according to three criteria: (i) the category of ecosystem components (intermediate products, ecosystem services, benefits obtained from the ecosystem), (ii) existence of a market, intention to exchange or possibility for restoration or preservation, and (iii) direct/indirect monetary valuation techniques. The methodology is then tested with a case-study.