Project-Level Assessment of Environmental Impact: Ecosystem Services Approach to Sustainable Management and Development

Abstract

Project firms currently have little incentive to incorporate environmental considerations into infrastructure development or management decisions beyond those that are either regulated or subject to public perception. This lack of incentive exists in part owing to the absence of: (1) a clear understanding of the connections between project ecological affects and how these damage firm/project assets; and (2) the ability to include the project ecological effects in operational decisions. In response, the concept of ecosystem service monetization is applied as a novel approach to capitalize on the relationship between industry and the natural environment. We present a framework for ecosystem service valuation that consists of four parts: (1) life cycle assessment (LCA) to quantify project ecosystem emissions; (2) fundamental biophysics and biochemistry to characterize the component processes of ecosystem services; (3) functional substitutability to assign a monetary value to such services; and (4) representation of ecosystem services value within international financial accounting norms. As a demonstration, the framework is applied to a project-level decision between alternative designs for a surface parking lot at Disney’s new theme park in Shanghai, China. We conclude that the framework is able to inform project-level decisions, eventually leading to more sustainable management and development. Suggestions also are provided for future research to solidify the foundation, assess the robustness of the approach, and broaden the applicability of the framework.