What is Nature Worth? Comparing the Economic Value of Urban Forests and Wetlands in India

This blog evaluates ecosystem service valuation across two contrasting ecosystems, an urban forest (Vetal Tekdi) and a wetland (Ousteri). Using a mix of replacement cost, contingent valuation, and benefit transfer methods, the study estimates ecosystem values in Indian Rupees (INR). Results indicate a stark contrast, with Vetal Tekdi (Pune, India) dominated by regulating ecosystem services of ~₹16.5 trillion annually, while Ousteri Wetland (Puducherry, India) reflects livelihood-driven provisioning services with net present value of ~₹15.74 billion annually. The study highlights methodological disparities, policy implications, and the need for plural valuation frameworks aligned with global standards such as IPBES and SEEA-EA to support sustainable development and decision-making.

Written by Sudha Ravi J, Project Intern Sustaina Greens LLP 

1. Introduction

Ecosystem services are the direct and indirect contributions of ecosystems to human well-being, including provisioning, regulating, supporting, and cultural services (Millennium Ecosystem Assessment, 2005). Recent frameworks expand this concept into “Nature’s Contributions to People (NCP),” emphasizing socio-cultural and relational values alongside economic benefits (IPBES, 2022).

Globally, economic systems are deeply dependent on nature, with more than 50% of global GDP moderately or highly reliant on ecosystem services (World Economic Forum, 2023). However, inadequate integration of environmental values into economic planning continues to drive biodiversity loss and ecosystem degradation (CBD, 2022).

2. Environmental Valuation: Concepts and Approaches

Environmental valuation refers to the process of estimating the value of ecosystem services to inform decision-making (TEEB, 2010). Traditionally focused on monetary valuation, contemporary approaches emphasize plural valuation frameworks integrating:

3. Case Study: Vetal Tekdi Urban Forest, Pune

Vetal Tekdi is a prominent urban forest in Pune, Maharashtra, functioning as a biodiversity hotspot and groundwater recharge zone (Mastakar, 2025). These hills are renowned for its biodiversity, tranquil atmosphere, and the spiritual importance of the Vetal Baba Mandir (temple), the Tekdi is cherished by the people of Pune.The valuation considered key ecosystem services:

• Carbon sequestration (using social cost of carbon)

• Biodiversity (species richness and habitat indicators)

• Groundwater recharge (replacement cost method)

• Cultural and amenity values (contingent valuation)

  
  

The values were standardized to ₹/hectare/year for comparability and care was taken to avoid double counting by distinguishing between intermediate and final ecosystem services (TEEB, 2010). Groundwater recharge contributed the highest economic value, followed by cultural services and carbon sequestration.

• The value of the water in the aquifers is the highest, Rs. 14.62 trillion,

• The water in the quarry, Rs. 98,28,00,000,

• The biodiversity valuation is Rs. 1,537,000,

• Carbon sequestration value Rs. 1,614,870,

• Oxygen value, Rs. 66,945,840,

• The heritage value of Vetal Temple, Rs. 74,368,869,

• The heritage value of Hanuman Temple is Rs. 10,665,430.

Additionally, after the market price of the land of the urban forest, the total value goes up to Rs. 16.5 trillion.

The findings demonstrate the significant economic and ecological importance of urban forests. However, uncertainties in valuation and overlaps between ecosystem services require careful methodological treatment.

• Policy recommendations of this study are that decision makers should use the valuation tools while evaluating projects for implementation.

• More than a green space, the urban forest is a vital part of Pune’s ecological, cultural, and community landscape.

• Policymakers must leverage community values and accessibility insights to craft inclusive, eco-conscious development strategies.

• This invaluable natural endowment will compromise sustainability and deprive future generations of its valuable services if sacrificed to urbanisation.

  
  

4. Case Study: Ousteri Wetland, Puducherry

Ousteri Wetland is a transboundary wetland ecosystem shared between Puducherry and Tamil Nadu, supporting irrigation, fisheries, and biodiversity (Venkatachalam, 2023). Ousteri is the largest water body of the Puducherry region, with a water-spread area of 700 hectares. It can store up to 540 million ft3 of water, capable of irrigating close to 3,800 hectares of land. It attracts a diverse population of migratory birds, making it one of the ecologically important wetlands of Asia

Ecosystem Services Assessed

• Recreational benefits

• Irrigation and groundwater recharge

• Biodiversity conservation

• Fisheries

  
  

The original ecosystem service valuations (2012–2015) were adjusted to 2025 price levels using India’s Consumer Price Index (CPI), applying an approximate inflation factor of 1.9. The revised estimates indicate that the total annual economic value of ecosystem services increased from ₹1.97 crore to approximately ₹3.74 crore. Irrigation benefits alone rose to ₹2.18 crore annually, reaffirming their dominant contribution to the wetland economy. Recreational benefits increased to ₹1.08 crore, while fisheries contributed a modest but consistent ₹0.95–1.14 lakh annually. The net present value (NPV) correspondingly increased to ₹15.74 crore, highlighting the long-term economic significance of the wetland ecosystem. These updated estimates reinforce the critical role of wetlands in supporting rural livelihoods and regional water security.

Note: While inflation adjustment improves temporal comparability, it assumes constant ecosystem service flows and does not account for ecological degradation, land-use change, or climate variability, which may significantly alter actual service values over time.

Wetlands provide critical climate regulation services, including flood mitigation, carbon storage, and drought resilience (Ramsar Convention, 2021).

The results show that the economic value of ecosystem benefits, i.e. recreational benefits, groundwater irrigation and biodiversity protection, currently derived from Ousteri are very significant.

Government conservation efforts and problems such as industrial pollution, encroachment, and siltation have reduced both the number and the scale of ecosystem benefits that different stakeholders currently receive.

Most people living near the wetland were willing to pay for its conservation because they believed protecting it would help them continue benefiting from the ecosystem services it provides.

5. Role in Sustainable Development and Policy

Environmental valuation is a critical tool for integrating ecological considerations into economic and policy decisions. Moving beyond monetary valuation to plural frameworks enhances robustness and inclusivity in decision-making. Strengthening methodological rigor and aligning with global frameworks will be essential for advancing sustainable development.

Environmental valuation supports sustainable development by enabling:

1. Informed land-use planning

2. Integration into ESG frameworks (GRI 304, BRSR Principle 6)

3. Risk assessment under TNFD (LEAP approach)

4. Development of market-based mechanisms such as carbon credits and Payment for Ecosystem Services (PES)

   
   

References

• CBD. (2022). Kunming-Montreal Global Biodiversity Framework.

• IPBES. (2022). Methodological Assessment Report on the Diverse Values and Valuation of Nature.

• Millennium Ecosystem Assessment. (2005). Ecosystems and Human Well-being.

• Ramsar Convention. (2021). Global Wetland Outlook.

• SBTN. (2023). Science Based Targets for Nature Initial Guidance.

• TEEB. (2010). The Economics of Ecosystems and Biodiversity.

• TNFD. (2023). Recommendations of the Taskforce on Nature-related Financial Disclosures.

• United Nations. (2021). System of Environmental-Economic Accounting-Ecosystem Accounting (SEEA-EA).

• Venkatachalam, L. (2023). Economic valuation of ecosystem services of Ousteri Wetland.

• World Economic Forum. (2023). Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy.

• Mastakar, P. (2025). Valuation of Environmental Services of Urban Forest: Vetal Tekdi Case Study.