From carbon trading to biodiversity offsetting, more and more environmental policy sees nature as a commodity that can be valued and traded. This trend is referred to as the commodification of nature, a very contentious topic in the environmental debate, which begs the question: does putting a price tag on ecosystems actually help protect them, or does it just fast-track their destruction?

—

Commodification refers to the expansion of market trade into areas that were previously excluded from it, involving both the conceptual and operational approach of treating everything as commodities to be exchanged. When applied to nature, this implies that ecosystem functions once considered common accessible goods, such as fresh air or water, gradually acquired a monetary exchange. 

This shift relies heavily on the concept of “ecosystem services” – defined as the direct and indirect contributions that humans gain from nature. Proponents of this approach suggest that the value of these natural services has historically been overlooked precisely because they exist outside the market. Therefore, placing a monetary value on them is seen as a way to correct this blind spot.

To understand how this process unfolds, a 2011 paper splits this environmental commodification into four main stages: economic framing (conceiving these ecosystem functions as services that nature provides to humans); monetization (measuring the use values of ecosystems’ services in monetary exchange values, or pricing); appropriation (establishing ownership claims over certain services or territories); and commercialization (creating institutional structures of sale and exchange, like markets and payment schemes).

What Are Payments for Ecosystem Services?

A clear example of this logic is the Payments for Ecosystem Services (PES) – economic incentives for land management practices to increase and improve the provision of ecosystem services. Their theoretical foundation is the Coasean postulate, which states that environmental negative externalities can be internalized via negotiation between service providers and beneficiaries. PES have spread rapidly, with more than 550 operating PES schemes globally making transactions worth $36-42 billion annually. 

These instruments sit within the broader trend of neoliberalization of nature conservation, an approach aiming to find a balance between economic growth, resource allocation and environmental protection through the markets. To better understand this, one can look at pollution. 

According to mainstream economics, pollution is simply an externality. The benefits of controlling pollution are the social and environmental damages avoided, while the costs are the control equipment and the lost output that the polluter has to absorb. These gains and costs are presumed measurable in financial terms, and control costs escalate as pollution decreases. This gives rise to the idea of optimal pollution, where the marginal cost of polluting becomes equal to the marginal benefit of avoided damages. Pollution is therefore never eliminated, but only optimized.

This then leads to a discussion by economists over how to impose a price on polluters reflecting the marginal damages of pollution, a process that takes the name of internalizing externalities, and follows the same logic that underpins PES. 

Why Is Commodification Problematic?

The long-lasting commodification of ecosystem services raises many concerns. First of all, commodification increases inequalities, as only those capable of paying for services like clean water or access to forests can benefit from them, privileging only landowners and rural elites. Monetary payments can also undermine the motivations for preservation, as they shift the justification for conservation from morality or social norms to conservation for gain. This anthropogenic, utilitarian, and mostly Western view of nature totally disregards any type of cultural and traditional view. 

Additionally, the problem with biodiversity offsets and ecosystem valuation is that they rely on economic arguments to facilitate, instead of preventing, the loss of habitats, as suggested by Ecological Economist Clive L. Spash. For instance, under standard economic assumptions, optimal species extinction can be “efficient” when the marginal monetary benefit of species habitats falls below the opportunity cost of alternative land uses.

Evidence of De-Commodification 

Commodification is not irreversible. Market expansion can be contained, a 2023 paper argues. An instance are the Atacama communities in Chile, who managed to contrast the country’s market-oriented stance towards water provisioning through the use of shared community values. Rules within the community prevented the sale of water to the mining industry, while the people who sold water became social outcasts, effectively creating a moral economy around water.

A European example comes from Switzerland, where 70% of the nation’s forests belong to public institutions, and all individuals have a right to access them, whether public and private, free of charge. 

The most meaningful de-commodification cases share a redefinition of nature. Nature should not be framed as something humans own and use but as something humans cohabit with. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) introduced Nature’s Contribution to People as a partial alternative to the ecosystem services concept. It is a broader category that includes material and non-material benefits and accommodates worldviews such as living in harmony with nature. Key to this shift is a move from exchange values toward relation values: ethical principles rooted in relationships and responsibilities to nature.

While it is true that PES schemes have channeled investments toward conservation and put environmental degradation on the policy agenda, these de-commodification cases suggest that meaningful change does not need to start with better pricing, but with a critical re-approaching of our relationship with nature.