Fundamentals of RealValue

The fundamental premise of RealValue is to connect and express the holistic value of nature in the context of the existing real assets legal and investment regime to facilitate the restoration and conservation of ecosystems.

Foundational works, including the MA, TEEB, SEEA EA and those from IPBES circle around four main concepts of value:

• Instrumental Value

• Intrinsic Value

• Relational Value

• Total Economic Value (TEV)

Instrumental, Intrinsic, and Relational Values

IPBES cover these at length and provides these definitions:

• Instrumental values are associated with an entity that serves to achieve a human end, interest or preference. Instrumental value includes economic values, regardless whether the entity is directly or indirectly used, or not used (existence and bequest values).

• Intrinsic values refers to the value of an entity (e.g., an organism, an ecological process) independent of how it relates to humans.

• Relational values are associated to the meaningfulness of relationships, including the relationships among humans and nature and among humans, including across generations, via nature (Chan et al., 2016). These values are attached to the entity itself in ways that make it not substitutable, hence not serving an instrumental or utilitarian perspective (O’Neill, 2017), and represent what people consider meaningful about nature (e.g., attachment, responsibility, commitment). Relational values can also be associated with relationships with nature towards achieving a good life, e.g., when choosing “the right thing to do” or in the context of a “meaningful life.” (Pascual et al., 2017). (IPBES)

Total Economic Value (TEV)

Total Economic Value (TEV) is covered extensively in TEEB and referenced in SEEA. Here we provide a consolidated definition of TEV:

Total Economic Value (TEV) is a comprehensive framework used for evaluating the utilitarian value of ecosystems and biodiversity. TEV quantifies the economic importance of natural capital by aggregating multiple types of values that humans derive from ecosystem services, both currently and in the future. These values are usually expressed in monetary terms or other market-based units to facilitate comparison and policy-making.

TEV is categorized into two main types of values:

1) Use Values: These are the values derived from the direct or indirect utilization of ecosystem services for consumption or production. They include:

• Direct Use Values: Services that are consumed directly, such as harvesting food, timber, or medicinal products. Direct use can be either consumptive (reducing the availability of the good for others) or nonconsumptive (not reducing the good's availability).

• Indirect Use Values: These are services used as intermediate inputs for the production of other goods and services. Examples include soil nutrients, water purification, and pollination services.

• Option Values: These are values attached to preserving the option to use services in the future, either by the individual or by others. They also include the quasi-option value, which is the value of delaying irreversible decisions until more information becomes available.

2) Non-use Values: These values are not linked to any current or future use but represent the value people place on the mere existence of a resource. This category often includes:

• Existence Value: The value people ascribe to knowing that a resource exists, even if they never use it directly.

In addition to these categories, TEV also recognizes the concept of Insurance Value, which relates to .

Methods for estimating TEV vary and include direct market approaches, revealed preferences, and stated preference techniques.

In essence, RealValue is an iteration of TEV that is based on the practical application of real assets and real property law and investment fundamentals. RealValue uses Instrumental Values to help express the Intrinsic Value of nature to connect Relational Value in the common language of dollars.