LAYER 3: ECOSYSTEM SERVICES
Ecosystem Services
What nature provides – the foundation of all economic value.
Understanding the benefits, and the emerging markets that price them.
IN THIS SECTION
In 30 Seconds
Ecosystem services are the benefits nature provides to people and the economy. Scientists organise them into four types:
- SupportingFoundation services that enable everything else (nutrient cycling, soil formation)
- ProvisioningResources we extract (food, water, timber, fibres)
- RegulatingProcesses nature manages (climate regulation, pollination, flood control)
- CulturalIntangible benefits (recreation, spiritual value, aesthetic appreciation)
Why it matters now: Markets are emerging for regulating services (carbon credits, biodiversity credits). Supply chains are under scrutiny for provisioning impacts (EUDR, deforestation-free). Supporting services are the next frontier (soil health payments, regenerative agriculture premiums).
Key Distinction: Ecosystem Services vs Nature-Based Solutions
Ecosystem Services (this page)
What nature provides – the benefits that flow from functioning ecosystems.
- • Pollination (bees pollinate crops)
- • Carbon sequestration (forests absorb CO2)
- • Flood regulation (wetlands slow water)
- • Water purification (ecosystems filter water)
These happen whether humans intervene or not.
Nature-Based Solutions
Deliberate human interventions – actions to protect, restore, or create ecosystems that address societal challenges.
- • Creating woodlands to sequester carbon
- • Restoring peatlands to stop emissions
- • Protecting mangroves from destruction
- • Managing farmland for soil carbon
These are deliberate human interventions.
The relationship: NBS (what you do) generates or protects Ecosystem Services (what nature provides). Planting a woodland (NBS) creates carbon sequestration capacity (ecosystem service).
Natural Capital: The Asset Base
Natural Capital is the stock of natural resources – the asset base from which ecosystem services flow. Think of it as the relationship between a factory (capital) and its products (services).
Natural Capital
THE STOCK (Asset)
- • Forests & standing biomass
- • Soils & soil carbon
- • Freshwater systems
- • Biodiversity & genetic resources
- • Wetlands & peatlands
- • Coastal & marine ecosystems
Ecosystem Services
THE FLOW (Returns)
- • Carbon sequestration
- • Food & fibre production
- • Water purification & supply
- • Pollination & pest control
- • Flood & erosion control
- • Recreation & wellbeing
ISEP Definition: Natural capital is “the stock of renewable and non-renewable natural resources (plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people.”
From Landscapes to Services
Different landscape types hold different natural capital stocks, generating different service profiles:
| Landscape Type (L2) | Primary Natural Capital | Key Services Generated |
|---|---|---|
| Forest Landscapes | Standing biomass, soil carbon, biodiversity, water storage | Carbon sequestration, timber, water regulation, habitat |
| Freshwater Wetlands | Water storage, peat, aquatic biodiversity, sediment | Flood control, water purification, fisheries, groundwater recharge |
| Peatlands | Peat (30% of soil carbon on 3% of land), water, unique biodiversity | Carbon storage (when intact), water regulation, rare species habitat |
| Coastal & Marine | Mangroves, seagrass, coral reefs, fish stocks | Blue carbon, coastal protection, fisheries, tourism |
| Grasslands & Savannas | Soil carbon, grassland biodiversity, grazing capacity | Livestock production, soil carbon sequestration, wildlife habitat |
| Agricultural Landscapes | Topsoil, pollinators, water, crop genetic diversity | Food & fibre, soil carbon potential, pollination services |
The key insight: Depleting natural capital (cutting forests, draining wetlands, degrading soils) reduces the flow of ecosystem services. Regenerating natural capital increases the flow. This is why regenerative approaches and nature-based solutions are central to sustainable business strategy.
Where This Fits
Ecosystem Services is Layer 3 in our 5-layer sustainability model:
L3 is the translation layer – where the physical reality of ecosystems (L1-L2) becomes economic value that flows into corporate strategy (L4-L5). It's where natural capital becomes commodities and credits, ecosystem processes become monetisable services, and corporate dependencies become measurable risks.
The Four Service Types
Supporting Services
The foundation that enables everything else
Services that maintain ecosystem functions: nutrient cycling, soil formation, water cycling, photosynthesis.
Economic relevance: Emerging – soil carbon markets, regenerative agriculture premiums.
The next frontier. Early movers are positioning for significant growth.
Provisioning Services
What we extract from nature
Tangible products from ecosystems: food, freshwater, timber, fibres, genetic resources.
Economic relevance: Established – commodities, supply chains, certifications.
Current focus: EUDR compliance, deforestation-free supply chains, sustainable sourcing.
Regulating Services
How nature manages vital processes
Processes that regulate environment: climate regulation, water purification, pollination, pest control, flood mitigation.
Economic relevance: Growing – carbon credits, biodiversity credits, PES, watershed payments.
This is where the most dynamic markets are emerging.
Explore Regulating Services →Cultural Services
The intangible benefits
Non-material benefits from nature: recreation, aesthetic value, spiritual significance, educational value.
Economic relevance: Partial – tourism, heritage, wellbeing programmes.
Often overlooked, increasingly valued in tourism, hospitality, and real estate.
Provisioning: From Landscape to Corporate
Most corporate supply chains are provisioning services flowing through value chain stages. Understanding this flow is essential for Scope 3, traceability, and sustainable sourcing.
“You are what you eat” – a company's sustainability footprint is largely defined by its supply chain.
Value Chain Stages
Extraction
Harvesting from landscape
L2
Primary Processing
Initial transformation
L3
Manufacturing
Product creation
L3
Distribution
Logistics & wholesale
L3
Retail
Consumer access
L3-L5
Consumer
End use & disposal
L5
The Private Markets Reality
9 of 10
jobs globally are in private companies. Most supply chain actors are SMEs, not public corporations.
70-90%
of corporate emissions are Scope 3 – embedded in supply chains that companies don't directly control.
Fewer stakeholders
Private companies face less political scrutiny, making sustainability adoption potentially easier.
The implication: Corporate sustainability targets depend on private company data and action. A big public company cannot figure out its sustainability footprint without getting its arms around its supply chain – which means engaging thousands of SMEs who often lack resources, expertise, and peer benchmarks.
Bidirectional Flows Through the Chain
Materials Flow UP ↑
Raw materials extracted from landscapes flow up through processing, manufacturing, distribution to the corporate buyer.
Extraction → Processing → Manufacturing → Distribution → Corporate
Requirements Flow DOWN ↓
Sustainability requirements cascade down from corporates through the chain: supplier codes, certifications, data requests.
Corporate → Procurement → Suppliers → Processors → Extractors
Data Flows UP ↑
Traceability data, MRV evidence, and sustainability metrics must flow up from landscapes through every stage to enable corporate disclosure. This is where most supply chains struggle – data quality degrades at each stage, and SMEs often lack systems to collect and share it.
The data challenge in supply chains connects directly to the Data Maturity Journey →
How Value Flows
Ecosystem services don't sit still – value flows through the system:
Landscapes (L2)
Where services are produced
Value Chains (L3)
Where services become tradeable
Corporates (L5)
Where services are purchased
Finance Flows Down
Corporate credit purchases fund landscape stewardship
Data Flows Up
MRV provides evidence for disclosure and verification
From Landscape to Markets: One Landscape, Multiple Value Chains
A single landscape generates multiple ecosystem services simultaneously. This interactive model shows how value flows from planetary foundations through a real landscape to corporate markets.
Click each layer to expand and explore the detail.
From the East African agricultural landscape, six value chains emerge across all four service categories – each monetising different ecosystem services while sharing the same land stewards and community infrastructure.
Buyer
Regen-certified
Market
Local + WFP
Retail
Specialty
Buyer
Net-zero corps
Users
Urban + ag
Buyer
Research / Corps
Premium
Price uplift
Distribution
Regional traders
Roasting
International
Trading
OTC / Market
Beneficiary
Clean water
Benefits
ABS payments
Certification
ROC / L2M
Packaging
Posho meal
Export
Green bean
Registry
Credit issuance
Payment
Utility fees
Protocol
ABS / Nagoya
Testing
Soil analysis
Processing
Milling
Washing
Wet process
Verification
Verra VM0042
Scheme
PES design
Documentation
IP protection
Measurement
Baseline + MRV
Aggregation
Cooperatives
Collection
Cherry points
MRV
Digital + satellite
Assessment
Hydrology
Capture
Knowledge record
Landscape
Soil biology
Smallholder
2-5 acre plots
Harvest
Shade Arabica
Landscape
Agroforestry + SOC
Function
Infiltration
Source
Traditional practices
Insetting opportunity: Coffee brands can claim Scope 3 reductions from the same landscape that generates their supply – carbon sequestration from agroforestry stacks with coffee provisioning.
Value captured at top • Source undercompensated
The key insight: A single landscape generates multiple value chains simultaneously. The same farmers producing maize (provisioning) can also sequester carbon through agroforestry (regulating), grow shade coffee (provisioning), protect watershed functions (regulating), and maintain biodiversity (supporting). This “stacking” of ecosystem services creates diversified revenue streams and climate-resilient livelihoods.
Who Operates Here
Producers / Land Stewards
Supply side of ecosystem services
Which services does my land provide? Which can I monetise?
Corporates / Buyers
Demand side of ecosystem services
What are my dependencies? How do I procure credible credits?
Intermediaries / Aggregators
Market makers and facilitators
How do I structure blended revenue from multiple service types?
Investors / Finance
Capital deployment
What are the emerging opportunities as markets mature?
Current State of Markets
Mature
Commodity markets (provisioning), certification premiums, compliance carbon markets (EU ETS, UK ETS)
Growing
Voluntary carbon markets, Biodiversity Net Gain (UK mandatory), watershed PES schemes
Emerging
Soil carbon credits, regenerative agriculture premiums, voluntary biodiversity credits, stacked credits