This report reviews some of the basic economic principles necessary for understanding the questions that arise in ecosystem service valuation. Heal argues that even with the best possible data and scientific understanding, the sense in which economists can value nature's services is limited. Heal also argues that valuing these services is much less important than providing incentives for their conservation, and that valuation and providing incentives for conservation are quite different. Valuation is neither necessary nor sufficient for conservation, whereas providing the right incentives is.
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