The role that the natural environment plays, and the importance of its ecosystem services are often undervalued because either they are unseen (take place under ground or under water) or there is no tradable market value placed on them. The result is an environment sector that receives an inadequate budgetary allocation that relatively relates to its contribution to the economy and livelihoods. In PNG, this is certainly the case. Currently, only PGK 112 million per annum (US$ 32 million) is allocated to environment protection. This equates to 0.5 percent of total government expenditure.

Globally, the value of ecosystem services equates to approximately 4.5 times the value of Gross World Product (GWP) in the year 2000 (Costanza et al., 2014). In particular, countries with tropical forests were estimated to have Total Economic Values of US$ 5,264/ha/yr. The Total Economy Value estimates in specific locations vary depending on the level of biodiversity. PNG has some of the highest values of ecosystem services globally.

The assessment outlined in this report implemented a Total Economic Value framework for PNG, the first of its kind in the country. The report outlines the approach, data acquisition, calculations and gaps. The Total Economic Value of the natural environment in PNG is estimated to be worth PGK 1 trillion (US$ 310 billion) per annum, 13 times the value of the country’s GDP in 2020 (see Figure 3). The table below outlines the contributions of individual ecosystem services and their intermediate and final contributions to economic output. Therefore, each hectare in PNG contains a Total Economic Value equivalent to PGK 23,700 per year (US$ 6,704) in 2020 prices, corresponding with the global average Total Economic Value for tropical forests of US$ 5,264/ha/yr (Costanza et al., 2014), as well as a conservative estimate compared to the findings of Costanza et al. (1997), indicating the value of ecosystem services tends to be the greatest (and up to US$ 10,000/ha/yr in some places) in highly diverse warm, low-latitude regions (locations found between the Equator), such as PNG.