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Keywords:

  • economics of restoration;
  • restoration of natural capital;
  • ecosystem services;
  • benefit–cost analysis;
  • system dynamics;
  • discounting

Since the publication of the Millennium Ecosystem Assessment in 2005 there has been a surge of interest in ecological restoration (ER) to recover biodiversity, re-establish ecosystem functioning and connectivity, and reactivate the delivery of ecosystem services. In policy spheres, there have also been repeated calls for expansion of restoration efforts. In many countries, new legislation now requires some form of restoration and/or a form of offset investment. All of this will require major increases in financial allocations toward restoration science, technology, and implementation, and much more detailed valuation techniques. The economics of restoration is a new field emerging to support these needs. Our paper here starts with an analysis of the articles and reviews published on this broad subject from 1928 to 2012, as captured in the Scopus academic search platform. Our goal is to present and summarize what has been said and done in this area to date. Next, we map out one possible way forward, illustrated by examples and based on a coherent bundle of decision parameters related to the economics of ER and, more broadly, to the restoration of natural capital. The restoration of natural capital is defined as activities that integrate investment in, and replenishment of, natural capital stocks to improve the flows of ecosystem goods and services, and the preservation of biodiversity, while enhancing all aspects of human well-being. We give special attention to system dynamic approaches and other promising tools and techniques.