http://www.revistadestatistica.ro/wp-content/uploads/2014/02/RRS-5_2013_A2_en.pdf

Hi Arshad,

This can be a very tricky question (see http://www.ecosystemservicesseq.com/step-3-functions/water-regulation).

I think that you need to consider where most ES values lie in your specific context. You may want to have a look at the following paper by Fisher et al (2008) (http://onlinelibrary.wiley.com/doi/10.1890/07-1537.1/epdf) to help you diagnose whether you see water regulation as an intermediate or a final service in your case.

As they say: "Services are often a function of beneficiary’s perspective. For example, water regulation services provided by a vegetated landscape might be valued as a final service to someone interested in a steady water supply, but valued as an intermediate service to someone interested in a final service of usable water for recreation purposes like boating".

The economic value attached to a particular ES can only be determined from the moment you have identified how that ES benefits society. As Fisher et al (2008) state, "benefits are typically generated by ES in combination with other forms of capital like human capital,knowledge, or equipment, e.g., hydroelectric power utilizes water regulation services of nature but also needs human engineering, concrete, etc."

Hope this helps. Good luck.

Jeremy 

There are basically two broad methods in valuing ES monetarily - Stated (choice experiment and contingent valuation) and Revealed (hedonic property price method). I would use either of them to quantify the monetary value of  ES. Each method has its advantage and disadvantage, the researcher must be cautious in choosing between them based on the type of ES they want to value, the budget they have in conducting the study, and available information.