Journal of Sustainability Science and Management Volume 14 Number 5, October 2019: 148-163 ISSN: 1823-8556 © Penerbit UMT TOTAL ECONOMIC VALUE OF ECOSYSTEM SERVICES IN MALAYSIA: A REVIEW NITANAN KOSHY MATTHEW* 1,2 , AHMAD SHUIB 2 , SRIDAR RAMACHANDRAN 2,3 , SYAMSUL HERMAN MOHAMMAD AFANDI 2,3 1 Faculty of Environmental Studies, 2 Institute of Agricultural and Food Policy Studies, 3 Faculty of Economics and Management, Universiti Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia. *Corresponding author: nitanankoshy@upm.edu.my Introduction Forests are universally important actors as reservoirs, sources, and sinks of carbon. Given the apparent benefits from the forest, environmental economists had attempted to place economic values on tropical forest conservation endeavours (Adhikari, 2018).The economic valuation allots quantitative values to the goods and services provided by the ecosystem services, regardless of the availability of market prices in monetary terms (Zhang et al., 2017). Though valuation methodologies are exposed to an enormous range of errors, they are influential in high-level policy arenas (Richardson, 2010). The ecosystem service is valued based on the reflection by the society as well as the willingness to conserve these natural resources (Kumar, 2010). Furthermore, it provides indicators of the importance of the ecosystem to the society (Ahammad et al.,2019). Among the indicators, at the national level, the steps taken include efforts to reduce landslides and floods as well as upgrading of quality and supply of water; meanwhile, at the global level, the indictors include reduction of emission and carbon storage by restricting deforestation, increasing human health and food security (Ahammad et al., 2019). Amongst the issues underlying an economic valuation of the ecosystem services in forests per se, are missing markets, imperfect markets, and market failures (Rolfe et al., 2000). Consequently, the value of many ecosystem services is often underestimated and even ignored in daily decision-making. Since ecosystem services are categorised as public goods, they tend to be over-consumed by society (Bujosa & Riera, 2010). Public goods share the characteristics of “non-rival” whereby these goods can be beneficial to the users without disrupting the benefits attained by other users(Hanley et al., 2007). For example, the magnificent scenery and the refreshing cool air of national parks can be enjoyed by the visitors at all times. As the amount of air inhaled and exhaled is uncountable, the value of environmental goods and services is unable to be determined, hence, leading to market Abstract: Southeast Asia contains the world’s third largest tropical forests, currently experiencing a high deforestation rate, thus highlighting the need for conservation efforts. The full potential of ecosystem services in tropical forests has never been completely quantified in economic or monetary terms. This potential value is accessible by extraction of readily available information in both market and non-market terms. As such, an economic valuation approach is capable to estimate the full range of an ecosystem services benefits provided by a tropical forest. This paper reviews the suitable indicators pertinent to a Total Economic Value (TEV) of tropical forests to propose a conceptual framework for the TEV of Tropical Forest in Southeast Asia. The failure to impute price on ecosystems services in tropical forests would result in a misguided policy and the society would be in detrimental as a result of misallocation of resources. Keywords: Indicators, conservation, economic valuation, ecosystem services, tropical forest.