The Value of Nature

Can we express the value of Nature in an understandable and comparable way? Should we do it? Around basically these two questions a debate has emerged in recent years. In a world approaching the so-called “planetary boundaries” (and we already have crossed at least three of them) they are particularly important to ask because by answering them we also give an implicit answer to the question of how we want to protect the planet from ourselves. However, the answers remain controversial and the debate is ongoing.

Many people, particularly biocentrically oriented conservationists and environmentalists find it wrong to actually try to attach an (economic) value to Nature. They oppose the idea while emphasizing that Nature value is infinite and, therefore, any calculation of this value is futile. Also, they see attempts at economic valuation of ecosystems and their services as both dangerous and a sort of sacrilege. Their arguments cannot be easily dismissed and have a true core. However, there are many misunderstandings and dogmatism on this side of the debate.

Is the value of Nature infinite? In a sense, it indeed is: we cannot live without it. However, economics deals less with absolute values (i.e., the total value of Nature as a whole) – even though there were attempts at expressing in monetary terms the value of all ecosystems of our planet together -, but rather with marginal values (i.e., values of incremental changes in a good, be it an ecosystem or an apple). The idea of assigning an economic value to ecosystems is to make visible to economic actors in a language they understand (i.e., where possible, in monetary terms) the consequences (costs) of the inferences between their activities and ecosystems.

Valuing Nature is less of a sacrilege – it is, rather, an act of pragmatism. Within the current economic system (and, indeed, all that is imaginable for the middle run) there is, alas, a need for some kind of signalling to economic actors that Nature’s services (including, but not limited to, natural resources) are not for free. They have an economic value, even though they have no market price. Also, it has to be kept in mind that natural capital that is replaceable by artificial capital is rather an exception than a rule, so the economic value of ecosystems is not meant to be their exchange value (this is an often invoked – and rightly so – concern). However, to oppose any effort of economic valuation of ecosystems is equal to resigning to continued overuse and destruction of the ecological foundations of our all livelihoods.

This does not mean, however, that economic valuation is always a good thing and, indeed, that it is always possible. Our understanding of how ecosystems actually work, how they interact with each other, how meaningful their parts are for the proper functioning of the whole etc. is limited. We have to face this fact. Clearly, experiments on a large scale are not an option (we cannot burn down the Amazon rainforest in an attempt to assess how meaningful it is for other ecosystems or the climate). There is always some guessing involved, which means that the estimated values should never be taken as definitive and should always be treated with (pre-)caution.

Also, a “right” methodology to assess economic values of ecosystems does not exist. There are many methods – they all have both merits and perils that should be always kept in mind (both by the scientists using them and by the wider public when it is exposed to such estimates). A reasoned application of multiple methods (with due attention to local characteristics), however, can provide a hint on how much a particular change in an ecosystem would cost.

Another concern that should be addressed is the unit of valuation. Many oppose putting the value of Nature in monetary terms. Although this is sometimes possible to some extent (given the other concerns discussed above), in some cases we can express the value of an ecosystem in quantitative terms only (e.g., what percentage of a forest would likely be lost given a particular interference with it), or our possibilities can even be limited to a qualitative assessment (we might know what will likely happen without having a reasoned guess of the extent and value of the change in question). Indeed, this is the approach of the authoritative global project in the area of ecosystems valuation, the TEEB (The Economics of Ecosystems and Biodiversity), which highlights the limited suitability of the monetary “language” in attempts at assigning a value to ecosystems.

Should we try to express the economic value of ecosystems? And can we do it? I think that both questions can be answered with “yes”, although it is a conditional one. A reasoned valuation of ecosystems is feasible and, indeed, quite desirable if we want to solve the ecological challenges of today (and avoid some of those of tomorrow). Waiting for people to change is not an option. We haven’t the time.

This post is the first in a likely series of entries on the issue of ecosystems valuation. In late August I am going to start working on my Masters thesis concerned with the problems of economic valuation of ecosystems, so more specific problems and challenges in this area will be then discussed here.

• sustainability
• TEEB
• valuation