Ecosystem Disservices Revisited

Some months ago, I wrote a post here about the concept of ecosystem disservices. My conclusion was the following:

Ecosystem services are of tremendous importance and benefit to humanity. But, seen from the human perspective, these same ecosystems also generate disservices. This is something that is not accounted for in economic valuation efforts going by the name of “ecosystem services valuation”. However, it should be. If we count all the positive services Nature provides us with, we should be realistic and honest enough to count the numerous disservices against them.

Recently, however, I engaged in a discussion of this concept (under this blog post by Joern Fischer), which made clear to me that the matter is much more complicated than I initially thought. I would like to reflect on that point a bit today.

Advertisement

Addendum to On Economic Valuation and Sick Mothers

I just found the panel discussion mentioned in my recent post on YouTube. For those interested in arguments pro and contra economic valuation: enjoy.

On Economic Valuation and Sick Mothers

I have spent most time this week at the Fourth International Conference on Degrowth for Ecological Sustainability and Social Equity, which takes place in Leipzig. In one of the sessions today, my doctoral father had the pleasure(?) to defend the economic (valuation) approach to environmental problems in a panel discussion. Most arguments used in this discussion against the economic approach were, I say it frankly, nonsense. Either they resulted from misunderstanding or from confusion or they just didn’t have anything to do with the issue. The only two valid arguments I was able to filter out were: a) that economists often treat ecosystems atomistically in that they value single ecosystem services and then just “add them up”, which is a practice I am very concerned about, too, and b) that the economic approach hasn’t achieved anything so far (which is debatable, but still a valid critique, as there is no systematic assessment of this issue to be checked against). Today, however, I would like to respond to one of the misconception-based arguments, for I think that it shows in an impressive way what economics is (not) and why we need economic analysis.

Is Economic Valuation a “Neoliberal Road to Ruin”? A Response to George Monbiot

George Monbiot is actually an environmental journalist I esteem highly. But I do not agree with his aggressive criticism of what he calls a “neoliberal road to ruin”, which I would prefer calling economic valuation of environmental goods and services [the linked article is a transcript of Monbiot’s talk, which you can see below]. While he does make important points, I see his criticism as mistaken in many respects. In what follows, I would like to respond to some of the points he made.

Ecosystem Services or The Downsides of Choosing the Wrong Namesake

Just a few days ago I published a post in which, among other things, I criticised economists for using the term “value of a statistical life”, as it begs to be misinterpreted and opens up space for criticism that is actually based on misconception. Today, I realised that often I must deal with a similar issue in my own research field. “Ecosystem services”, while arguably originally an eye-opening metaphor, seen from today’s perspective was a badly chosen term. It invites criticisms of the approach that are at odds with its essence, but are suggested by its name.

The Economic Value of a Statistical Life

A human life is worth $4 million to $9 million. At least according to an authoritative meta-analysis of economic studies that estimate the so-called “value of a statistical life”. This is one of the most controversial issues in modern economics, which has met with vast criticism. Particularly, it has been argued that one cannot attach a price-tag to the life of a human being. In what follows, I would like to argue that a) this criticism is largely based on a misconception of the estimates; b) economists can only blame themselves that the misconception actually arised; and c) the calculation of the value of a statistical life is not sensible, albeit for reasons different from the ethical ones that are commonly used to argue against it.

It’s Deliberation, Stupid!

Economic valuation, attaching price tags to nature, is considered wrong by many people. The reasons are divergent, ranging from complete rejection of the idea that the value of nature could be reduced to a price to critique of specific valuation methods, especially those based on questionnaires in which people are asked about their willingness-to-pay for an environmental good in a hypothetical market. Except for the general rejection of the economic approach, which I can understand but do not accept, many of the criticisms can be approached and incorporated. A particularly promising path towards “better” economic valuation is the still seldom applied class of deliberative valuation methods.

Putting a Price on Nature’s Beauty

In a recent Guardian piece George Monbiot was quite hard on my profession–or rather, on the issue of how politicians use the ideas behind the concept of economic valuation of ecosystems:

As Ronald Reagan remarked, when contemplating the destruction of California’s giant redwoods, “a tree is a tree”. Who, for that matter, would care if the old masters in the National Gallery were replaced by the prints being sold in its shop? In swapping our ancient places for generic clusters of chainstores and generic lines of saplings, the offsetters would also destroy our stories.

While I do not think that economic valuation is useless, an important question implicitly posed by Monbiot is: even if economists know what they’re doing and where the limits of their work are, is it justified to expect that politicians do? To price or not to price: That is the question…

How and Why: Economic Valuation of Nature

Since I started working on my PhD thesis, I have been asked many times what it is about. I must admit that it is hard for me to explain. First, because attaching price tags to forests or wetlands is not quite something that people expect to be done by scientists. It is strange. Second, because most people do not like the idea. Even if they are not aware of this term, what they fear is going by the name of “commodification” and is a highly controversial topic in scientific literature, including a famous commentary in the prestigious journal Nature by Douglas McCauley, aptly titled Selling Out on Nature. While I do have some answers to the questions and doubts of my friends and relatives, they are too complicated and comprehensive for a casual conversation at the coffee table. Therefore, I decided to write a blog piece about this, at least for those of my friends and relatives who understand English.

Getting Prices Right vs. Getting Morals Right

One major justification of my work on the economic valuation of ecosystems is that we need to “get the prices right”. Economists think that factoring the value of ecosystem services into the prices of goods and services traded in markets is one important way of creating incentives to use these ecosystems sustainably. Opponents of the economic approach, however, fear the resulting “commodification of Nature”. Instead, the Douglas McCauleys and Mark Sagoffs of this world suggest that, instead of getting the prices right, we should attempt at getting morals right. In their view, this is the right approach to end the ongoing destruction of Nature, rather than the harmful valuation exercises conducted by economists.

Mark Sagoff’s Schizophrenia

I am currently reading The Economy of the Earth by the US-American philosopher Mark Sagoff, one of the more influential critiques of the economic approach to preservation of nature based on its valuation. There is a lot of things in Sagoff’s book I don’t agree with, including a few false analogies, sadly common feature in the economic valuation debate. What has stricken me the most, however, is how Sagoff supports the frequent criticism that economic valuation of environmental public goods conflates the consumer and the citizen – he does it by invoking schizophrenia.

Is Some Number Assigned to Nature Better Than No Number?

Imagine the following situation: a 6-year old approaches you holding in his hands a picture – he drew a dolphin. Then you see a number above the dolphin, with an €-sign at its end, and the child tells you that the dolphin costs this amount of money. When you ask him, however: Where does the number come from? Who is to pay this to whom? And what is the expected result of the transaction?, he knows no answer.  This situation is not so much dissimilar from what sometimes happens when economists attempt to assign a value to ecosystems.

Nature’s Disservices

There is much talk in ecological and environmental economics about ecosystem services – all the things Nature contributes to human well-being, such as pollination, climate regulation, aesthetic values or food. Indeed, my own master’s thesis dealt with the ecosystem services approach to valuation of Nature. Even though I wrote about the problems generated by this approach (and there are many), I still am rather a proponent of it. Recently, however, I realized that there exists an important flaw in the way ecosystem services are valued. I owe this insight partly to Bjørn Lomborg and Douglas McCauley. Particularly the latter mentions explicitly the fact that not all Nature “does” is good for human beings. Indeed, along with ecosystem services, Nature provides us with many disservices, too.

Yasuní in Master’s Thesis

I already once mentioned that I was going to write a master’s thesis about economic valuation of ecosystems and the Yasuní rainforest of Ecuador. I submitted the thesis some months ago and wanted to make it available to anyone interested in the subject. It can be downloaded here: http://ubuntuone.com/6lkeCkyV4R9LLW9wx8VQLZ I make it available under under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License, so you are free to use it with the restriction of no changes and no commercial use.

[UPDATE: As UbuntuOne, where I had uploaded my thesis, has gone offline, the thesis is no longer available. In case you are interested in getting it, write a comment.]

[UPDATE2: The thesis can be downloaded from ResearchGate here.]

Yasuní – A Model for the Future?

How much is a pristine ecosystem worth to us? And a stable climate? These are questions that are very controversial among many environmentalists, as I recently discussed. However, economic valuation of Nature and its “services” is not just a theoretical possibility, it is a fact. A particularly interesting example of an (implicit) valuation of an ecosystem is the Ecuadorian Yasuní-ITT Initiative.

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.

Yasuní – Attaching Value to Ecosystems

Many will have heard about the Yasuní-ITT Initiative. It is a proposal made by the Ecuadorian government – it offered not to drill for oil in the Ishpingo-Tiputini-Tambococha (a part of the Yasuní National Park) if the international community were to compensate Ecuador for at least half of the foregone revenues. This initiative could become a milestone towards the attaching of value to ecosystems and biodiversity. Furthermore, although not every Western politician seems able to recognize this fact, saving Yasuní by paying Ecuador would be a win-win situation.