The idea of placing a value on the environment to encourage its protection has become increasingly popular, but critics say it amounts to little more than the privatisation. We asked three experts in the field to answer this charge – here’s their response.
By Robert Costanza, Simone Quatrini and Siv Øystese
That humanity depends on the essential goods and services provided by natural ecosystems seems too obvious to require restatement. The issue, however, is that many of these ecosystem services today are jeopardized by human-induced degradation.
The root cause of this is that the incentives for private exploitation are at odds with the social good. Often, this is the result of excessive market demand and misuse of natural resources. In this context, valuing ecosystems in monetary units might appear at first glance as a wrong-headed strategy to cope with the environmental degradation caused by market-based capitalism.
Placing a value on nature is not a straightforward process. (Source: Flickr/Mazzaliarmadi.it)
The UK Environmental writer George Monbiot expressed these concerns last week in the Guardian – explaining why some people fear that valuing ecosystem services could expose them to unfair appropriation driven by a capitalistic logic.
What Monbiot did not explain, however, is that this (mis)appropriation is already happening.
Valuable ecosystem functions and characteristics, such as providing clean air, pure water, rich soil, and healthy biological activity are embedded in virtually every product we buy, but their contributions are often neglected and unvalued. Ecosystems also provide a host of benefits that never enter the market system but nevertheless provide huge direct benefits to people.
The ecosystem benefits contained in marketed products and services accrue to the producer who extracted and captured those benefits and not to their providers, i.e. the ecosystems and their stewards, and the non-marketed benefits of ecosystems, including landscapes, biodiversity, and natural beauty are squeezed out and ignored.
Incentives
Fortunately, there are forward looking approaches to sustainable ecosystem management across many sectors of our society and economy, which suggest that a better future is possible. Many of these approaches are based on the recognition of the total value of ecosystem benefits and its translation into concrete incentives for responsible use.
Increasingly, valuation of (and compensation for) ecosystem services is seen as a viable solution to many of our present and future socio-economic and environmental challenges.
This approach has been picked up by pioneers in the investment community, as well as local authorities, central governments, UN agencies, and Multilateral Environmental Treaties such as the Conventions on Climate Change and Biological Diversity.
Behind this large movement lays a new but solid sustainable development paradigm, backed by scientists from a wide array of disciplines, including ecologists, economists and many other social scientists. Some call it ecological or “green” economics.
Mr. Monbiot is justifiably concerned about the privatization and commodification of nature. But the valuation of natural capital and ecosystem services, including in monetary units, is not (or should not be) a prelude to privatization. Many natural capital assets are, and should remain, common property and should be managed as public goods.
Some benefits like rubber tapping are easier to quantify than others, such as natural beauty. (Source: Flickr/CIAT)
Unlike private goods, they are largely non-rival and non-excludable and it is well known that conventional markets do a very poor job of managing these kinds of resources.
On the other hand, we cannot afford to leave these commons as open access resources, which has led to their severe abuse.
The answer lies, we believe, in new institutions, like common asset trusts – a way to propertize common assets on behalf of all, not private interests. By holding these assets in trust for current and future generations, we become stewards and trustees with interests in maintaining and increasing the long term value of the assets, rather than private owners with an interest in reaping short term gains.
Valuing life
Ecosystems contribute hugely to sustainable human well-being and to ignore that fact is the height of folly. Some argue that it is also the height of folly to attempt to value these resources. However, we already value ecosystems every time we make a decision involving trade-offs concerning them. The problem is that the valuation is implicit in the decision and often hidden from view.
For example, many object to the idea of placing a value on human life. However, decisions we make about health care, highway safety and many other things imply a value for a statistical human life that can often be expressed in monetary units.
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If we spent a given amount more on highway safety we could save a given amount of lives and the relationship can be estimated.
It is simply denial to say that we do not value human life in this way. But this certainly does not mean that we can or should exchange humans in markets. Likewise, decisions we make as a society about ecosystems imply a value for them. Making that value more explicit and improving its estimation can only help us to make more informed, and hopefully better, decisions. However, as with human beings, it absolutely does not mean we should exchange ecosystems in conventional markets.
No one can these days own another human being, but people can exchange some of their own services in well-regulated labor markets. Likewise, no private interests should own our common natural capital assets, but we might provide economic incentives to better manage some ecosystem goods and services within appropriate institutions.
Trust
Ultimately, we need new institutions to better manage our common assets. One possibility is the idea of a “common asset trust” mentioned above. Trusts are widely used and well-developed legal mechanisms designed to protect and manage assets on behalf of specific beneficiaries.
Extending this idea to the management and protection of the commons for the benefit of current and future generations is a new but straightforward extension of this idea and has legal precedence in the US in the form of the “public trust doctrine”.
Trusts would shift the emphasis from extraction to enhancement of the long-term value of the asset. For example, the US state of Vermont is currently considering a “Vermont Common Asset Trust” to create the institutional structure to manage its natural capital assets as a public trust to maximize their value to society.
In conclusion, we must not confuse valuation of natural capital and ecosystem services with privatization or commodification, as Monbiot has unfortunately done. As a wide range of private and public actors worldwide have already recognised, valuation is both essential and unavoidable, if we want to stimulate sustainable ecosystems management, which in turn, generates higher returns for the people and the planet. However, privatization and conventional markets are the wrong institutions to maximize social value and sustainable human well-being, which should be the ultimate goal.
About the authors:
Robert Costanza is an American ecological economist and a Professor of Sustainability at Portland State University in Oregon.
Simone Quatrini is an ecological economist, and coordinator of the Policy and Investment Analysis program of the Global Mechanism, a subsidiary body of the United Nations Convention to Combat Desertification (UNCCD).
Siv Øystese is a (Norwegian) resource and development economist and coordinator of the Economic Instruments and Innovative Finance Programme at Global Mechanism of UNCCD.
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