What is an Ecosystem Worth?

There’s an entire scientific field of inquiry which has emerged to answer this question. Ecological Economics. They have a journal, an annual conference, and slews of papers regarding methodologies, technologies, and strategies for valuating ecosystems and the services they provide. What is desired is the ability to put a dollar value on ecosystems, so that conservation budgets can be established, or so they can be compared to the values of potential developments. In this way, ecological economists seek to put a price tag on nature, either to justify it’s conservation in the face of development, or, justify its development if the conservation value is not high enough. Often, this evaluation is determined by asking people how much they’d be willing to pay to preserve it. How much would you be willing to pay to preserve the Amazon?

The most famous ecological economics paper was written by a team of scientists let by Robert Costanza, then at the University of Maryland. This paper set the value of all of Earth’s ecosystems at $33 trillion/year. Whoa,  that’s a lot!

But is there a problem with reducing Nature’s value into dollars? What are dollars? What other dimensions of value are worth evaluating in ecosystems?

Hmm, these are hard question. Let’s look at something a little smaller; a little easier to grasp. How about an acorn.

What’s an acorn worth?

bur oak acorns

Probably nothing. Oak trees produce acorns in abundance every year. No one really ever uses them. Squirrels eat them and tuck them away underground, but certainly no where near all of them. Deer fatten on them in the fall, but it’s not like they don’t have enough corn around to eat anyway. Anyone can walk outside any fall day and pick one up off the ground for free. But why would you want to do that? Although nutritious, tannins make them bitter. Leaching the tannins out of them is possible, but any rational cost-benefit analysis makes this practice not worth the effort. Yes, from any rational utilitarian perspective, the value of a single acorn is zero.

But let’s look at that acorn from another perspective. That acorn has the potential to

grow into an oak tree. If it’s lucky, or well-cared for, that tree may live 500 years. Each day of its life it will draw water from the ground and transpire it into the atmosphere, cooling the earth around it and creating a micro-climate desirable for grazing animals, humans, and certain plant communities. It will produce millions of acorns which will help feed hundreds or thousands of squirrels, deer, and turkey. A few of these acorns are likely to germinate and establish as trees themselves, providing all those services throughout their lives. As generations continue, these trees will have the capacity to adapt their DNA to changing environmental conditions. Who knows what their progeny will look like 5 million years from now. Regardless of their appearance, however, they are likely to still be feeding and providing services to surrounding plants and animals as they have continued to do throughout their 20 million year evolutionary history.

From this perspective, the value of one acorn is essentially infinite. It has infinite generative and adaptive capacity. Hmm, this is quite different from a value of zero.

So if the value of an acorn is infinite, how much more valuable is a functioning ecosystem as a context in which acorns can grow into oaks feeding animals, transpiring, reproducing, and evolving. What is the value to us, as humans, to be able to eat food produced in ecosystems functioning on their own, running on real-time solar energy, without fossil fuels, pesticides, or fertilizers? How much would you pay for that?

Infinity +1?

Is money the best way to try to value ecosystems? To value nature? To value life?

What do we hope to accomplish by putting a finite price tag on an infinitely-valuable ecosystem? Are we simply justifying and expediting its exploitation and destruction?

Comments

Melissa

Nice post, Peter. As someone who acknowledges both the good and bad of economics, I thought I’d make a few comments. Typically specific monetary values are associated with specific quantities in economics. Values will increase as scarcity increases. That’s why you get a demand (or marginal willingness to pay) curve that slopes downward. So if you have a trillion acorns and you ask someone what they’d be willing to pay to get one more acorn, you’ll probably get a value of $0. That doesn’t mean that the value of acorns is zero — it’s just someone’s willingness to pay to have one more acorn (and thus potentially one additional tree providing benefits.) But what if you only have 3 acorns left in the world? The value has likely now increased to near infinity. I don’t remember the specifics of Costanza’s paper, but I think that he didn’t well account for increasing marginal values as scarcity increases.

Anyway, I think that there’s an inherent problem with putting a total value on anything, since as scarcity increases, the value of many resources increases to infinity. Economics used in this way is bastardized. Economics is most useful when comparing the trade-offs between small changes. E.g., is it better to spend $1,000 removing algae from Lake Monona or $1,000 dollars conserving prairie? (Or maybe $1,000 in job training for unemployed folks?) Which generates the most net benefits? That’s where measuring the value of a marginal increase in water quality or marginal increase in prairie is useful.

Also, I know that there are differences between environmental economics and ecological economics, although I’m not really clear on what they are. I’ve more often associated contingent valuation techniques with environmental economics, though. And I believe environmental economics is more tied into neoclassical paradigms while ecological economics tries to break free of some of those.

Just my $.02. Cheers!

pclarkallen

Great points, Melissa. I also associated contingent valuation techniques more with environmental economics, though I think the boundaries are pretty fuzzy. I guess I was trying to point out that when you start to expand your criteria for describing value to encompass more than just money (such as regenerative and adaptive capacity), the value of functioning ecosystems (or an acorn), to me, quickly reaches infinity relative to any other dimension I can think of, or care about. My biggest gripe with these types of valuation methods is that they are built within a deterministic mechanistic world-view, which lacks the language and concepts to value the most critically important features of living systems, such as their ability to heal, self-organize, regenerate, adapt, and evolve. Features that necessarily can’t be measured in dollars.

Melissa

Definitely true, Peter. I hope you don’t mind a comment-section conversation (I’m enjoying it!). Although perhaps over a beer sometime would be better.

Anyway, I think what you’re pointing out relates to the overall problem of people not being able to accurately value what they don’t know or understand. Contingent valuation starts from the assumption of perfect information — we know what the Amazon is worth to us. Or a tree. Or a snail. But in fact we don’t. How could we? There are so many aspects of these living things (like you pointed out — their ability to evolve, heal, self-organize, etc., or even their basic role in an ecosystem) that we typically don’t think about or don’t completely understand. So asking people to put a value on these things is going to fail completely to value them.

On the other hand, I think that despite its weaknesses, putting a dollar value on nature is still better than nothing in order to make arguments against, say, development proposals. I mean, ideally we wouldn’t have to because people would already be aware of the immense value of natural things. But as our society has moved to having an arm’s length (if that) relationship with nature, we’ve lost our sense of the value of it.

Or you could, as Dan Bromley might propose, just have a conversation about the value of natural things instead of reducing their value to a number. But policy-makers like to have numbers to back up their decisions (it shifts some of the responsibility/burden away from the policy-maker to the “objective” scientists who came up with the numbers.) Anyway, if you don’t use numbers that you can point to, doesn’t the winner of the argument just come down to who has the best debating skills? Or, more cynically, the most money with which to bribe the politicians? Not having numbers makes decisions much less transparent, I think.

So I guess my current opinion would be that, while flawed, ecosystem valuation does more good than harm.

pclarkallen

Hmmm. We definitely do not want to less transparency in the public decision-making process (if that’s possible). But think about climate change. We’ve got more science than we can handle and that hasn’t exactly helped the situation.

Numbers are so easily manipulated. In evaluating the cost-benefit of a proposed development, and having a dollar value of the natural system whose functioning will be compromised by that development, simply gives the developer a target to manipulate numbers to achieve. I would say that from this point out, no development should ever be undertaken if it compromises any functioning ecosystem. We have to start figuring out ways of living that support ecological functioning, not destroying it. To me, putting a price tag on an infinitely valuable (to society) place, gives us an excuse to destroy it if the (private) economic return is sufficient. We’ve degraded nearly all our ecosystems at this point, an the only way we’re still eating is because of fossil fuels. When those dry up, we’re going to need our ecosystems back, and their continued and restored functioning will be priceless.

Classic Einstein quote:
“Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.”

Thanks for the convo! Beer would be fun too 🙂