Putting a Price on Nature

William Cronon’s classic environmental history, Changes in the Land, tells the story of the confrontation between European colonists and native people in what came to be known as New England.  In the last chapter, “That Wilderness Should Turn a Mart,” Cronon shows the clash in perspectives between two very different cultures regarding the great natural abundance of the region.  The domineering European culture resulted in the “commodification” of resources that had sustained the native populations for generations on generations.  Cronon argued that we live with the extensive ecological changes wrought by that change even today.

Commodification of nature was a product of the market economy that Europeans imposed on the peoples and landscapes of North America, a process historians have documented as a growing connectedness of the planet over the past several centuries.  By the end of the 20th Century we reached a point where even committed environmentalists had come to focus almost exclusively on the commodity value of nature.

The history of environmentalism in the second half of the 20th Century shows how this came about.  Rachel Carson’s book Silent Spring is often credited with igniting the environmental movement of the 1960’s.  Carson clearly saw values in the natural world beyond the goods and services that nature could generate for humans.  The movement experienced in 1970 its first political successes with the passage of an alphabet soup of Federal statutes to address environmental concerns including NEPA, CAA, CWA, ESA, CERCLA, FIFRA, and more.  By the 1980s, despite great progress around environmental issues, the environmental community began to sense it was losing battles on important issues due to economic arguments.  The fight over the effects of the endangered species status of the Northern Spotted Owl on timber harvest on National Forest lands was just one example of many.  The response was to try to make “economic” arguments for the values of nature and environment protection.  This led to dramatic growth in what has become known as ecosystem service valuation.

The logic of ecosystem service valuation is simple.  If we keep natural areas undeveloped, they provide services for us that we would have to buy otherwise.  An often used example are the thousands of acres of conservation lands in watersheds North and West of New York City that provide the city’s water supply without the need for elaborate filtration systems.  The New York Department of Environmental Conservation estimates that this saves the construction of an $8-10 billion filtration system that would cost $1 million a day to operate.  So the conservation land, which would have tremendous value for development in one of the richest regions of the world, provides services of such value that we are justified keeping the land out of development.  Money talks when it comes to conservation

Despite this compelling example of how ecosystem service valuation can lead to large scale conservation, there are several problems that should make us cautious about the overuse of ecosystem service valuation to argue for conservation.  While it is a useful argument to make sometimes, it should not be the primary justification for environmental protection and land conservation.

First, this approach has the ironic effect of actually de-valuing nature.  It makes many people feel that nature is valuable only if it results in benefits to humans that are quantifiable in monetary terms.  There are many potential sources of value, which I have written about with my colleague Mario Teisl.  Focusing on just those of importance to individual humans that we can measure in dollar terms leads to ignoring the rest.  Money values crowd out other values of equal or even greater importance.

Second, ecosystem service valuation has led to thinking about nature as something wholly of importance to humans.  It leads people to ignore what some environmental ethicists call the intrinsic value of nature, nature’s values without reference to humans.  A good example of this is the argument in Science magazine by the chief scientist at The Nature Conservancy Peter Kareiva that nature has become “domesticated.”  Kareiva and colleagues suggest that this means our goal as humans is not to conserve nature but rather to “domesticate nature more wisely.”  Nature is conserved only to meet human needs.

Third, the effect of this emphasis is to place the natural world into a framework where it is just one more resource to serve humanity.  In economic terms, natural capital is simply one more input for the market economy like financial capital, technology, and labor.  The obvious risk of this thinking is that market economies are very good at finding substitutes for inputs when they become more expensive (more valuable as measured by ecosystem service valuation).  What then?  The justification for conservation has now vanished.

Whale oil is a good example to think about this substitution effect.  Whale oil was once a significant resource for the New England economy and had whales been valued in the 19th Century for their ecosystem services there would have been a compelling economic argument for their conservation.  Once whale oil was replaced with petroleum distillates the ecosystem service value of whales diminished dramatically.  If conservation appeals had hung on the ecosystem service values then there would have been a much less compelling economic argument for conservation.

Going down the road of justifying the preservation of nature on the basis of its commodification is a slippery slope the environmental community should avoid.   Some might argue that this is just one argument for protection of species and ecosystems.  The risk is that by focusing on this one argument the debate ends up being about only this argument and all the other reasons we should be concerned about the decline of nature are lost.

Mainers get this.  In 2010 and again 2013, in a research done as part of UMaine’s Sustainability Solutions Initiative, I helped with a survey of the Maine population as part of a team led by Caroline Noblet.  In this survey, we asked Mainers whether or not they agreed with this statement: “Nature is valuable for its own sake, even if humans get no goods and services from it.”

nature data

As you can see in this chart, the vast majority of the respondents agreed or agreed strongly with this statement.  There is no need for ecosystem services to justify the value of nature for them.  Mainers understand that humans can fit gracefully into the natural world without having to control every inch of it for human needs.  We do not need to commodify nature to protect it.


Mark W. Anderson

About Mark W. Anderson

I am proud to be a Mainer, born in Caribou and schooled at Brewer High School, Bowdoin College, and the University of Maine. I am grateful for a 35 year career at UMaine, the last decade in the School of Economics.