When most people hear the word economics they think of money. I remember visiting a local Maine historical society and the excitement the caretaker felt when he learned that I was an economist. He immediately assumed that I would want to see their collection of 19th Century currency in circulation in Maine. I did not.
The idea permeates the environmental community as well. In recent years environmentalists have embraced a concept known as ecosystem service value to justify their preferred environmental policies. The idea is simple. Parts of nature – ecosystems – do things that humans value. So large areas of the Catskill Mountains are preserved as natural habitat and the water supply for New York City is purified. The “value” of the land in conservation can be calculated in money terms. In this thinking, the conservation is worth what it would have cost to purify water for the city using engineered treatment plants.
Many environmentalists had tired trying to justify their policy goals in the face of economic arguments about jobs and incomes. The logic of ecosystem valuation was, if you can’t beat ‘em then join ‘em. There is a vast and growing academic literature on the pitfalls of this approach. The fundamental problem is that it assumes that the only values that matters are those that can be expressed in money terms. The approach treats nature as a commodity that exists only for satisfying human wants and needs. One of the first authors to show the problems created by this commodification of nature was historian William Cronon in his book Changes in the Land, which I previously talked about in this blog.
This approach also shows a naïve understanding of economics, which deals with much more than just the money value of things. I have written with my colleague Mario Teisl about the many ways that economists think about values, particularly those associated with the environment. This figure shows the breadth of different values types that humans express.
The problem with ecosystem valuation for determining how much the conservation of land in the Catskills is worth, for example, is that it just focuses on a small piece of this picture – human-centered, use-based values.
Without going into all the different types of values reflected in this chart, you can see that nature or the environment has a wide array of ways it might be valuable. A good specific example is the pending Canadian court battle between developers of a ski area and Ktunaxa First Nation. The developers know what the mountain is worth; its value is measured in the money they can make creating a deep powder ski resort to attract wealthy North American skiers. For the First Nation members the mountain is home to the Grizzly Bear Spirit, a central part of their belief system. Obviously the values reflected in the spirit are not measurable in dollar terms.
In addition to the development and spiritual values of this mountain, there are other values we can ascribe to it that can be seen in the figure above. The mountain is home to wildlife, it is a potential bequest to future generations as an undeveloped wilderness, and a source of wellbeing to some people just by existing, whether or not they ever plan to ski or worship there.
When we make decisions about the environment only in dollar terms, doing what economists call benefit/cost analysis, policy decisions are shortsighted. Decisions made this way leave out important sources of value, by definition. Economics does not offer any easy way to make decisions like whether a mountain should be a ski area or a central part of belief systems. But the fundamental lesson here is that we need to start talking about our values when we make policy decisions.
Last year’s referendum in Maine on bear hunting was a good example where we did not do this. During the debate I heard one wildlife biologist say, “We can talk about our values until we are blue in the face. We won’t get anywhere.” I say, without talking about our values we will get somewhere, but it is likely to be the wrong place. If we confront our differences in values with respect, we have a chance to get to the right place.