Valuing Ecosystem Services Toward Better Environmental Decision-Making (2005) / Chapter Skim
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2 The Meaning of Value and Use of Economic Valuation in the Environmental Policy Decision-Making Process
2 The Meaning of Value and Use of Economic Valuation in the Environmental Policy Decision-Making Process
Pages 33-58
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From page 33... ...
While acknowledging the potential validity of the first point of view, the committee was charged (see Chapter 1 and Box ES-1) specifically with assessing methods of valuing aquatic and related terrestrial ecosystems using economic methods, an approach that views values as inherently anthropocentric.
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From page 34... ...
The chapter closes with a summary of its conclusions and recommendations. The broad overview of economic valuation provided in this chapter is followed in subsequent chapters by more detailed discussions of the types of ecosystem services that can be valued, the economic methods that can currently be used to quantify those values, and the role of professional judgment and uncertainty in ecosystem valuation.
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From page 35... ...
The literature on environmental philosophy and ethics distinguishes between (1) instrumental and intrinsic values, (2)
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From page 36... ...
In this sense, utilitarian values are instrumental in that they are viewed as a means toward the end result of increased human welfare as defined by human preferences, without any judgment about whether those preferences are "good" or "bad." Existence values still stem from the fact that continued existence generates welfare for those individuals, rather than from the intrinsic value of nonhuman species. As such, there is the potential for substitution or replacement of this source of welfare with an alternative source (i.e., more of something else)
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Quantifying Values Recognition that ecosystems or ecosystem services are valuable, possibly in a variety of ways or for a variety of reasons, does not necessarily imply a quantification of that value (i.e., its valuation) .5 In fact, those people who affirm the intrinsic value of ecosystems object to the very idea of trying to quantify the value of environmental goods and services (see, for example, Dreyfus, 1982; MacLean, 1986; Sagoff, 1993, 1994, 1997)
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From page 38... ...
For example, NRDA requires a point estimate of the total damages or lost benefits from an environmental reduction in ecosystem services resulting from some event (e.g., an oil spill)
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From page 39... ...
While adherence to moral principles relating to intrinsic value will inevitably involve trade-offs, under this approach these trade-offs are of little or no consequence to the policy choice. If policy choices are to be based on the notion of intrinsic values and rights, then these rights have to be identified, but the values are implied by that identification need not be quantified in order to choose among alternatives (unless the decision to protect one intrinsic value implies a loss of something else with intrinsic value)
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Similar trade-offs are also implied by decision rules that apply a benefit-cost test to environmental policy choices but constrain the decisions to ensure that certain conditions reflecting intrinsic value are not violated. Possible constraints include ensuring (1)
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From page 41... ...
has argued that the protection granted to species under the Endangered Species Act (ESA) is based primarily on principles regarding the duty to preserve species because of their intrinsic value.
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From page 42... ...
, either positive or negative, and that the valuation exercise is the quantification of the value of those changes.14 Thus, in a policy context, economic valuation is not concerned with quantifying the value of an entire ecosystem (unless the policy under consideration would effectively destroy the entire ecosystem) ; rather, it is concerned with translating the physical changes in the ecosystem and the resulting change in ecosystem services into a common metric of associated changes in the welfare (utility or "happiness")
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From page 43... ...
forever because they lead to irreversible changes. This is particularly likely in the context of ecosystems, where stock effects are important and losses of key ecosystem services may be irreversible.
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The Total Economic Value Framework: Use and Nonuse Values The total economic value (TEV) framework is based on the presumption that individuals can hold multiple values for ecosystems.
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From page 45... ...
The distinction between use and nonuse values is similar but not identical to the distinction between instrumental and intrinsic value discussed earlier. Clearly, use values are instrumental and utilitarian, but, as noted above, the concept of existence value is not identical to the notion of intrinsic value, because the latter is deontological and includes nonanthropocentric values while the former does not.
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From page 46... ...
In contrast, nonconsumptive direct uses involve services provided directly by aquatic ecosystems without extraction, such as use of water for transportation and recreational activities such as swimming. Although nonconsumptive uses do not involve extraction and hence diminution in the quantity of the resource available, they can diminish the quality of aquatic ecosystems through pollution and other external effects.
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From page 47... ...
The economic valuation of the impacts of the Exxon Valdez oil spill on the aquatic and related ecosystems of Prince William Sound, Alaska, highlights the importance of nonuse values in natural resource damage assessments and project appraisals (Carson et al., 1992)
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From page 48... ...
In valuing an improvement in environmental quality or services, WTP considers trade-offs that would leave utility at the level that existed prior to the improvement (the pre-change utility level) , whereas WTA considers the utility level that would exist after the improvement (the post-change utility level)
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From page 49... ...
has shown that when valuing changes in the quantities of goods or services available for which there are no close substitutes (including many ecosystem services) , the two measures of value can yield quite different results.
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Uncertainty and Valuation Estimates of the values of ecosystem services are frequently somewhat uncertain for a variety of reasons. Chapter 6 explores the major sources and types of uncertainty, indicates which are most significant, and discusses their consequences in ecosystem services valuation.
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From page 51... ...
. This chapter provides only a brief summary of the underlying issues, which are quite complex and the subject of a massive literature.17 What is normally referred to as "the discount rate" is in fact the utility discount rate, also known as the pure rate of time preference, the social rate of discount, or the social rate of time preference.18 This is the rate to which Frank Ramsey's famous strictures 17For a more detailed discussion, see Heal (2004)
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From page 52... ...
As a result, the value of incremental ecosystem services will rise over time and the consumption discount rate to be applied to these will be negative rather than positive. That is to say, 19Frank Ramsey was an influential economist and mathematician at Cambridge, United Kingdom, in the 1920s.
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From page 53... ...
It argues that there is no compelling argument for discounting utility, but that there may be reasons for discounting consumption, although the appropriate rate may be positive or negative. When is it appropriate to use the consumption discount rate in ecosystem valuation and when should the utility discount rate be used instead?
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From page 54... ...
Use of this framework helps to provide a checklist of potential impacts and effects that must be considered in valuing ecosystem services as comprehensively as possible. It reduces the likelihood of omitting key sources of value, as well as the possibility of double counting values.
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From page 55... ...
· If the benefits and costs of a policy are evaluated, the benefits and costs associated with changes in ecosystem services should be included along with other impacts to ensure that ecosystem effects are adequately considered in policy evaluation. · Economic valuation of changes in ecosystem services should be based on the comprehensive definition embodied in the total economic value framework; both use and nonuse values should be included.
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From page 56... ...
1997. Valuing ecosystem services: Philosophical bases and empirical methods.
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From page 57... ...
1987. Nonuse values in benefit cost analysis.
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From page 58... ...
58 Valuing Ecosystem Services U.S. Supreme Court.
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