Environmental Engineering Reference
In-Depth Information
Methods for Valuing Biological Assets
Looking at the number of papers and monographs published on monetary valuation
of biological assets, it could probably be said that it is now a well established
practice. It might also be felt that valuation of nature is still controversial because
of the combination of theoretical and empirical problems, and the potential impor-
tance the resulting values may have in influencing public opinion and policy
decisions (Loomis et al.
2000)
. For example, biologists such as Ehrlich and Ehrlich
(1992)
, argue that ecosystems are complex, indivisible entities that operate on time
scales outside the range of human perception, and that they have values that are
difficult or impossible to measure (see also Gowdy
1997)
. Not only biologists, but
also scholars from other disciplines (and even economists) may find monetary
valuation a 'hopeless' exercise. Philosophers, such as Sagoff
(2000)
and economists,
such as Bromley (Vatn and Bromley
1994)
, dismiss monetary valuation as ethically
insupportable and impracticable. Nunes and van den Bergh
(2001)
, on the other
hand, claim that monetary valuation of biodiversity can make sense. However, they
point out that the various valuation methods should not be considered as universally
applicable to all levels of biological diversity or to all types of biodiversity values.
Research on the monetary value of biodiversity can be motivated by the desire to
better understand the importance of biodiversity (for a much more elaborate treatment
of the need for valuation, see, for example, Simpson
2007)
. Intuitively, the importance
of biodiversity to society is best represented by monetary values. However, reality is
more complicated than the common intuition suggests. Economics is more concerned
with prices than with values or importance.
1
An important difference between
prices and values, which is particular relevant for this study, is that prices that arise
from market transactions offer, in some sense, objective information, whereas many
concepts of value are subjective (Heal
2000)
. As a result, valuation cannot be
dissociated from choice. Economic analysis provides several very ingenious
measurement techniques to assign a (subjective) value to the benefits of, or avoided
damage due to, changes in agro-biodiversity, and next we review some of these.
Non-demand Approaches
Following Bateman and Turner
(1993)
, two basic approaches are distinguished:
those which value an asset via a demand curve (see the following subsection), and
those which do not. In general, non-demand approaches are based on the principle
assumption that if people incur costs to avoid damages caused by lost nature's
services (such as the pollination of agricultural crops by bee species) or to replace
nature's services, then the value of those services are worth at least the amount of
1
Reasoning along Oscar Wilde's line of thought - who once remarked that a cynic is someone who
knows the price of everything and the value of nothing - economists are utterly cynical folks.
