Environmental Engineering Reference
In-Depth Information
thus the benei ts derived may not be easily ascribed to it. For example,
deforestation may result in increased erosion, leading to sediment deposi-
tion on downstream farmland, potentially af ecting the nutritional content
of the deforested soil and crop production on the downstream farmland.
Thus, in addition to its value for timber production, the forested land may
also have a direct inl uence on crop and livestock/game production in the
immediate area and crop production in a dif erent area. Including forest
area as a determinant of livestock/game or crop production may therefore
capture some element of the economic contribution of this ecological
function. In mathematical terms this can be described as:
Q
5
f
(
x
i
. . . . .
x
n
,
A
)
where
Q
can be considered as the output or marketed good, for example,
crop production,
x
i
. . . . x
n
are marketable inputs required to produce that
good, for example, labour, seed and so on, and
A
is the environmental
input of interest required for the production of the good, for example, the
area of forested land.
In attempting to value these environmental benei ts, two underlying
relationships must be elucidated. First, the physical ef ects of changes in
a biological resource or ecological function on an economic activity have
to be ascertained. That is, an accurate understanding and quantii cation
of the change in the output of a good with a change in land-use patterns
must be known. To use our previous example, which other ecosystems
are af ected by the deforestation of an area and what are these ef ects?
Knowledge of these processes requires detailed ecological understanding
of the systems involved. Second, the ef ect of these environmental changes
must be valued by considering the corresponding change in the output
of the marketed good, for example, what is the quantitative change in
downstream crop productivity and thus farmers' incomes in response
to the deforestation of an upstream forest? Again this requires detailed
ecological and sociological understanding of the processes in place. In this
way, the biological resource is considered as an input into an economic
activity, and can be valued in terms of the impact it has on the output of
a marketed good.
Limitations to the use of the production function approach: the absence of a
monetary value of the output good
When a product,
Q
, such as crop production, is measurable and a market
price is available for it or one can be imputed, determining the values of
the environmental inputs (
A
) into its production is relatively simple.
3
If
however,
Q
can not be measured directly, then a measure of the change in