Geoscience Reference
In-Depth Information
8.4.5
E CONOMIC V ALUATION AS A D ECISION -M AKING T OOL
Section 8.2 provided the conceptual framework and need for economic valuation of
the ecological lagoon system. Quantifying the various components of the lagoon
system as accurately as possible will produce the best information for a cost-benefit
analysis. Once an inventory of the goods, services, and other intrinsic values provided
by the lagoon system has been conducted, a valuation of each component can be made.
A number of methods for evaluating environmental value in economic terms exist.
However, due to the complexity and dynamics of the natural environment, the concern
remains whether the existing technology and information adequately capture the com-
prehensive values of the system. Therefore, these methods are considered as tools to
provide the best estimates available. There is a great deal of work in this emerging
field of environmental economics and advances in environmental accounting are being
made. 37 Significant information gaps and research needs remain. 17,19,28,38,39
An example of an economic valuation or inventory is provided in Figure 8.3. It
consists of two steps. The first step is to define the economic values derived from and
intrinsic to the lagoon ecosystem, commonly referred to as the NC. “Capital” has been
traditionally defined as the accumulated wealth in the form of investments, factories,
equipment, etc. NC is similarly defined as the natural resources we use, both renewable
and nonrenewable. More recently, this definition has been expanded to include not
only the “goods,” but also the myriad ecological “services” that the natural system
provides (e.g., wetland filter pollutants from run-off water, buffer shorelines from
erosion) that are, in many cases, sinks to ground water. 16 For example, Costanza
et al., 17 Brouwer et al., 18 and Wilson and Carpenter 19 describe the significant economic
values of wetlands and acknowledge their multifunctional resource role. The status of
methodology attempting to quantify these values is rapidly evolving but is still con-
sidered to be inadequate in its early development stages. 20,21,40
International attention has been focused on developing a better method of
quantifying interrelationships between the natural environment and the econ-
omy. 41-43 The 1993 United Nations Handbook of the UN Statistics Division issued
the integrated environmental and economic accounting system (SEEA). Environ-
mental accounting was begun in the European countries by the Norwegian gov-
ernment in 1974, followed soon after by the French government. The Fifth Com-
munity Programme for the Environment and Sustainable Development 44 called for
an environmental adjusted national account (to account for the natural resource
stock of air, water, soil, landscape, heritage, etc.) to be formally adopted by the
end of the decade.
A few examples of how countries are attempting to better account for natural
resources can be found on the informative Internet sites. 9,45 Further examples, which
discuss how these systems need to be improved, are contained in the Summit
Conference on Sustainable Development. 46-48 These reports describe a national
resource accounting framework that has been used to evaluate agricultural practices
in the context of production systems including the cost of soil erosion, infrastructure
costs, etc., and a service-level approach that has been proposed to value natural
resource and man-made assets in making policy decisions. This approach relies on
a set of performance indicators to measure user-base service levels. This provides
 
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