Assigning a Value to Nature

"Everything we depend on for survival, including air and water, soil, plastic, energy, glass, metal, and food, comes from the Earth and represents 'natural capital.' Yet we are led to believe it is a strong, growing economy that ensures that we receive these necessities. In the looking-glass world of economics, human capital is overvalued, whereas natural capital and the processes by which the living world maintains itself are unvalued or ignored altogether.

A schematic representation of the economy is filled with items and arrows indicating the intricate relationship between resource extraction, processing, manufacturing, retailing, and regulations, taxes, and incentives. The ozone layer, underground aquifers, topsoil, biodiversity, and fresh water are depicted as externalities: outside the realm of the economy. But that means the economic system is no longer grounded in the real world, since those so-called externalities are actually the life-support systems of the planet. Without them, there could be no life -- and certainly no economy.

. . .

In the 'household' of the living world, each system, each entity, has a part to play in the 'economy' of the whole. A standing tree performs numerous ecological 'services' for the Earth, yet none of these services has economic worth according to the way our system does its accounts. Economics recognizes the value in a forest such as its recreational and medicinal properties, but all value is still defined in terms of human use, not in terms of the entire living world.

Progressive economists like Herman Daly are attempting to include factors that wer previously thought to be outside the boundaries of the economy -- that is, to internalize factors that were once considered external. Now ecologists are attempting to document and evaluate those vast services rendered by nature.

If we try to replace or substitute a natural service with a human-centered technology, we may get an estimate of its economic worth. Thus, we can compute the worth of water purification by a watershed by calculating the cost of doing the same thing with a purification plant. Some of nature's services can never be replaced, because we simply don't have the technological competence to even try. David Pimentel calculates that on a sunny day in New York State, insects pollinate a trillion flowers, a feat no human technology can reproduce. Nevertheless, it is possible to make crude attempts at putting a dollar value on much of what nature does. When Robert Costanza and his associates did this, they came up with an annual economic value of about U.S. $30 trillion, an amount that is almost twice the collective annual GDPs of all the countries in the world! In our economic systems, these services aren't even part of the discussion, so it's no surprise that we are so ecologically destructive. Critics, of which I am one, of this economic assessment of ecological services warn that there are some things that are beyond economic worth, that might be considered sacred. In imposing an economic value on all parts of nature, there is a danger that economists will simply try to factor everthing in, including air, water, and biodiversity, as if it can all be rationally calculated.

Nevertheless, by trying to realize its enormous 'value,' a value that dwarfs our economies yet is currently unacknowledged. So we continue to push the limits of a finite planet. And still the process continues: the underlying assumptions and priorities still drive us on toward disaster."

-- David Suzuki, "Assigning a Value to Nature"