Putting a price tag on nature

treehugger.jpgThe L.A. Times published an interesting if somewhat odd piece in last week’s magazine about efforts to coax the business community into loving the environment by assigning a dollar value to our natural resources, or “ecosystem services.”

So, for example, we learn that dung beetles provide $380 million of waste management services to the U.S. cattle industry. One mile of coastal wetland provides $2.4 million of storm protection. A nice fern is worth $4, or you can get 3 for $9.99.

I made up the last one.

The odd part of the article is that it wraps together these efforts to place a concrete value on natural resources with a very different phenomenon: the use of pollution markets to curtail environmentally damaging activities.

Superficially, the two concepts seem similar. They both involve pricing, profit motives, and payments as a means to promote conservation. Less superficially, though, they are mirror opposites.

The “ecosystems services” approach represents an attempt to uncover the intrinsic worth of a particular corner of nature. This stretch of wetland is valuable because without it we’d have to pay however much in storm damages. That population of bees is valuable because without it farmers would have to find alternative ways to pollinate their crops. In theory, quantifying this intrinsic value is a pathway to convincing interested parties that ecology is worth paying for.

Pollution markets — whether for carbon or sulfur dioxide or whatever — are quite a bit different. A pollution market is an attempt to assign a cost, rather than a value, to a particular activity we don’t like. These markets are just an exotic form of taxation, and there’s nothing intrinsic about the dollar values. Politicians set it at whatever level is deemed necessary to discourage the activity in question.

The L.A. Times piece spends a lot of time hand wringing over what this mercantile approach to conservation means for the soul of the environmental movement, but the basic confusion between ecosystem services and pollution markets muddies the questions the author is trying to pose. Assigning a dollar value to wetlands may raise thorny philosophical questions about our relation to nature. Taxing polluters does not.

And even though I have my doubts about the general applicability of the ecosystems services approach to conservation, I admit I don’t find the proposed alternative — an appeal to our innate sense of ethical obligation toward nature — hugely compelling either:

The essence of the conventional and by-now-familiar ethic goes something like this: Because nature is of inherent and infinite value, humans have a moral obligation not to trash it. In the abstract, this resonates with most reasonable people; tree-huggers or not, we generally agree that littering is uncool, and a sense of right and wrong does influence many people’s relationship to the natural world.

This would be nice if it were true, but my experience is that in most parts of the world, littering is in no way seen as “uncool,” and even in America the change in attitude is recent and far from complete. The ethic is certainly a worthy ideal, but by itself it isn’t going to carry the day. As always, environmental preservation will require a canny blend of appeals to both our moral sense and our sense of self interest. And, of course, a healthy dose of coercion in the form of taxation and regulation.

This article is cross-posted from Grist. I know there’s overlap in our readership, but I suspect that enough people only read one blog or the other that it’s worthwhile to post in both places. Let me know in comments if you feel otherwise.

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  1. Pete - February 26, 2007

    I believe you’re right, but the real trick comes with keeping the innate sense of ethical obligation intact while at the same time making things happen. It’s a core value. That doesn’t mean you shouldn’t compromise and work with a money-based system, but it does mean that you have to watch that you don’t get seduced by the Dark side of the Force.

  2. FD - February 26, 2007

    What bothers me, is a trend that I have been noticing of late in the environmental movement. It seems to me the most suggestions for how to hold business accountable is by some new tax or additional regulations. Now don’t get me wrong, I believe that we have to get people going and that is going to take some motivation of the taxation sort. However, I’m yet to see a government system that I look at and say “Wow, that’s a well run efficient program”. I just think we need to consider that in some, perhaps many cases, more regulation and more tax, may not be the best answer. There are many examples out there for how saving the planet, saves business money and makes it more profitable. As a process engineer I have seen many examples of companies changing their ways for greener technologies, because once they see the whole picture, they realize they can’t afford not to change. Just a couple hours of meetings and a few weeks of research, no taxes or government paper pushers required. Perhaps it’s time we work with business and see them as an ally instead of the enemy, working with them professionally, will get them to agree more quickly. More taxes or regulations, may just make them move the problem and the jobs to a different country.

  3. Kenneth Mulder - February 26, 2007

    I am afraid I must disagree. The link between the two concepts is inherent–the cost of a particular form of pollution is generally determined by its impact upon ecosystem services. Indeed, it is hard to think of a form of pollution whose cost is not a result of diminished ecosystem services. For this reason, the efficient level of taxation of pollution can only be ascertained by knowing the value of the ecosystem services that are impacted. If we are not worried about efficient taxation, then we can simply ban given forms of pollution, but this is seldom feasible or desirable (DDT and CFCs being some exceptions).

  4. Amos Baehr - February 26, 2007

    Quoting John Locke, ” Land that is left wholly to nature is called, as indeed it is, waste.” – an outdated illusion of ignorance which if it persists will self distruct taking us with it. Their is no such thing as waste land, air or water and if Locke can be forgiven his ignorance no institution that venerates his dillusion can persist. Humans must be enlightened concerning the darkness of several European Enlightenment short commings. Markets may persist if they can be made to internalize the cost of consuming Ecosystem services. Humanity may persist if it will surrender its vain attempt to conquer nature. The dollar value can never be the bottom line for ecosystem services but any part of human activity organized by the market will reflect dollar value. Market logic must be shifted to reflect Ecological logic.
    The Alaska permenant fund is an economic model that recognizes the potential of trust fund management in bridging natural and economic interests. I favor the development of a commons sector (ie. Capialism 3.0) in the economy to integrate Ecological concerns into the market. A trust can be bound to ecosystem services by scientifically informed human judgement while interacting with the market through simple monetary mechanisms.

  5. Aaron A. - February 27, 2007

    FD said: I just think we need to consider that in some, perhaps many cases, more regulation and more tax, may not be the best answer.

    I’m inclined to agree. I think that the reason for defaulting to taxation is because it’s the first thing we think of when we think of mandatory action, or how to internalize costs. The government provides tax breaks for education and homeownership because we as a society want to encourage it, and they levy fines for speeding and littering, because we consider such behavior irresponsible.

    However, I believe that the most efficient way for consumers to encourage responsible corporate behavior is to demand it. Politicians have many masters to serve, and chances are you’re not on top of the list. Your dollars, though, they cannot lie. Take a look at what’s happened over the last few years based on consumer demand: McDonald’s has branched out into healthier (or at least healthier-looking) fare because of customer demand. A sub-industry of supermarkets has hit the mainstream, specifically catering to those who prefer organic foods. The Academy Awards, an annual jubilee of meaningless glitz and conspicuous consumption, has started spreading the message of conservation. They do it for one reason: they want our money. The poorest among us don’t have much choice in where we shop, but most of us do, and we can influence policy by deciding which companies are worthy of our business.

  6. Lindsay - March 5, 2007

    I agree with Aaron A.
    The choices we make as citizen consumers can cause rapid shifts in big business.
    I see voting with our dollars as the most efficient way to reach a sustainable society.