None of the methods of valuation discussed earlier in this lecture is altogether satisfactory, and each one only measures some aspects of the environment. Some people oppose putting a price on the environment because it can never be accurate. The Commonwealth Government said in its 1990 discussion paper on sustainable development that 'because of the subjective elements involved, translating valuation into price can be difficult. In some cases it may not be appropriate to attempt to do so.'

Willingness-to-pay surveys only take account of the functions of parts of an ecosystem to the extent that the people surveyed are knowledgeable about them and are influenced by this knowledge in their responses. The British Association of Nature Conservationists says:

The problem of valuing environmental resources does not lie primarily in the lack of markets but in the difficulties of determining the value of any particular species or example of habitat type to the system as a whole. Decisions rarely involve stark choices between survival and extinction for particular species or eco-systems. Rather they involve questions of more, or less. Opting for less increases the risk of extinction, but by how much? And if extinction does follow how does one value this? The world's stock of genetic material is depleted, but what is the probability that a particular species or eco-system will contain the key to future survival or welfare? And if we knew that how should we appraise it? How risk averse should we be? The scientific community has no answers to these questions; what can one hope to obtain by asking the public? What one gets from the contingent valuation is a willingness to pay, but is that the relevant measure in a context of extreme uncertainty about the significance of the decision? (Bowers 1990, p. 17)

In terms of sustainable development, a major problem with valuing the environment according to individual preferences is that the preferences of future generations are not taken into account. For this reason, a value that reflects current willingness to pay might not be consistent with long-term welfare or survival. Economist David Pearce and his colleagues point out:

Some care needs to be exercised, then, that the use of social objectives such as gains in welfare does not dictate or support policies which are inconsistent with the ecological preconditions for existence or, at least, some minimal quality of life. (Pearce, Markandya & Barbier, p.52)

In times of recession, individuals might prefer to continue adding to the greenhouse emissions rather than cut back on energy use; but, taken to its extreme, such behaviour could threaten future generations. Also, individual preferences are shaped to a large extent by the information available to people about the consequences of their choices&emdash;and that information is usually partial, often distorted and mostly shaped by the media. Preferences will also be shaped by the actual choices available. If public transport is readily available, then the willingness to do without a new road may be greater than if those people really need the road. Moreover, their willingness to pay will depend on their financial security and income levels, whereas their desire to protect the environment may go far beyond this. Any survey of willingness to pay is therefore likely to be distorted towards the values of those with the highest incomes.

Another argument against contingent valuation and other methods of finding a price for parts of the environment is that these methods are completely human-centred and take no account of the preferences of other living creatures. This, economists believe, is as it should be. For them, as we saw earlier, value is defined in terms of exchange between humans. For many environmentalists, however, especially deep ecologists, this is unacceptable and arrogant. It denies other living things any intrinsic value, namely any value outside of their value to humans.

For many people, not just environmentalists, putting a price on nature is as abhorrent as putting a price on family, friendship or freedom. It represents the further creep of the market and economics into areas of life that have traditionally been considered above material concerns. Like the packaging and marketing of religion, sex and body organs, it is somehow unsavoury and definitely unwelcome. The usefulness of economic theory can be pushed too far.

Biology professor David Ehrenfield says:

It does not occur to us that by assigning value to diversity we merely legitimize the process that is wiping it out, the process that says, 'The first thing that matters in any important decision is the tangible magnitude of the dollar costs and benefits.' People are afraid that if they do not express their fears and concerns in this language they will be laughed at, they will not be listened to. This may be true...But true or not, it is certain that if we persist in this crusade to determine value where value ought to be evident, we will be left with nothing but our greed when the dust finally settles. (1988, p. 213)

Daly and Cobb note that resource economists have found a certain reluctance by the public to co-operate with contingent valuation surveys. They quote a researcher who argues that 'respondents believe that environmental policy&emdash;for example, the degree of pollution permitted in national parks&emdash;involves ethical, cultural, and aesthetic questions over which society must deliberate on the merits, and that this has nothing to do with pricing the satisfaction of preferences at the margin' (1989, p. 91).

Back...