Valuing the Environment

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Case Against Valuation

Decisions are better made in the political arena

Economic concepts such as consumer choice and allocative efficiency are now intruding into politics. Peter Self, a professor of public administration at London University, argues that 'politics has been invaded by market theories which assume that 'political man or woman' has the same motives and goals as 'economic man or woman' (1990, p. 4).

Environmental questions are traditionally determined by the political process, and government taxes are used to provide public goods and to protect the environment. This means that everyone shares in the costs of this according to their position on the tax structure. Many economists do not like this system, however, because they argue that an individual may be paying more for something than he or she thinks it is worth, meaning that the resource allocation is not 'efficient' (the social costs may outweigh the social benefits).

These economists argue that voting is a poor mechanism for revealing individual preferences about how resources should be allocated. This is because not everyone is eligible to vote or participates in elections, and generally there is a choice between a very small number of political parties, each of which has a package of policies on a variety of issues. People do not vote solely on the basis of self-interest but also on personalities and ideologies. Moreover, voting cannot reveal the strength of a person's preferences for a particular alternative. This only occurs through devoting money, time or energy to lobbying politicians or to organisations that lobby them.

These economists argue that it is only when a person puts a money value on environmental quality that they can get a measure of the strength of feeling and the degree of concern individuals have for an environmental asset. Self claims that this conclusion (that markets are more efficient at giving people what they want than governments) is based on the fallacious assumption that there is no such thing as the common good outside of individual wants and preferences. He argues, however, that when people vote they often consider wider interests than their own self-interest. They see themselves as part of a group; be it an occupational group, an ethnic group, a class, a nation or whatever:

Economic markets follow an instrumental logic whereby, under the right conditions, rational egoistic behaviour is socially legitimated and acceptable … In politics, by contrast, it is or was a general social belief that individuals should have some regard to the 'good of society' and not just their own private wants. (1990, p. 9)

This is why people support ideas such as public education, when they do not have children, and environmental protection beyond their own lifetimes.

While many economists argue that the market is democratic because individual consumers can vote by choosing how they spend their money, the move towards a market allocation of natural resources has been seen by some environmentalists as a move away from democracy. Currently, communities can influence governments to protect the environment through legislation and intervention by campaigning and demonstrating as well as by voting. In a system where the optimum level of environmental protection is decided automatically by a market responding to prices that incorporate environmental costs, influence is far more difficult. The power of the consumer is not evenly distributed (the wealthy, businesses and bureaucracies have far greater consumer clout), and alternatives are often not available. Moreover, power through consumption is not seen as such a benefit to the environment by those who believe consumption itself is inherently bad for the environment.

In reality, the more that economists are successful in persuading people that environmental problems should be solved using economic solutions, the more those economists will control the decision-making processes; for it is they who will do the cost-benefit analyses, work out the national accounts, and put the prices on environmental 'assets'. As was noted earlier, it is because people put different values on the environment that conflict arises in the first place. That conflict is normally resolved politically. However, these economists are seeking to avoid that political process and to take over the role of attaching values.


Source: Sharon Beder, The Nature of Sustainable Development, 2nd edition, Scribe, Newham, Vic.,1996.

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