The measurement of environmental gains and losses can be made in money terms, although it is recognised that these gains and losses would not in reality be bought and sold on the market. The use of money as a measure enables economists to make choices and comparisons. Direct costs and benefits are the easiest to estimate. These might include estimating the value of production forgone because of environmental damage, the value of earnings lost through health problems associated with air and water pollution, health-care costs because of pollution, and the value of decreased growth and lowered quality of crops because of soil degradation.

However, even these direct monetary costs tend to underestimate the real costs and benefits provided by the environment. For example, improved health resulting from a cleaner and safer environment is worth more than just the medical bills saved. A clean beach is worth more than just the value of having healthier beach-goers. Direct costs do not measure the values that people put on the environment. Economists differentiate between different types of values. 'User' values cover benefits that individuals get from the environment, including those from recreation, sport, or just viewing pleasure. 'Option' values are potential user values&emdash;the value to a person who might use the environment in the future.

'Existence' values, only recently recognised by economists, are people's preferences that are outside 'use' values&emdash;such things as 'concern for, sympathy with and respect for the rights or welfare of non-human beings' (Pearce, Markandya & Barbie 1989, p. 61). For example, many people want to save endangered species and wilderness areas that they themselves will never see, nor hope to see. The economist's notion of 'existence' or 'intrinsic' values is different from the environmentalist's idea of intrinsic values, which are values that the environment might have quite apart from humans and how they might benefit from it. The question of whether birds, animals and ecosystems have any value outside their use to humans is a philosophical question that environmentalists and economists cannot agree on.

For most economists, the environment can be priced because option and existence values can be translated into the preferences of individuals for things like cleaner air and water, less noise and protection of wildlife; and those preferences in turn can be measured. This can be done in the three ways described on the next screen.

Nancy Beckham (1991, p. 16) looked at how a single tree can be valued. The first attempt by a scientist she could find was by an Indian professor, T. M. Bas, who in 1979 valued a tree at $A188,000 over 50 years. This figure included;

the timber and fruit	negligible
the oxygen it produced (valued at market rates)	$30,000
the feed it provided for goats	$ 2,000
controlling soil erosion and fertility	$30,000
recycling water and controlling humidity	$36,000
sheltering birds, animals and plants	$30,000
controlling air pollution	$60,000.

More recently, the US Council of Tree and Landscape Appraisers valued a healthy tree in a park with a 100 centimetre trunk at $120 000. The Australian Institute of Horticulture takes account of how rare a tree is, its historical significance, and its location and particular characteristics&emdash;but comes up with much lower figures. Beckham used their formula to value a 50-year-old Eucalyptus pilularis in her yard and found it was worth $7000; she pondered why Australians might value a tree so much less than Indians and Americans.

It may be that the Australian figure represents a current value rather than a lifetime value. Even so, if each tree and plant can be priced in such variable ways despite carrying out such important and varied tasks, as shown below, it is no wonder that people baulk at pricing whole ecosystems.

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