Is it right to put a price on nature?

I’ve just spent a week trekking along Wainwright’s coast-to-coast route, walking the first section from St Bees to Penrith. The walk took us across the vast and stunning landscape of the Lake District, as described in Wordsworth’s poem ‘Daffodils’:

I wander’d lonely as a cloud
That floats on high o’er vales and hills,
When all at once I saw a crowd,
A host, of golden daffodils;
Beside the lake, beneath the trees,
Fluttering and dancing in the breeze.

Extract from ‘Daffodils’ by William Wordsworth (1804)

Along the walk, I was pondering a question posed on the discussion forum of a course I’m studying on Agro-Ecosystem Services at Bangor University. The question was whether it is relevant to put a monetary value on ecosystem services? Can it improve policy and management decisions? Is it too reductionist? Is uncertainty too high to produce credible values?

The motivation behind monetary valuation is that it provides decision makers, such as policy-makers and planners, a means to translate a complex subject into the more familiar language of money, which then helps guide an appraisal of its importance and can support decisions. Monetary valuation may also be a helpful way to engage certain audiences such as economists and investors, who can yield significant influence.

My initial reaction to introducing a monetary value on ecosystems is heavy caution. It’s against all common sense to put a price on nature. The Lake District offers a variety of what we call “ecosystem services”, a term that means the benefits that humans obtain from ecosystems. The ecosystem services concept helps us understand the value of ecosystems, which can help us make better land management decisions. From an ecosystem service perspective, my experience of the walk was social, cultural, aesthetic and spiritual, benefiting my health and wellbeing. I also accessed fresh water along the way, as well as oxygen and food, all vital to my survival. Was that experience worth £50 or £100,000? If forced, I could put a personal, entirely subjective financial value on it but it would be a flawed calculation and I would never want to do it. Likewise, how could I put a financial value on Wordsworth’s poem? It would be an insult to the Lake District and Wordsworth to reduce what they provide into a monetary figure.

The flaws of monetary valuation

Some people rightly argue that in many cases, valuation is a meaningless idea as ecosystem services are vital for human survival; therefore they have infinite value (Chaisson 2002, McCauley 2006). Technology is unable to deliver planet-scale services such as climate regulation, soil formation and air quality maintenance, so there are no comparable means to value it in financial terms. Even if we do put a monetary value on it, the figure is so high that it becomes meaningless. Furthermore, if ecosystems are dynamic and inextricably linked to one another, how is it possible to segregate one ecosystem service or geographic area and put a value on it?

There’s another reason to be highly cautious of ecosystem valuation. When we start associating a financial value to nature, we are walking on a path that exposes ecosystems to commodification or privatisation (Monbiot 2002, McCauley 2006). The concept behind valuation is that it can reduce market distortions and align economic incentives with social and environmental incentives. This can sound attractive, however by aligning everything in monetary terms, we are trusting that market-based mechanisms will deliver the right decisions to protect nature. It’s perverse, as George Monbiot argues, to use the same processes (commodification, economic growth and financial abstractions) that are driving the world’s environmental crisis to try and solve them.

Another challenge with monetary valuation is that it’s often flawed due to poor data availability and quality: this includes both coverage and resolution, where data can often be inconsistent and incomplete, requiring proxies which can have a high potential for error (Eigenbrod 2010).

Despite its troubles, there is a lot of interest in monetary valuation and it’s a growing science. In the UK, we have projects that refer to monetary valuation, such as the mega interdisciplinary National Ecosystem Services Assessment. There’s also a number of smaller studies across the UK, as presented in the BESS database. Robert Costanza, a prominent ecological economist has even had a stab at estimating the global value of ecosystem services – about $46 trillion/yr if you’re interested!

Making the case for monetary valuation

With all these criticisms and flaws, what is the case for monetary valuation? Robert Costanza is a prominent voice in academia that advocates for monetary valuation and has some compelling arguments.

Firstly, Constanza argues that valuation is unavoidable since it is already done implicitly when we make decisions involving trade-offs; therefore improved transparency through monetary valuation can help us make better decisions (Costanza et al. 2014). Constanza also emphasises that it’s a misconception to assume that valuing ecosystems in monetary terms is the same as commodifying or privatising them for trade. Rather, most ecosystem services are public goods or common-pool resources, which makes conventional markets work poorly, if at all. In addition, the values do not relate to exchange values, rather use or non-use values.

“If nature contributes significantly to human well-being, then it is a major contributor to the real economy, and the choice becomes how to manage all our assets, including natural and human-made capital, more effectively and sustainably” (Costanza et al., 2014).

There are case studies that demonstrate how ecosystem valuation has led to market-based mechanisms have helped make the right decisions. A commonly cited example is the Catskill Delaware Watershed, where New York City invested in conserving a watershed that filters its water as effectively as a filtration plant, and more cheaply. Yet these examples of success are far and few between so far.

Using valuation in the right circumstances?

There are many interesting uses for monetary valuation that convince me it can sometimes have a place, but it shouldn’t be a go-to tool in the first instance. Monetary valuation may convince decision-makers to realise the irreplaceable services of nature, to treasure them deeply as sacred, delicate systems that we must protect and help thrive. However we should be very cautious about when it’s used. My pragmatic view is that monetary valuation can have an appropriate place in the discussion but in proportion with other tools and communications. Its purpose must be well communicated, together with its accuracy, as it’s no use bringing shoddy evidence to the table.

I also believe that we should also not allow monetary valuation to dominate the debate when the moral arguments are clear. Douglas McCauley, a professor at Stanford University argues against the central role of monetary values in decision making, suggesting that protecting ecosystem services should be framed predominantly as a moral issue; as the right thing to do, rather than reduced to the financial bottom line. McCauley suggests that policy-makers can be driven by more than the financial bottom line and believing otherwise is “akin to saying that civil-rights advocates would have been more effective if they provided economic justifications for racial integration” (McCauley 2006). 

Many social and environmental justice campaigners have experienced how decision making in the real world often does not follow evidence-based, rational processes. The reality is that decisions are made rashly and that the those in power can be manipulated or will act selfishly to win favour with one group over another. While monetary valuation clearly has some flaws, both practically and philosophically, it is another tool we can add to the toolbox. You never know when it might come in handy, but we just need to be very careful how and when to use it.

References

Chaisson, E.J., 2002. Cosmic Evolution: The Rise of Complexity in Nature. Harvard University Press, Cambridge, MA.

Costanza, R., 2006. Nature: ecosystems without commodifying them [Correspondence]. Nature 443, 749.

Costanza, R., de Groot, R., Sutton, P., van der Ploeg, S., Anderson, S.J., Kubiszewski, I., 2014. Changes in the global value of ecosystem services. Global Environ. Change, 26, 152–158.

Eigenbrod, F., Armsworth, P.R., Anderson, B.J., Heinemeyer, A., Gillings, S., Roy, D.B., Thomas, C.D. and Gaston, K.J., 2010. The impact of proxy-based methods on mapping the distribution of ecosystem services. Journal of Applied Ecology, 47(2), pp. 377-385.

McCauley, D. 2006. Selling out on nature [Commentary]. Nature 443, 7107: 27-8.

Monbiot, G., 2012. Putting a price on the rivers and rain diminishes us all. The Guardian.

London to Berlin: weighing up the transport impacts

I’m heading to Berlin later this year with a friend and we’re discussing our transport options. The default choice for most folks is to fly. However, I’m a complicated case because around 2005 I started getting all concerned about the environment and made a pledge to fly as little as possible in my life. At the time I was at University, immersing myself in groups such as People & Planet and Engineers Without Borders while reading George Monbiot books and WWF’s Living Planet reports. Over in London, my friend Petra was campaigning with a new environmental group called Plane Stupid. I reasoned that not flying seemed the right thing to do, keeping in mind that the luxury of flight is a very modern possibility and that there were plenty of adventures I could still have without boarding a plane.

Since that pledge to fly less, I’ve turned down many holidays and spent more time exploring by bus and train. It’s been great. However I have taken some flights: USA, Switzerland, Kenya, and later this year, Israel-Palestine. I’m uncomfortable with the flights, but they have been incredible trips.

These ideals that feel so common with “environmentalist friends”, have earned me a bit of a reputation with others. I became “the eco-warrior” of the family and friends would consider me “the one into sustainability”. I don’t mind having that reputation, I just hope that more people will join me.

As we started planning this trip, without even asking my friend knew I might be uncomfortable with flying and raised the idea of alternatives. So I thought I’d spend a bit of time geeking out to present the options we have.

In brief, here’s what we are weighing up:

  • Time taken
  • Cost of the journey
  • Greenhouse gases

Now for the data crunching. Using Skyscanner, Loco2, Eurolines and a few other websites to gather data, I then fed this into an old carbon-calculator I made a few years back and spruced it up (you can grab it here) to present the results for a return London-Berlin:

Cost: Rail (£156), Car (£154), Flight (£138), Coach (£63)

chart3

Time (hours): Car (26), Coach (20.5), Rail (20), Flight (3.5)

time

Greenhouse gases, kg CO2e: Flight (360), Car (225), Coach (64), Rail (27)

ghg

Now we are properly informed with the data, it’s time to weigh things up. As expected, flying is the most polluting.  Even when we put a figure on the emissions,  it’s still rather meaningless to most people. What does 360 kg CO2e look like? I remember very roughly that an average person’s GHG emissions are 12-15 tonnes per year which is a little bit of helpful context. But finding some more perspective would be helpful. I think this would be a good exploration for another blog.

It’s useful to compare against the car. My friend was proposing this option as an alternative but this shows that unless we really value the freedom the car offers and enjoy driving, taking the train trumps the car and we can sit back, watch the scenery and have a beer. If we’re strapped for cash then the coach makes sense.

Time is the sticking point. You really can’t beat the speed of a plane. Some jobs can support working on the train, but many can’t and for someone in a job, it may not make economic sense to take a day off for the train. But it does make great environmental sense. And it’s a great adventure. I’m also fortunate in being able to work on the move. So no time will be lost. Here’s to the train!

Using the calculator

The calculator is based on Google Docs and I welcome anyone to take it, share it, and remake it. Click here to access it. I hope it will be helpful for others weighing up their transport options. 

Living in a doughnut

A few years ago, the Stockholm Environment Institute released a paper on planetary boundaries. I failed to rouse much interest from friends about the paper, but it had me tremendously excited. It provided me with a much needed framework to describe how climate change isn’t the only major threat of our lifetimes, there are several others and each one can be considered to have a safety boundary. Together with climate change, there are two other planetary boundaries we have crossed: exceeding safe levels of nitrogen extraction from the atmosphere (to produce fertilisers for crops and animal feed) and biodiversity loss. By illustrating this (see picture below) we have a platform for talking more holistically about solutions, and can make sure we don’t miss gaping holes in our environmental policies.

thresholds
SEI (2009), Planetary Boundaries: A safe operating space for humanity. Featured in the Nature Journal.

But there is one gaping hole that is continually exploited by corporations and journalists. This is the supposed incompatibilities of pursing environmental goals with social justice. I know that badly put together environmental policies can exacerbate social justice but is this idea really true in general? That’s exactly what Oxfam has been discussing in the run up to the Rio Summit.

Oxfam’s have just released a discussion paper that explores the dynamics of living within safe environmental limits and within acceptable levels of human deprivation, and illustrates the concept in a doughnut (see picture).

doughnut
The social foundation forms an inner boundary, below which are many dimensions of human deprivation. The environmental ceiling forms an outer boundary, beyond which are many dimensions of environmental degradation. Between the two boundaries lies an area – shaped like a doughnut – which represents an environmentally safe and socially just space for humanity to thrive in. It is also the space in which inclusive and sustainable economic development takes place.

Individually, none of the ideas or data is new, but the report is a great step towards tying together some of the top-level discussions around social justice and the environment. It also does well to explain the all important question: what happens to the environment when poor countries start consuming more? Here’s what the data suggests:

  • Food: Providing the additional calories needed by the 13 per cent of the world’s population facing hunger would require just 1 per cent of the current global food supply.
  • Energy: Bringing electricity to the 19 per cent of the world’s population who currently lack it could be achieved with less than a 1 per cent increase in global CO2 emissions.
  • Income: Ending income poverty for the 21 per cent of the global population who live on less than $1.25 a day would require just 0.2 per cent of global income.

Meeting basic human needs such as food security, energy and income poverty must be done in tandem with a greater global equity in the use of natural resources. The greatest reductions have to come from the world’s richest consumers. Unfortunately, as George Monbiot writes in his blog:

“the politically easy way to tackle poverty is to try to raise the living standards of the poor while doing nothing to curb the consumption of the rich. This is the strategy almost all governments follow. It is a formula for environmental disaster”.

All this has motivated me to work for BioRegional and access:energy, two organisations that I believe understand the dynamics between environmental limits and global equity. BioRegional is an organisation that invented the One Planet Living framework, which helps people design sustainability action plans that are holistic and ambitious (in line with a sustainable and globally equitable level of consumption). access:energy is a social enterprise based in Kenya that designs and manufactures affordable, locally-made, clean energy technologies (focussing on wind turbines).

Sources