You can put a price on the earth's worth to humans, but it does little for understanding its true value or helping us to make policy.
Early one morning in May 1997, I was on a train on my way to work at the Beijer International Institute of Ecological Economics in Stockholm. Leafing through a newspaper, my drowsiness disappeared when I spotted a brief piece saying that an article published in Nature put the economic value of the earth's ecological systems at $33 trillion a year. Since economic valuation of the environment is my field of research, I was eager to lay my hands on a copy of this work.
The Nature article received much attention, especially that dollar figure. It also created heated discussion within the scientific community, which was evident from a special section on ecology and economics in Nature about a year and a half later. I was involved in another kind of response: a workshop for ecologists and economists in September 1998 that resulted in a consensus-type article called "The value of nature and the nature of value", published in Science a few months ago.
One key message in our Science paper is that it is not helpful to try to compute a total economic value of such big things as the world's ecosystems. We cannot live without the earth, so its economic value may be seen as indefinable or infinite. If it is to be helpful as one of several possible tools in public policy-making, economic valuation should focus on predicted environmental (and other) consequences of policy options. Economic valuation of environmental changes is typically carried out by studying what trade-offs people are willing to make between resources such as their time and income and environmental quality or, as we say, the supply of ecosystem services.
The concept of ecosystem services has proven fruitful for joint research efforts by ecologists and economists. The earth's ecosystems may be viewed as capital assets, supporting human survival and wellbeing with services such as soil generation, pollination and water purification. Another important message in the Science article was that as these services are getting scarce, economising on them is increasingly crucial. I find it uncontroversial that ecosystem services should, like ordinary goods and services, be subject to sound housekeeping principles. This involves pricing them so that their consumption implies a cost.
Unfortunately, the economic valuation needed is often tricky, partly because many ecosystem services are public and thus not subject to market pricing, and partly because they are often poorly understood. Often, it is simply not known how ecosystems generate services, what ecosystem interactions imply for their supply or how a particular human activity influences a certain ecosystem service. I try to apply valuation methods that have been developed to cope with situations where market pricing does not exist, and I work closely with ecologists to ensure that such valuation endeavours are ecologically sound. The work can help decision-makers, but gaps in our knowledge of how ecosystems produce services can hardly be closed completely. This supports the argument for adopting the kind of precautionary principles that are often advocated in the environmental policy debate.
This approach to ecosystem services was a key point in the Nature article. Its main contribution was the introduction of such a perspective and an extensive listing of the services and the attempts that have been made to value them. However, the total value figure drew so much attention that it tended to obscure this more important contribution.
Tore Soderqvist is a research associate at the Beijer International Institute of Ecological Economics, Royal Swedish Academy of Sciences, Stockholm.