Putting a price tag on nature

Issues in Science and Technology, Winter 1997/1998 by Kenneth Richards

Throughout the book, I had the uneasy feeling that some serious double counting was used. For example, the chapters on pollination, pest control, soil, and water services all seemed to claim that the loss of that service would lead to a complete loss of agricultural production, which is undoubtedly true. However, agricultural production can be lost only once, so to the extent that the chapters rely on total value calculations to accomplish their impact, there is the danger that, taken together, they overreach.

The difficulty here is that there is no integrating framework that allows for what economists call "general equilibrium" effects. This is the idea that a change in one part of the economy (ecosystem) can have direct effects that are easily observable as well as equally important indirect effects in other sectors of the economy (ecosystem). The other side of the general equilibrium coin is that when multiple changes occur simultaneously, a given benefit can be lost only once. Daily recognizes this problem in her concluding chapter, where, to her credit, she resists what must have been a powerful temptation to simply sum up the values estimated in the various chapters to arrive at an estimate of the total value of all ecosystem services.

The potential impact of the book was also dulled by a number of minor but easily avoided problems. For example, in estimating the value of carbon accumulation in grassland soils over 50 years, Sala and Paruelo fail to discount future benefits. In discussing the costs of water rights, Postel and Carpenter do not clearly distinguish annual from one-time benefits of water flows. Daily, Matson, and Vitousek badly misuse the term "existence value," first introduced in the book by Goulder and Kennedy.

None of the mistakes in Nature's Services are so egregious as to undo the significant good that the book accomplishes. However, they do suggest that a social scientist, particularly an economist, was not integrally involved in coordinating and editing the volume. This is a problem for a project that claims to be based on the work of a "broad, interdisciplinary group of natural and social scientists."

Kenneth Richards is an assistant professor at Indiana University's School of Public and Environmental Affairs.