Measuring the Value of Biodiversity

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As we can see, there are equally diverse and valid ways to value biodiversity. Throughout most of human history, there has been no need to quantify these values. However, given the recent, overwhelming impact of human activity on biodiversity, in part because of population growth and our technological capability, developing ways to measure biodiversity has become a necessity. We live in a world in which tradeoffs and decisions have dire implications for biodiversity.

Apart from family, humans interact with each other as both community members and as consumers (Sagoff, 1988). Within these frameworks, we have developed ways to "measure" the importance of biodiversity related to other values, either through deliberation and priority-setting in a democratic process or in economic terms. To date, the most commonly employed method has been economic.

To determine biodiversity's importance in economic terms, economists group biodiver-sity's values into two categories: use and nonuse. Use values include direct use values (for goods), indirect use values (as in ecosystem services such as flood control), and option values (protecting biodiversity for some unknown future human need). Nonuse values include bequest values (the value of the legacy left to the future) and existence values (the value of the knowledge that certain species or wilderness areas will continue to exist). Economists have not found a way to capture intrinsic values in a meaningful economic way, so this value has been excluded from any economic determination scheme (Moran and Pearce, 1997).

Each of these use or nonuse value groupings (other than intrinsic) can be assigned a monetary value. This is most often done by determining how much people are willing to pay, or what they are willing to accept, as compensation for the gain or loss of a benefit of biodiversity.

In some cases, willingness to pay (or to accept compensation) can be determined directly, by asking people what they prefer. One of the most common of these methods is the Contingent Valuation Method. In this method, the public is surveyed to determine what value they place on a particular natural asset. For example, how much will they pay for a scenic view, or to live in a community with cleaner air, or to prevent a species from going extinct. This method was used to determine the nonuse values of the marine ecosystem that was damaged by the Exxon Valdez oil spill in 1989. People living outside Alaska were asked how much they were willing to pay to avoid an oil spill in Prince William Sound with similar environmental impacts. The median was $31.00 per household, or $2.8 billion when all U.S. households were totaled (Peterson and Lubchenco, 1997).

Willingness to pay can also be determined indirectly. In place of directly asking how much people would pay to live in an area, the hedonic price technique determines the difference in housing costs between an area with clean air and one with polluted air. The difference in price is assumed to be the value of the clean air.

Another example of indirect valuation is the travel cost method, in which the value of a particular resource is inferred by the cost of travel to that resource. Travel cost and other related expenses have been used to estimate the economic worth of a horseshoe crab fishery in providing ecotourism opportunities. Each spring thousands of migratory shore-birds, en route to their arctic breeding grounds, stop along Delaware Bay to feed on horseshoe crab eggs. Many bird-watchers come to the region to view the shorebirds and the crabs. The "value" of the crab population has been determined indirectly, in part by calculating what the birders spend to see the birds and crabs. This valuation includes the birdwatchers' travel, lodging, and food costs, as well as equipment costs and park fees (Manion, West, and Unsworth, 2000).

Replacement value is another example of indirect monetary determination. A replacement value analysis assigns a monetary value to an ecosystem function based on what it would cost to replace it if the service were no longer available. For instance, New York City's water supply comes from the Delaware and Hudson River watersheds farther to the north.

In 1996 the water coming into the city was no longer meeting Environmental Protection Agency standards, as sewage, pesticides, and fertilizers were interfering with natural water purification processes such as soil microbe activity, natural filtration, and sedimentation. The city decided against constructing a new, multimillion-dollar purification treatment center within the city limits, instead concentrating on investing in the preservation of so-called natural capital (that is, watershed land) in the Catskill Mountains. To replace the services provided by the watershed would cost roughly $6 to $8 billion, as well as $300 million annually for maintenance. That is the replacement value of the ecosystem's services. To ensure the sustainability of these watersheds, New York City administrators developed a comprehensive plan to control activities within the watershed that affect water quality. This somewhat controversial plan included reducing pollution from agriculture, minimizing nonpoint pollution, restoring streams and wetlands, protecting buffer lands through land acquisition and stewardship, and developing community education programs.

Although these and other economic assessment techniques can be useful tools, they do not fully determine the value of biodiversity for a number of reasons. People's decisions about their so-called willingness to pay are based upon different preferences and constraints, ultimately affecting the final dollar value. People usually expect more compensation for the loss of something they already have (for example, clean air) than they are willing to pay to improve an existing situation (such as cleaning up polluted air) (Van Deveer and Pierce, 1998). In addition, the value of these assessments also depends upon how much—and what kind of—information people are given to help them make their determination. The quality of available information can alter their response and the final valuation (Sagoff, 1988).

Economic cost determinations seldom include true environmental costs. Typical cost determinations include raw materials, wages, and the cost of processing, production, and distribution. Costs usually not included (termed "externalities") are the waste or pollution generated by production, the depletion of natural resources, and other social impacts on the population (for example, smog that leads to poor health). Instead, these costs are passed on to society. As Van DeVeer and Pierce (1998) explain, "If a firm wishes to dump a ton of sulfur dioxide into the atmosphere, it is under no obligation to determine whose health or whose view might be impaired by this use of the environment."

The market economy considers only costs and benefits to humans, and works with a short-term view of the world. How do we factor in the costs to wildlife or natural processes and the impacts that accrue over a longer ecological time frame? How can we predict what might be "valuable" to us, or the world, in the future? Current economic theory is based on the assumption of unlimited abundance, whereas in reality the earth and its resources are finite.

Ecological economics is a relatively new field, working to address these concerns and to do a better job of incorporating ecological concepts into economic theory. In contrast to conventional economics, ecological economics is defined as multiscale, focuses on all species (including humans) and whole ecosystems, and has a goal of maintaining our natural world. Designing ecologically sustainable economic activities will require modifying existing techniques or developing entirely new tools. An important proposed revision to current economic standards is the incorporation of natural resource accounting to


A flock of emperor penguins in the Antarctic landscape. The economic costs for the products and services we use seldom include the environmental costs—the price paid by species and their habitats. The market economy considers only costs and benefits to humans and works with a short-term view of the world. How do we factor in the costs to wildlife or natural processes? How can we predict what ecosystems and species might be "valuable" to us, or the world, in the future? (Qalen Rowell/Corbis)

determine gross national product (GNP). This modification, the index of sustainable economic welfare, developed by Herman Daly, adds the contributions of natural resources (for example, the value of forests, topsoil, farmlands, and so forth) to determinations of economic growth. Ecological economists believe that this is necessary because the GNP typically counts all economic activity as good, regardless of whether that activity has high environmental costs, such as pollution (Costanza, Daly, and Bartholomew, 1991).

Despite these efforts to improve the techniques of applying economics to ecological valuation, some argue that certain things, such as health, safety, freedom, nature, and human life, cannot be viewed in monetary terms. According to Sagoff (1988) and others, the values of nature are better determined by a democratic, deliberative process allowing for discussion and compromise.

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