Tuesday, October 21, 2008

Economic downturn means more need for valuation

Here is an interesting article from the Environmental News Network that bridges many of our topics.

While I tend to agree with most of the article, being a realist I fear that this call for valuation will largely go unheeded. Why? Non-market valuation surveys tend to be expensive. As governments budgets are slashed in the face of the global economic downturn, can they afford to conduct expensive valuation studies? Of course, I'd like to argue that they cannot afford not to.

7 comments:

steve burke said...

Interesting article, though I am not totally sure I see where the direct connection should be made between the economic downturn and the proposal for increased valuation. As Dr. Schuhmann said, the realist would expect with less financial resources to be spread around it seems less likely that money will be put towards studies that don't really yield significant immediate benefits. The article clearly states that resources are worth more intact, so why would any new research prove otherwise...it seems the only benefit would be to have an actual dollar amount to present to people to say this is how much more value our resource is worth versus destroying it for another use. And if the knowledge is already there that it is worth more (on large resources like the rainforest) then people are likely to make decisions based on whether they want money now or benefits later, with or without additional data. The only benefit really seems to be so that you either have the satisfaction of knowing what dollar amount of money you are saving or what dollar amount you should charge others to keep you from destroying the resource.

Colin said...

I believe it is very important that we valuate our resources thoroughly and correctly to better their importance in the economy. Knowing the value of our resources will allow us to make better informed and hopefully more efficient choices with our resources in the future in an attempt to prevent further economic disaster. The costs of such actions may be drastic, but if they are staggered over a few years, maybe even decades, the immediate costs would be less. If the economy is already messed up, I don't see why we shouldn't try to fix what we can and improve where we failed.

Antonio Joyette said...
This comment has been removed by the author.
Antonio Joyette said...

Indeed this is a chance drive home the point of the real value of what truly sustaining economies. Its a chance to re-write how national wealth and GDP is computed. I am sure economists who purposefully undervalued environmental resources are rethinking their positions. For years, using standard economics, countries have posted economic growth resulting from commercial deforestation, overfishing, and climate-change, overcrowding coral reefs and beaches with visitors. A heavily one-sided economic view was taken to valuing these resources. Now I believe a reversal of fortunes is coming and it's favoring the natural environment. Let's see if anyone is paying attention!

AshtonB said...

So, this article is talking about the environment and how it is hard to put a value on. We have learned about non-market value in class and after reading this article and attending class i feel strongly about the carbon trading system, any system that approaches saving our ecosystem by limiting deforestation is a smart one. Dr. Schuhmann told us in class that all of our problems could be ended if the richest people in the U.S. could pay these foreign countries to leave their resources alone. Although, this will never happen isn't a bit ironic that we are the only country that has yet to sign the Kyoto Treaty? American's are greedy, we have already exploited so much of our land that it would be a perfect opportunity for our nation to right our wrongs. Why not give poverty-stricken countries incentive to conserve? America is not setting a good example to follow, why not spend our money on improving our environment and being sustainable? Our nation's leaders are much too concerned with economic gain, look where is has gotten us...in a succession, lets make some changes for the place we live and the well-being of our planet. If every country exploits their resources no one will survive, it's time to start conserving what we have and giving these countries who don't have incentive as much incentive to conserve as we can.

Dr. Peter Schuhmann said...

Antonio ... I don't think anyone *purposefully* undervalues natural resources. There are no markets to reveal these values, so they are simply ignored until regulations or some other incentive causes society to do otherwise. I would also point out that in your statement: "A heavily one-sided economic view was taken to valuing these resources" your use of "economic" is not the best choice of wording. Economics is not a synonym for markets. It would be more accurate to say that there has been a one-sided *market* view.

AshtonB ... Americans are "greedy"?? Really? What exactly do you mean by "greed"? Which Americans are greedy? All of them or just ones that own businesses?

Also, I never claimed that transfers from rich to poor nations would solve all of our problems.

I think you should use some basic economics to answer this question that you raised: Why not spend our money on improving our environment and being sustainable?

Drew Moxon said...

The problem you run into is personal preference. You may want to save the environment so you spend your excess wealth on environmental causes. I, on the other hand, want to have a luxurious giant house and 20 polluting cars, so I will not spend my excess wealth on environmental causes. It's a personal decision. Of course, this is still assuming the market is efficient. It assumes that all externalities are internalized, which they are not. If policy is put into place to internalize those cost (think of the gas taxes on those 20 polluting vehicles!) then it would truly be up to what the market demands and how it values the environment.