Tuesday, June 2, 2015

Valuation

The main topic for this week is non-market valuation.

Here are links to some good sources:

Why Economics Matters for Endangered Species Protection (Shogren et al., 1998)

The Role of Economic Valuation in the Conservation of Tropical Nature (Naidoo, 2008)

Conservation Pays (Yuskavitch, 2007, Defenders of Wildlife)

Marine Conservation: How Economic Valuation of Ecosystem Services Can Help (Environment Matters, 2008)

Can Environmental Economic Valuation Techniques Aid Ecological Economics and Wildlife Conservation? (Loomis, 2000, Wildlife Society Bulletin)

Of additional interest:

Economic Incentives and Wildlife Conservation (Bulte et al., 2003)

Tons of references and links here:  Economic Valuation References WRI

Reefs here and here and here

Valuation and the endangered species act here.

This is a tiny fraction of what's out there. What are your thoughts on valuation?  I'd especially like to see if students from different backgrounds look at valuation differently. When you post a reply, let us know your primary field of study. 

17 comments:

tmarinello said...

I really enjoy this topic of valuation, and I think its SUPER important. I personally don't always make the conscious decision to conserve but I am interested in it because I have looked into the job of city planner or town development coordinator and valuation is HUGE in these fields. For these jobs, you always have to consider the environment and the value of natural resources because in a lot of new projects, natural resources and the environment are highly effected by the proposed changes. Economist in these departments are doing valuation on resources everyday. I think it especially important in places like wilmington because the environment is so key in most industries here.

Ryan Lynch said...

I think valuation is the most important thing in not only environmental economics, but in economics as a whole. Valuation determines price which determines everything else within a market. Valuation is very important for every economics student to understand and I am glad we are learning about it on such an advanced level (with the issues presented that come with non-market goods).

Tori Deluise said...

I think that valuation is essential for calculating the "true" value of natural resources. Economists can spend hours determining the value of any particular resource but this goes to waste if non-use values are not considered. For example, someone could calculate the economic loss in dollars if the Outer Banks, which are barrier islands, shrank by a specified amount in a specified time frame, let's say 50 years. The economist would probably look at the loss of real estate value, tourist attraction and other things that have dollar amounts readily available. However it is also necessary to estimate the loss of value that would result from the shift in ecosystems and the services they provide. Barrier islands especially are very imporatant to species that thrive in areas inundated with cord grass and brackish water. These habitats occur in these barrier island environments and it is important to consider the valuation this. I am an environmental studies major and I have a personal belief that money is the driving force behind most bad decsions when it comes to the environment. Therefore, the study of valuation is esepcially interesting to me because it is so important to be able to explain the true value of natural resources to the entities that are over-using and degrading them.

McLeod Brown said...

My major is economics and my minor is journalism. Putting those two together, it is one of my goals some day to publish an economic journal. However, I've also always had a direct interest in the environmental side of economics as well. One of my good friends is a double major in economics and environmental science, and we always bounce ideas and thoughts of each other concerning the environment and topical issues and situations. Valuation is obviously always one of those issues. How do we measure certain environmental goods and services? What are we willing to sacrifice for the preservation of our environment? This is a topic I am very interested in and look forward to studying more throughout this course. I am hopeful I will learn a lot from the constant building on this subject and will come away with more insight on the topic. Being from the Hampton Roads area of Virginia and then moving down here to Wilmington, I've always been surrounded by water and, furthermore, have always had a keen interest in learning more about the freshwater and saltwater ecosystems, how we are harming them, how we can protect them, and what other people think about the issues. The fact that so much of the Earth is covered by water is astonishing to me, both in that facet itself, and again when you realize that there are some people that do not seem to care at all about the ocean and other bodies of water preservation. Hopefully by learning more about valuation, I'll be able to place a better finger on the pulse of the population and their thoughts on preserving the environment.

Abby Moody said...

I am really enjoying the topic of valuation. I think its very relatable and super important to cost benefit analysis. As a math major and an aspiring actuary, valuation directly relates to my field of study. As an actuary I will be evaluating the risks associated with many different things in order to decide how much something should be (like an insurance premium). I have a very analytical mind so valuation makes sense to me. I'm not just going to choose to protect something because its pretty, I want to know why it's important and how its impacting others.

Anonymous said...

Being an EVS major and a PAR major wanting to go into Environmental Law, valuation of natural resources and the environment are key for me and my train of thought because I think the contributing cause of the issue of Environmental issues is that people don't understand and aren't trained to see the environment as a non-market value instead of just for market value goods. Whenever the transition is made and dollars are put onto the value of preserving and sustaining the environment as is, instead of augmenting and developing, that's when a real cost analysis discussion can occur and when people who aren't environmentally inclined can see why the environment does have non-market value, but that value can be translated into dollars in order to make a comparison of the costs and benefits of what development is doing to our environment. Although economics isn't my strongest area, this is only my second class, these ideas have already been circulating my head for years and it's nice to see that there's a field of study and terms for what I was thinking but couldn't eloquently explain.

Olivia Setser said...

Wait... i'm anonymous, i just didn't want to sign in...

Tess Johnson said...

Growing up so close to the Cuyahoga River I have always seen the environment and economics interact. One of the most interesting concepts to me is that of governmental incentives. In order to achieve the best outcome for the environment, incentives must be set in place. There are two different sets of incentives: economic and market, which both help to get consumers to understand a true cost. While incentives worked to help clean up the Cuyahoga River and the surrounding river valley, there are also incentives that fail to do their job. Valuation helps to look at the true value of the river, and why it was important to clean it up. Even today there are multiple government agencies, businesses, community groups, and educational groups set up to express the importance of the river and what it brings to not only the Cuyahoga area, but the entire state of Ohio as well.

Morgan Hoy said...

Being an Environmental Studies Major with a concentration in Conservation and a Minor in Biology, the idea of valuation is extremely interesting to me. I hope to go into the career field of sustainability in which I will go into companies and corporations and assist them in becoming sustainable economically and then marketing that sustainability to the general public in a way that will lead them to support the company. The various different ways of applying valuation to the public have helped me to better understand how people subconsciously think about the economy and how to better appeal to those thoughts to encourage them to support certain companies. I live near the Chesapeake Bay so the fertilizer issue presented in the extra credit opportunity is a very prominent issue that the Save The Bay Foundation is actively involved in because the amount of fertilizer in the Bay is effecting the progress of the oyster restoration projects. Thus far in the course, valuation appears to be one of the most important ideas in economics because it provides monetary value to things that previously did not hold such value.

James Glenn said...

With my background in Environmental Science Valuation on resources should be price less because I love the environment. But I am a fourth generation saw miller working full time in my families sawmill. With my background in the lumber industry I know that no matter what you do there will be a value put on a resource so the most important concept in my opinion is the valuation of the conservation not the actual resource.

Mary Densmore said...

One of my favorite hobbies is SCUBA diving and/or snorkeling, so I've really enjoyed learning about non-market valuation more in depth because it directly relates to this. Because I enjoy diving, reef quality is of great importance to me. I would pay at least 20 extra dollars per dive to ensure good reef quality and biodiversity (and to ensure it would stay that way). If I'm willing to pay 20 more dollars per dive, I'm sure there are other people who would pay that if not more. The extra money could go towards pollution prevention methods or other various things to ensure that there is little to no reef degradation. It's been interesting to learn about how natural resources are valued and how effective each method is.

Erin Tremblay said...

I am an Environmental Science major with a focus in Biology. Quite honestly, this is my first go-round with Economics at all. Concerning valuation, I was initially surprised by the fact that everything is translated into monetary terms if possible. From an environmental standpoint, monetizing the environment seems to undermine it's actual value. But therein lies the struggle... In a world where economics and the environment are inextricably linked, how else does one place value on somewhat intangible things like "the environment"? This is necessary so that the environment and the economy can be in comparable units (money) which allow a working relationship, one that is hopefully working toward a more sustainable future.

This of course is the case with Natural Resource Economics, but perhaps not in the entire field of Economics. In order to educate those who don't fully understand the implications of using up and building an economy around nonrenewable energy sources, it is necessary to translate natural resources and ecosystem services into monetary terms. This allows for cost-benefit analysis and all types of valuation. In other words, it translates the natural world into a language that the economic world can understand, and vice versa, which leads to more interdisciplinary work between two of the most important systems, the environment and the economy. I'm sure there's a lot more I need to learn about economics, but I think it's safe to say that the link between the two has a lot to do with valuation.

Dr. Peter Schuhmann said...

Erin - Good post, especially the second paragraph. But let me correct a misunderstanding or two in your first paragraph. You wrote "everything is translated into monetary terms if possible". This is absolutely incorrect. The economic value (measured in monetary terms or otherwise) of most natural resources has not been measured. And, we don't go around trying to estimate the value of things just because we can. We only engage in valuation when there is a clear need: an imminent tradeoff involving natural resources and/or policy decision where we need to understand costs and benefits in order to make a smart decision. Indeed, even where there is a clear need for valuation it doesn't always happen because valuation research is expensive. A full valuation study can cost tens of thousands of dollars and take several years to complete.

In terms of valuation "undermining actual value", I'd say it's quite the opposite in most cases. In the eyes of most people and governments, the default value of most resources is zero. While it is true that we can often only estimate some of the more readily observable benefits from the environment, valuation can help show that while resources might be freely available, this does not mean they have zero value.

Jimmy Morgenroth said...

Valuation definitely seems to be a tricky subject. Everything holds value, but the value changes from person to person or group to group. This makes it so important to know what audience you're working with when giving value to a resource. It seems to me that things/resources are much easier to valuate if they are already being used/consumed. When there are resources that don't have an obvious use or an obvious user it's more difficult to determine their value. This actually reminds me of the way Europe relies on the precautionary principle because I think a resource should be valuated before being used, but that seems to be more difficult. If we were to put value to things before they're extracted or used, more often, there would be less valuation needed in the realm of clean-up costs, mitigation etc.

I'm an EVS major, so as most are, I'm partial to the preservation of most natural resources. Though I'd love to see all the trees grow up and live to their fullest extent, and see no animal die, I definitely understand the importance of using resources in the most economical way. The world absolutely is based around economics, therefore things need to be valuated in order to help conserve resources and protect the natural world.

McKenzie LeFlore said...

I am a rising junior majoring in Economics and International Studies with a concentration in globalization. As this class goes on, I have found that the topics are fitting into my day to day life more and more. I think the concept of valuation is super interesting and important. I cant help but think that if more people understood it, we would have a lot larger conservation movement. I really enjoy this subject because I think some people believe that economists cannot be conservationists and this proves that it is not only possible but very important and relevant.
My love for the ocean has grown immensely since I move to Wilmington and I have met so many other people like me, who devote their time, money, and energy to being in the ocean. I think it is very neat to be able to convert than devotion into concrete values.

Dr. Peter Schuhmann said...

Before we move on to new topics, I think one of the more interesting things to consider about valuation is that it's something that we all do (implicitly) every day. For example, when you decide to drive your car instead of walking, you are implicitly stating that you value your own convenience more than you value the pollution that you cause by driving. On an aggregate level, when we vote for policies or politicians that favor other spending opportunities over spending on the environment, we are implicitly stating that we value those other things more than we value the environment. The process of economic valuation really just formalizes something that we are doing anyway. It makes the tradeoffs easier to understand and compare by expressing them in dollar terms. And, it's not limited to the environment. We even value human lives, including our own. When we choose to spend less money on road repair or highway safety, we are implicitly valuing human life. We could spend more money and have fewer people die, but we choose not to. When someone chooses to look at their phone when they are driving, they are revealing that they value that bit of information over their own safety and the safety of others. Our actions (individually and collectively speaking) reveal what we value.

Jawad Dughmush said...

Valuation is a term that I am trying to understand and apply to everything that I am trying to learn in this course. Valuation is the benefit received from a good when related to economics. I am trying to learn more about what I actually value when thinking about the issues discussed in natural resource economics. I am a general business concentration.