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What value should we put on clean air and water, lush forests and biodiversity? Can we put a dollar value on the environment?
It’s not a bizarre question. Whether you like it or not, it's one that will come up more often, with Australia and the rest of the world moving towards an emissions trading scheme, with carbon likely to become the world’s biggest commodity market and with some companies either likely to make a fortune out of carbon trading, or find themselves lumbered with massive liabilities.
The other point is that if governments are not aware of how valuable a forest, for example, might be to tourism, they are more likely to provide permits for logging and mining companies without any safeguards whatsoever. The same applies to fishing zones and water catchment areas.
As reported here, a recent United Nations report says protecting the environment could deliver trillions of dollars in economic benefits.
According to the report, protecting forests is more efficient than spending millions developing new technologies to capture greenhouse gas emissions and bury them underground. Similarly, protecting fishing areas would ensure food supplies and deliver higher profits. And cities around the world, like Melbourne, Rio de Janeiro, Johannesburg, Tokyo, New York and Jakarta, rely on protected areas for drinking water, saving a lot of money otherwise spent on public treatment plants.
So what are these assets worth? If the UN report is right, the annual contribution of coastal and marine ecosystems to the global economy is worth in excess of $20 trillion. And governments would typically under-value these assets.
That’s why one of the hot jobs of the future will be green accounting. You can find a good summary of it here.
Environmental accounting is about risk management. It’s about collecting and analysing information on material flows and pollution controls for the company's executives. Green accountants will report to investors and regulators and analyse how natural resources are used and how the company's environmental impact is being managed.
At this stage, it's a new area. There are no academic programs focusing on environmental accounting, and there is no professional credential for the specialty. But that could change as business and regulators become more environment-focused.
But as part of that, we need to start developing systems that put a dollar value on the environment.
What’s the environment worth? How do we develop systems that actually measure what clean air and water is worth? Or would you say it’s priceless? Tell us what you think.
Comments
With an economic system that does not reflect the reality of a finite planet clearly the outcomes shall be, and are, nonsense.
If we are to effectively manage Earth system, as with any system, we must measure, i.e. place a value on, the critical variables as well as manpower and capital.
Economics has well proven supply and demand functions but excludes non-renewable and renewable resources from these: the ‘greed is good’ mantra gone mad. These resources currently incur the cost of labour and capital as they relate to extraction and or destruction.
Each cost benefit analysis that determines an activity without placing a value on natural resources other than the costs associated with manpower and capital of destruction/extraction shall invariably favour the course of natural resource destruction as the cheaper option.
A free market only benefits those represented. With no representative bidding for future generations or for our life-support system (biodiversity habitat) clearly there shall be little if anything left for these without real economic reform.
Triple (or other multiple) bottom line patches have been attempted but with little long term benefit: comparing apples with something else was always going to be imprecise.
We can continue to patch our fatally flawed economic system. Patches already include: Emissions trading schemes, tiger saving schemes, Landcare schemes, patchy recycling schemes, etc. We shall patch on patch add-infinitum or we can address the cause: improper use of the economically invisible natural resources.
And of course taxes and levies to modify behaviour are great for the legislators, accountants, traders and lawyers but are worse than non-productive and a feast for the corrupt. Refer the latest tax reform recommendations. Have the economy reflect the reality of Earth-system and most taxes would be unnecessary!
Rather than arguing that costing natural resources, such that the renewable are renewed and the non-renewable are recycled, is immoral or too difficult we should consider our current multi facetted disaster caused by decision making based on ignoring their cost.
If we do not measure the critical system characteristics we shall not manage population to sustainable levels; mankind fooled by a management tool: lifestyle then species destroyed by economics.
Costing’ is imperative, let us hope it is not too late.
It's a false choice. We can't determine a value for an input that determines the survival of the system. By attaching a value to something you imply that it CAN become less valuable or discarded/sold at some point, even if it is extremely unlikely.
Bluntly put, without a crucial input there is no system and all value becomes meaningless.
To put that in context, the inputs provided by the 'environment' such as clean water, oxygen through photosynthesis, which in turn requires sunlight and an appropriate temperature range, (relatively) reliable weather, and correct conditions for food production, CANNOT be discarded or sold. They CAN be reduced in capacity but only within a small range of tolerance before quality of life becomes affected.
The problem lies in the fact that the damage done to these ecosystem services is done piecemeal by a vast number of players. If it was only a few entities involved, an 'educated demand' approach might work very well.
But with the vast numbers of consumers, the (relatively) tight time frame and the crucial nature of the resource, a supply/demand system will not work well enough to prevent catastrophe. It is simply impossible to ensure that EVERYONE is enlightened enough not to sell that which cannot be sold.