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Putting a price on the world: Special issue on economic valuation in environment journal

American Chemical Society

How much would you be willing to pay for a clear view of the Grand Canyon? To prevent extinction of a species? To head off environmental threats that may never materialize?

Such questions are the subject of a special section on economic valuation of the environment in the current (April 13) print edition of Environmental Science and Technology, published by the American Chemical Society, the world's largest scientific society.

In a series of 12 articles, researchers from around the world present real-world and theoretical findings about the global marketplace called planet Earth. They demonstrate the practical and ethical challenges of such study and report the latest efforts in putting a price on the world.

"To properly appreciate the complexities of valuing environmental services and goods, one must first understand the framework in which economists value (them)," wrote Mitchell Small and his co-authors from Carnegie Mellon University. "Only then can one know the complexity of trying to regulate the environment."

A sampling of the issues:

  • Managing ecosystem resources: This introductory paper describes problems and opportunities for assigning economic values to global ecosystems, and the complexities of doing so. The researchers conclude that the environment is like any other capital asset and needs to be managed with an eye towards the future. This approach represents a new management science and would entail weighing the balance between people and nature, according to author Kenneth Arrow of Stanford University, winner of the 1972 Nobel Prize in economics, and his co-authors.

  • Evaluating health and environmental impacts of pesticide use: This paper examines how much people are willing to pay for goods produced in an environmentally friendly manner, and how to value environmental services not bought or sold in the marketplace. Using pesticides as an example, the researchers explored people's willingness to pay an additional tax on bread to avoid using pesticides that can adversely affect human health and certain species of birds. The study also examined the human costs, in illness, that would make people change their mind about saving the birds. The article was written by Susana Mourato, environmental economics lecturer from the Imperial College of Science, Technology and Medicine in London, England and others.

  • Economics and ethics of environmental valuation: The role of ethics weighs heavily on people's willingness to pay for environmental issues. In this paper, the researcher shows that some of us react in a way that differs widely from economic theory, due to beliefs that a healthy environment is a matter of right, not something to be traded for money or other goods. Economists who use people's "willingness to pay" as a measure of environmental costs may fail to take into account such beliefs, according to the author, Clive Spash director of Cambridge Research for the Environment at the University of Cambridge in Cambridge, England.

  • Determining costs of environmental damages: Estimating the dollar value of environmental damage is complicated, controversial and often uncertain, according to this report. The researchers propose using an economic assessment to estimate environmental damages and show how to incorporate the cost of such damages in prices. For example, the study examines the environmental cost of air pollution as the price for generating power. In addition, the authors introduce the concept of the "green GDP" to describe how the costs of pollution can impact the gross domestic product of a country. The writers challenge the traditional economic assumption that economic growth improves the quality of life, arguing that the costs of remedying environmental problems and replacing depleted resources must be considered to get the complete picture. Written by Lester Lave and Scott Matthews of Carnegie Mellon University.

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