This post is a bit of a follow-on to some previous posts on environmental economics. I generally agree with Amir’s previous post that the idea of assigning a dollar value to nature is not very meaningful because some things simply cannot be measured in money. Yes, there are plenty of assumptions that one can make and that are made, but ultimately things like the value of human and non-human life cannot be quantified. Moreover, I also tend to agree that trying to assign a dollar value to such things perpetuates a rather narrow-minded worldview.
On the other hand, I am having trouble thinking of a viable alternative that would force people to pay attention in a similar way. Having followed some of the fall-out from the Stern report (which I wrote about a couple weeks ago), I was impressed by how seriously it was taken by the business and investment communities in certain countries. Granted, as mentioned above and in my previous post, quantifying the projected damage of various climate change scenarios
is a very uncertain business, but the ultimate conclusion that acting to stabilize carbon concentrations at a reasonable level would cost 1% of GDP while doing nothing would cost more like 10% is pretty powerful; even if 10% really means more like 5%-15%, the conclusion is
still the same.
In the long term, maybe we don’t want to live in a world where environmental decisions and plans are made on the basis of this sort of analysis. But what would that world look like and how would we get there? I have no idea. Living in China, I am not particularly inspired by their alternative. Having a centrally planned economy is not exactly good for the environment unless the central planners have uncommon foresight. (Which, given Chairman Mao’s ardent belief in dam building and in “growing grain everywhere”, he clearly did not). It seems unlikely to me that we will ever find anything better than a market-oriented economy, and if that is the case, we will always be plagued by this question of assigning dollar values to nature.