Early this week, I passed by the sign shown above at a construction project in the Seattle neighborhood of Yesler Terrace. Known as the first racially integrated public housing project in America, Yesler Terrace is undergoing a major redevelopment – one in which low-income residents will now be integrated with high-priced apartments and software companies. And just as the value of land and housing were calculated in the planning of the project, apparently this tree gets a value. For both the neighborhood and the tree, the question is similar: will putting up a dollar figure prevent displacement and support a better future?
Valuing and pricing ecosystems services has become nearly conventional wisdom as a strategy to clarify and protect the important role natural resources and services play in our economy. Dollar figures help demonstrate value, so we need to put a financial price on nature is the thinking. Last week the Guardian published an article exploring business advancement in valuing natural capital. The piece highlighted the efforts of Puma, which was the first company to establish an environmental profit and loss account, which “measured the financial value of ecosystem services to Puma’s entire business, from the production of raw materials through to the point of sale.” The article highlights issues around measurement and verification systems, but a larger conflict looms.
The conflict comes from critics that argue the value implied by pricing nature is dangerous and sends the wrong message. That nature should be a function of the economy, not the other way around.
In “Economic Valuation and the Commodification of Ecosystem Services,” Erik Gomez-Baggethun and Manuel Ruiz Pérez from the Autonomous Universities of Barcelona and Madrid respectively, find the concept of ecosystem services a powerful tool for sharing common understanding of nature’s importance for sustaining human life. But that the belief that economic valuation will solve problems like biodiversity loss is misguided, because of a dominant economic, ideological, and institutional context which encourages commodification. This seems to leave room, between valuing ecosystems, and actively pricing them for the market. However, the authors have doubts, “monetary valuation of ecosystem services does not equate to commodification of ecosystem services, but it paves the way (discursively and sometimes technically) for commodification to happen.”
Joshua Farley from the University of Vermont sheds further doubt on the issue of pricing for the market as a tipping point solution to environmental and equity issues. In this talk on Economics for the Anthropocene, Farley gives the example of the price of wheat skyrocketing in 2007, a huge price signal. But while few in the developed world cut consumption, those eating less than 2,000 calories per day saw a significant decrease in intake. “Markets allocate the important resources to those that get the least benefit from them… this was market efficiency.” Beyond equity concerns, Farley highlights how the most important natural resources are not owned, and therefore cannot be priced, easily at least. Markets, he says are not providing the right information and are designed to provide a return on money, not on nature.
There is a robust debate here and plenty of room in between arguments. Feel free to add your opinion below. Can an ecosystem valuation be differentiated from a price in our current economic context? Does putting a price on nature, a neighborhood, or other things we hold dear, support their conservation or lead to their commodification and destruction? What else should be considered?