http://www.economist.com/news/finance-and-economics/21596943-setting-price-nature-useful-exercise-up-point-valuing
This article examines how economists are adapting to environmental needs. No longer do economists follow Adam Smith's model that says nature is unlimited in its resources. The problem that economists now face is how to place numbers on resources such as the long-beaked echida, clean air, or fresh water. In order to change policy decisions, economists are attempting to allocate numerical values to parts of the natural environment the same way manufactured goods are given numerical values.
The article states that there are two types of value that nature provides - use value and non-use value. Use value parts of nature include water and bees, which both provide resources used by humans. Non-use parts of nature do not necessarily provide resources to humans, but humans still value them. An example of a non-use part of nature cited in the article is a lion. People value lions because they are "charismatic." The article notes that use value goods that produce a good or resources are often easier to place a numerical value. The article also notes that when market values are affected by nature, a numerical value of nature can be derived. Third, surveying people about how much they value certain aspects of nature is a way to place numerical values on non-use aspects of nature. The article concludes by recognizing that economics will never be able to completely capture the value of nature.
1 comment:
It says nature has non-use value compared to economics, but if we discover a plant that we can use for a drug to cure a disease than technically the plant is valuable and should cost money. For nature that can provide society with a positive resource, than should it cost anything? Or should we act like we do with ideas, where the plant would have a net zero value but a company would have a patent on it. How would we value nature in this sense?
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