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Ebook Principles of environmental economics (2/E): Part 2

Part 2 book Principles of environmental economics has contents: Valuing the environment, the perennial debates on the biophysical limits to economic growth and the emerging paradigm of sustainable development, the problems of poverty and environmental sustainability in the developing countries of the world. | 8 Economic valuation of environmental services According to the current paradigm in economics ‘The ecosystem is viewed as external to society, providing goods and services, unoccupied territory in which to expand, and assimilative capacity to handle by-products. . . . Economics seeks to integrate this externalized environment into its own paradigm through the concept of ‘valuation.’ This approach sounds reasonable on the surface. Society should place a monetary value on the goods and services provided by the ecosystem and also on the effects of human activity on the ability of the ecosystem to provide these goods and services. Values for these ‘externalities’ can then be inserted into the economic model. Within the economic model, these externalities would provide the self-regulation needed to manage society’s use of the environment. (O’Neill and Kahn 2000: 333) 8.1 Introduction The primary objective of this chapter is to investigate the various methods by which economists attempt to measure the benefits of environmental improvement or the preservation of the services of the natural environment. Generally, environmental improvement arises from damages avoided by taking certain well-defined action(s). For example, an environmental ‘project’ undertaken to clean up a lake could trace its benefits from the mere fact that, among others, such action would lead to an improvement (or a reversal of the damages) to the natural aesthetic value of the lake. As another example, the benefits of a public policy measure intended to preserve a wetland area may come from the contributions this action would have on biodiversity, flood control and enhanced environmental amenities. (In this chapter, a project refers to any intentional actions undertaken by a private or public body for the purpose of changing the quality of the natural environment.) The above discussions indicate that the benefits from environmental improvement are inferred from assessment of avoided environmental damages.