Lecture 3: How to value nature?

Question 1

basic way to give value to an item

Answer 1

What is the maximum amount someone will pay for the service or good

Question 2

how is value made?

Answer 2

through exchange

Question 3

two visions on value

Answer 3

1. neoclassical economics = market value
2. political / classical economics = economic value

Question 4

neoclassical economics / market value

Answer 4

• Market price = minimum value of a good or service
• If no market, no value
• Encounter between supply and demand with a certain price -> value of the good
• Everything that is exchanged through market has a value, but without a market there would be no market
• It does not consider the social costs? (externalities)

Question 5

politial classical economics / economic value

Answer 5

• A commodity is more than just a price on a competitive market
• The value of a commodity is determined by (characteristics)
• The economic value considers all these characteristics
• This makes that the economic value is the maximum price people would pay

Question 6

value of a commodity is determined by (characteristics)

Answer 6

a value = labor time to produce it

a use value = utility / amount of satisfaction

an exchange value = proportion at which a commodity can be exchanged for other commodities

a price

Question 7

valuing nature

Answer 7

applying a monetary value to natural resources (inside and outside markets)

–> if you put a price on the environment, it can show that you may benefit from it in certain ways

Question 8

why do we try to value nature?

Answer 8

• incorporate environmental concerns into a cost-benefit analysis
• construct environmentally adjusted national income measures
• influence decisions about wise use / conservation of forest lands and ecosystems
• raising awareness
• avoid free-riding

Question 9

contingent valuation method

Answer 9

= willingness to pay

The idea is to create a hypothetical market situation –> How much would you be willing to add to this price to produce this chair in a more sustainable manner and keep the forests in better shape

Question 10

three main ways to give a monetary value to natural capital

Answer 10

1. contingent valuation method
2. ecosystem services and relational value
3. monetization vs. intrinsic value

Question 11

ecosystem services and relational value

Answer 11

Natural capital is adding to the wellbeing of human –> the idea that ecosystems are providing services to us. therefore it is important that we preserve ecosystem.

Making the connection to human wellbeing and nature

Question 12

relational value

Answer 12

Making the connection to human wellbeing and nature

Question 13

habitat services

Answer 13

quality of environment

Question 14

cultural services

Answer 14

nature contributes to wellbeing in intrinsic ways (walk in forest), it is related to many cultures in the world. Use of nature in arts

Question 15

quali and quanti

Answer 15

calculating what we could avoid (negative consequences on health, productivity, infrastructures) and the corresponding money we would need to manage these consequences

Question 16

monetization vs. intrinsic value

Answer 16

They criticize monetary value to biodiversity –> they advocate for the intrinsic value.

The concept of intrinsic value reflects the perspective that nature has value in its own right, independent of human uses –> ‘fundamental rights’ for nature, not just an economic perspective

• right to exist, regenate and be free from pollution etc.