Critics of the economic valuation of nature argue that valuing the destruction of nature in this way merely puts a price on it, but in no way prevents nature's destruction. Supporters respond to this by saying that economic valuation is not about putting a price tag on nature, or drawing up inadmissible equations that 'offset' ecosystem services against each other without acknowledging ecological links and the intrinsic value of nature. They deny that looking through economic spectacles gives the offsetting principle added momentum – and thus helps drive the development of economic offsetting instruments that commodify nature. They believe that the economic metrics merely serve to strengthen the arguments for nature conservation. For example, economic valuation could enable conservationists involved in a dispute about floodplain restoration to highlight the economic value of floodplains as flood retention areas - a value against which one can then set the cost of the dykes that would otherwise need to be raised for flood protection purposes.
In practice, the development of tools for the valuation of nature and the development of offsetting instruments are intertwined
It is true that describing nature in economic terms does not automatically lead to putting a price on nature or trading in compensation credits. But the crucial issue for policy-making is not whether this connection automatically exists. The key factor is whether an economic valuation of nature favours these mechanisms in practice. And it is clear that it does: the economic valuation of nature has given rise to methods and measurement techniques that are being used both for economic valuation and to establish markets for ecosystem services. The same economic valuation methods have for some time also been used in the calculation of compensation credits.
The fact that there is a clear link here is evident in practice: the focus of implementation is on initiatives for placing an economic value on nature that promote market-based instruments such as emissions trading, assign a price to ecosystem functions such as the carbon storage capacity of forests – e.g. through REDD+ offsetting programmes – or make the biodiversity of habitats something that can be compared and therefore traded (biodiversity offsetting). For example, in their joint publications on the development and implementation of biodiversity offsetting schemes in mining, the International Union for Conservation of Nature (IUCN) and the mining group Rio Tinto refer quite explicitly to methods and definitions that have been developed in connection with the economic valuation of forests.
'We first have to create a market.'
Just how fluid the boundaries between economic valuation and the development of instruments that 'put a price tag on nature' are, is also apparent from the comments of Pavan Sukhdev, the head of the TEEB initiative: "Currently, no-one pays for the services that ecosystems provide to us. That is why people who are expected to maintain these systems are not receiving payment to do so. An economic incentive to do the right thing is missing. That is why we first have to create a market."
The economist Geoffrey Heal, also a supporter of the economic valuation of nature and of market-based instruments, states that "providing the right incentives is not the same as valuing the services: we can provide the incentives without valuing the services and we can value the services without providing incentives for conserving them. […] If our concern is to conserve these services, then valuation is largely irrelevant. Let me emphasise this: valuation is neither necessary nor sufficient for conservation."
It is important to note that – intentionally or unintentionally – methods and definitions that are developed in order to put an economic value on nature also serve to assign a price to the destruction of nature. And, as Heal emphasises, valuation is largely irrelevant to the creation of incentives to conserve nature.
This article is part of our dossier "New Economy of Nature".