Conservation and Sustainable Use of the Biosphere - WBGU

Methodological foundations and explanatory potential of economic valuations H 5.2
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methodological foundations of economic valuation
should be outlined first. Besides, in this text, it is especially
important to explain in more detail which
explanatory potential is seen as underlying economic
valuation.
The preferences of individuals are the starting
point of economic valuations. They are the reference
points for the valuation approach based on neo-classical
welfare economics. In addition to the focus on
the individual, the desire for additional utility maximization
is the second assumption underlying the
economic valuation approach, ie individuals strive to
implement those alternatives that provide them with
the greatest benefits.
On the basis of these fundamental assumptions,
the task of economic valuations is also seen in
recording and valuing the benefits to be gained by
various alternative political actions and in reproducing
them in a comparable utility equivalent – usually
in monetary terms. In an expanded form, this can be
found in formalized cost-benefit analyses. They are
conducted in the political sphere in order to increase
the rationality of political decisions and contribute to
objectivization (Cansier, 1996).
When assessing economic valuations it is essential
not only to take a critical look at the methodological
foundations but also to consider the explanatory
potential of the economic valuation approach. In this
way, economics by no means claims to assign a value
to all things. Rather, an attempt is made to make the
usually implicit valuations in a society transparent
and thus relevant to decisions (Burtraw and Portney,
1991; Kosz, 1997).
This explanatory potential of economic valuations
can also be applied to the valuation of the biosphere.
Decisions on the protection of the biosphere are
unavoidable. For example, the whole of biological
diversity cannot be conserved in its current state. It
will be essential to consider carefully the extent to
which humankind wishes to conserve biological
diversity. On the one hand, such decisions occur
explicitly if, for example, the main concern is to
decide which land areas and their species are to be
designated as protected areas and, on the other hand,
implicit considerations are made if a road is built
through a semi-natural ecosystem for the purposes of
the economic development of a region, for example.
If corresponding ecological considerations have not
been included in the plans for road-building, an
implicit valuation and prioritization should be
included in the decision for construction along the
lines that the economic benefit should or should not
be given higher priority than the loss of biological
diversity that may be associated with the construction
of the road.
The need to act and to take a decision cannot be
avoided. Implicitly or explicitly, valuations are conducted
constantly (Weikard, 1998; Goulder and
Kennedy, 1997; Perrings et al, 1995). Because of this
inevitability of decisions, especially when protecting
the biosphere, the issue of valuation should be
viewed pragmatically. Pointing out that nature has
intrinsic values is of no help with most decision-making
problems, which have to be taken in political reality
(Pearce and Moran, 1998). The anthropocentric
approach thus has higher operationality because it
does not set intrinsic values of nature as absolute.
Instead, the anthropocentric approach aims at weighing
up different values of human societies (Heister,
1997). Another strength of anthropocentric justifications
for the conservation of biological diversity lies
in the fact that anthropocentric approaches can be
derived directly from central (liberal-democratic)
principles. With the ethics of moderate anthropocentrism
advocated by the Council it is at the same time
possible and intended to link ecological aspects to
the individual cost-benefit rationale. Because of its
integrating function, moderate anthropocentric
nature ethics appears to be the only ethics that can
acquire social and thus legal binding force. Only this
approach builds almost entirely upon the rules that
already exist in and justify a civilized society
(Geisendorf et al, 1998).
Along these lines, the attempt by economics to
render such decision-making situations more transparent
by means of monetarization should be viewed
as an approach that contributes toward demonstrating
the economic relevance of biosphere services. In
this connection, the exact calculation of the benefits
granted by the biosphere is less important. The
demonstration function of economic valuations is
decisive (Fromm, 1997). For instance, valuation studies
indicate the economic relevance of environmental
problems (Costanza et al, 1997; Repetto,
1993) and thus greatly help to increase public awareness
of environmental issues (Hampicke, 1991). The
conversion, or more modestly, the attempt at conversion
of biosphere services into monetary values also
makes sense because the value is expressed in a ‘currency’
that can be understood and further processed
in the political decision-making process (Daily,
1997a). The results of economic valuations can thus
not only be used as arguments for anthropocentric
conservation. Instead, they can also be helpful for
physiocentric viewpoints, especially because monetary
values are more convincing than an indication of
vaguely perceived intrinsic values (Hampicke, 1991).