Conservation and Sustainable Use of the Biosphere - WBGU

Conservation and Sustainable Use of the Biosphere - WBGU

Methodological foundations and explanatory potential of economic valuations H 5.2


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


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).

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