What is the value of nature? Philosophers, ethicists, theologians, and a wide spectrum of social and even natural scientists have responded to this question with a variety of answers based on an equally varied set of frameworks and approaches. These responses are often categorized as either "anthropocentric," in which value is derived from some form of interaction with humans, or "biocentric," in which nature and the organisms of which it is comprised have intrinsic value apart from humans, and where humans are no more or less valuable than any other organism. The response by the field of economics falls within a specific anthropocentric approach known as "utilitarianism." From the perspective of the utilitarian approach, nature has value insofar as it yields benefits or satisfaction to humans. Because economic theory and methods provide the foundation for most of Valuing Nature in Texas' efforts, this work is situated within the broad utilitarian framework.
As with markets, economics generally defines the benefits that nature provides in terms of goods and services. Some of these goods are inanimate, such as water, rock, oil and minerals; others are the result of living ecosystems, often referred to collectively as "ecosystem services." These beneficial ecological functions include the provision of renewable natural resources such as fish and timber, as well as a host of other valuable services ranging from erosion and flood control, to pollination, to the mitigation of a wide range of pollutants, to the provision of scenic beauty. Many of the goods, and most of the services that nature provides are conferred directly to their human beneficiaries by nature, without passing through markets.
In addition to values derived from various uses of nature, economics can also incorporate concern for the survival or well-being of other species and various other aspects of nature, with which no direct use occurs. Within the framework of economic value, such concerns are generally expressed as "non-use" values, because the individual does not consume or otherwise directly benefit from the "good." Sources of non-use values might include the existence of rare or diverse species of animals, unique natural environments, areas of pristine habitat, or even a way of life, such as family farms or indigenous villages. These values may seem less tangible because they derive from satisfaction the individual gets from knowing that such aspects of nature exists, and/or will continue to exist, without actually experiencing them at that moment. However, they can be an important component of non-market value associated with nature. Non-use values can be divided further into "existence," "bequest," and "option" values. Option values are motivated by the desire to preserve the option of the individual to enjoy the environmental benefit at some point in the future, even though the individual may not currently be doing so. Bequest values reflect the desire to leave an environmental legacy, i.e. to preserve the option for others in the current generation, and/or those in future generations to enjoy a given environmental benefit. Finally, existence value is based on the satisfaction derived from simply from knowing that a given element of nature exists.
Because markets for many, if not most, ecological benefits do not exist, no market prices exist to reflect their use or non-use values. The absence of a price is not inherently undesirable; however, the lack of a price to indicate the economic value (or loss of value) of such ecological benefits makes it difficult to incorporate these benefits into planning and decision-making processes. Consequently, many of the valued natural resources and ecological services provided by nature "for free" are overlooked and are undervalued in both the private and public sectors.
Over the past half century, the field of economics has developed a rich and extensive literature that advances the theory and methodology of estimating values associated with the myriad un-marketed yet economically valuable benefits provided by nature. While the literature is vast, the number of approaches remains limited to only a handful, each with its own strengths and weaknesses. An excellent non-technical discussion of most of these techniques can be found on the ecosystemvaluation.org website at http://www.ecosystemvaluation.org/dollar_based.htm.
Approaches used in the Valuing Nature in Texas Program
Approaches used in current VNT projects are indicated in the following table, and described briefly below. Because each of these techniques has its strengths and weaknesses, many VNT efforts use more than one approach.
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Valuation Approach |
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Hedonic Pricing |
Travel Cost |
Contingent Valuation |
Productivity Method |
Replacement Cost |
| The Value of Water to Sustain and Preserve the Ecosystem in the Lower Rio Grande Valley |
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| Valuing Freshwater Inflows Initiative: Rio Grande Estuary |
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| Valuing Freshwater Inflows Initiative: San Antonio Bay |
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Hedonic Pricing Method
Estimates non-market economic values for ecosystem or environmental services that directly affect prices of some other market good. Most commonly applied to variations in residential real estate prices that reflect the value of local environmental attributes. [More Information]
Travel Cost Method
Estimates economic values associated with ecosystems or sites that are used for recreation. Presumes that the value of a site is reflected in how much people are willing to pay to travel to visit the site. [More Information]
Contingent Valuation Method
Estimates economic values for virtually any ecosystem or environmental service. The most widely used method for estimating non-use values. Asks people to directly state their willingness to pay for specific environmental services, based on a hypothetical scenario. [More Information]
Productivity Method
Estimates economic values for ecosystem products or services that contribute to the production of commercially marketed goods. Also known as net factor income or derived value method. [More Information]
Damage Cost Avoided, Replacement Cost, and Substitute Cost Methods
These are related approaches that estimate economic values based on costs of avoided damages resulting from lost ecosystem services, costs of replacing ecosystem services, or costs of providing substitute services. [More Information]
For further non-technical information about any of these approaches, clicking on the More Information link will take you directly to the detailed description on ecosystemvaluation.org's web site. For a more technical discussion, click here to download an in-depth survey of the non-market valuation literature.
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