The world
economics means literally ‘’management of life’’
and is derived from the same root (mimic; management) as economics, the term
term that literally means ‘’management of the house’’. In most dictionaries economics is listed a synonym of ecology, but the word may now be appropriate
for an expanded economics of the ecosystem in which monetary values, cost
accounting, and management of natural process are included along with man’s
works. Such a special or might not be needed if economists where enthusiastic
about extending their traditional discipline to include the works of nature. Most
economists express the opinion that there is more than they can cope with in
man’s ‘’house’’ and that another discipline is needed to deal with the combined
‘’house’’ of man and nature. In any event, all agree that the time has come to
put greater emphasis on the value of the work of natural systems and to the
impacts, both good and bad, that are external to business operations.
Table provides and
example of how monetary evaluation of a
natural system might be extended to include useful work performed be self
maintaining ecosystems. Lines 1 and 2 represent conventional
four bases for economic evaluation of a tidal estuary.
sl
|
Basis for evaluation
|
Annual return per acre
|
Income capitalization value per acre (at interest rate 5%)
|
|
Commercial and sport fisheries
|
$ 100
|
$ 2000
|
|
Aquaculture potential
|
350
|
7000
|
|
Tertiary waste treatment capacity
|
2500
|
50000
|
|
Total life support value
|
4100
|
82000
|
Bases for economic evaluation, while lines 3 and 4 extend
the valuation to include the capacity of the tidal estuary to assimilate wastes
and to provide general lif support for man’s fuel – powered systems two values
are shown for each line, an annual return and an income capitalized by dividing
the annual return by an interest rate (5% or 0.05 in this case) a standard
procedure in resource economics (see barlowe, 1965)
Although natural seafood harvest and recreational values
accruing from very large areas are impressive, they are small on an acre basis
when compared with real estate values that the estuary might have if covert
from its natural state to some developed state (as, for example, if the estuary
was filled in for housing or factory development) oyster culture or other
intensive aquaculture would increase some what the commercial return from the
estuary. However, the estuary in its natural state has a much greater value to
the public as a whole in terms of its waste assimilation capacity and general
life support especially as the intensity of adjacent man made development
increases. The waste assimilation value, as estimated in table, is based on the
cost of tertiary treatment in treatment plants built and maintained by man. In other
words, this is what it would cost society to treat wastes in amounts not
exceeding the reasonable capacity of the estuary to metabolize treated
municipal and nontoxic industrial wastes if the estuary was not available to do
this useful work. The estimate for general life support was calculated by multiplying
the total productivity of the estuary times and energy dollars conversion
factor. One such conversion suggested by H.T. Odom (1971) is based on the ratio
of the gross energy consumption and the gross national product
(GNP) for the
country or region in question. As would be expected, the energy/GNP ratio
varies in different countries. In and energy conservative country such as New Zealand,
that does not have a lot of heavy industry, about 7000 kcal of energy is
consumed annually for each dollar of GNP. For the united states the energy
dollar ratio has fluctuated between 10,000 and 25,000 kcal per dollar between
1945 and 1970. Using a conservative figure of 10000 kcal =one dollar and annual
production rate for the estuary of 10,000 kcal m
-2 or 41 . 10
4
per acre, then the annual return comes to $4100 and the long term value of an
acre amounts to $82,000 (see line 4 table). Since ‘’productivity’’ is a measure
of a natural system’s capacity to do all kinds of useful work, such as aster
treatment, CO
2 absorption, O
2 production, seafood
production, wildlife habitat maintenance, protecting cities from stomps,
transportation, and on, then converting work energy to money is a convenient
way of making a economic evaluation of a given natural system.
In the example just given what might be called the ‘’social aloes’’
(lines 3 and 4 table) inherent in preserving a natural estuary exceed the
immediate or short term commercial values. Unless the former values are
recognized and appropriate action taken to preserve them, the pricing system
based on incomplete accounting will tend to force an irreversible artificial
development of estuaries, floodplains, watersheds, and prime farmlands even
though it is in the general public interest that such areas continue to
function a slife support ecosystems. The water situation briefly mentioned
on post
is another example of how an urban dweller benefits from nature’s recycling
work. The cost of water produced by a natural watershed is very much less than the
cost of artificially recycled water.
Putting a monetary value on the free work of nature does not
solve the problem of the conflict of interest between the value to the property
owner and the value to society where the area in question has a high social or
public value in its natural state, but also a high real estate value if
developed to something else. But at least this approach helps bring general
recognition of values that are either not recognized or in danger of being lost
through public apathy . for more on this approach see gosselink, odum, and pope
(1974).
As alluded to in the discussion of pollution,
environmental
debits as well as assets need to be included in economic assessments,
especially environment damaging residuals of manufacturing which in all but a
very few countries escape control by the economy. A variety of incentives,
sanctions, laws and governmental controls aimed at closing his dangerous gap In
economic institutions are being discussed and tried out. Evidences of citizen
concern are the increasing number of lawsuits aimed at halting pollution and what
individuals and groups consider unwise alterations of the environment. In turn
this has stimulated a judicial interest in cases involving the environment. Environmental
law has become a new research and teaching focus in many law schools. From these
largely uncoordinated efforts some generally agreed upon ground rules ill
hopefully emerge. There is no shortage of good ideas for economic and judicial
reforms if he number of new books and articles on the subject is any
indication. A sample of these are listed in the ‘’suggested readings’’ list at
the end of the book.
In the united states the national
environmental protection
act (NEPA) represents the first attempt to provide a nation wide legal basis
for extending value systems to include the natural environment. The act
requires that ‘’impact statements’’ be prepared for all large proposed man made
alterations. Hopefully this admitted stop gap measure will lead to a total
assessment procedure that includes environmental and social cost benefits along
with purely economic ones.
Perhaps the ultimate solution to the problem of joining ecological
and economic values is to adopt energy units instead of monetary units for all
values. The value of goods and services can certainly be measured in energy in
its as well as in dollars and cents; and, as we have seen, the value of the
work of nature can best be expressed in energy
units. Perhaps energy will probe to be the basic ‘’currency’’ for the
proposed new science of
economics.