4 ms·

The $100 million pond

29 points by robg 16y ago

bobds 16y ago
Put a price tag on nature? I am not liking this idea.
- eru 16y ago
  Our actions often put an implicit price tag on nature. Rejecting the idea often just leads to a lower implicit price tag. One anecdote, I heard from a co-worker [0]: There was a elementary school that had some asbestos in its walls. A consultant did some maths and presented his report, starting with "Suppose the live of a child is worth 40,000 Pounds" and went on to conclude that the replacement would probably avoid enough future deaths / illnesses to justify their rather great costs. The council that received the report rejected it outright, "We can't put a price tag on children." In the end they never replaced the walls. Moral of the story, the consultant shouldn't have started with the price tag, but just concluded: If you don't do the replacements, you are valuing our children's lives at less than x thousand GBP. And you wouldn't put such a low value on them, would you? [0] I can ask him for the source, if you are interested.
  - illumin8 16y ago
    It seems like one could pretty easily point out the logical fallacy there. Another thing is that most governments and corporations don't necessarily look at the positive benefits so much as the negatives. That's one reason why I like this dollar amount idea. You shouldn't say "each child's life is worth 40,000 pounds," but rather "the potential cost of a lawsuit brought by relatives of a deceased child is in the millions of pounds." The same method could be applied to valuing nature. You can simply say something like "the value of fisheries from the coast of Japan is $20 billion per year. Any release of radioactivity into the ocean could put TEPCO at risk of this amount in lawsuits." Corporations and governments don't want to put a price tag on people (even though there are well established pricing models, based on historical disasters). By putting a price tag on the environment they can hopefully do better risk management. Maybe they can make smarter decisions like: "Increasing the size of the Tsunami protection wall will cost an additional $200,000, but will prevent the potential $20 billion in cleanup costs from a radioactivity release incident."
  - AngryParsley 16y ago
    In first-world countries, most calculations value human lives in the millions of dollars. A bit less for infants and elderly, a bit more for young adults. http://squid314.livejournal.com/260949.html http://squid314.livejournal.com/260949.html explains the math pretty well: Contrary to popular belief, you can put a dollar value on human life. That dollar value is $5.8 million. Denying this leads to terrible consequences. Let me explain. We can do the same sort of thing with the environment. Of course, people get outraged if you frame it the wrong way, since they don't like trading "sacred values" for secular ones. (http://faculty.haas.berkeley.edu/tetlock/Vita/Philip%20Tetlock/Phil%20Tetlock/2001-2003/2003%20Thinking%20the%20unthinkable....pdf http://faculty.haas.berkeley.edu/tetlock/Vita/Philip%20Tetlo...)
    - eru 16y ago
      Thanks. That was an interesting link.
  - rayiner 16y ago
    Spot-on about the "lower implicit price tag" bit. When the EPA was trying to ban leaded fuel in the 1980s, the debate was largely over the increased costs from the switch (on the order of $1 billion a year) compared to the savings in maintenance from the switch to unleaded fuel. Health effects were factored in, but because of the uncertainty of the resulting benefits most of the cost-benefit analysis focused on measurable factors such as maintenance benefits. It turned out that when you considered the neurological effect of high blood lead levels in children (decreased IQ) the savings was on the order of billions of dollars per year: http://www.meca.org/galleries/default-file/lead0103_(final).pdf http://www.meca.org/galleries/default-file/lead0103_(final).... (12)
- warrenwilkinson 16y ago
  Today most of the environment is federally owned as crown or public land. 89% of Canada and at least 20% of the US are in this state (some western states are between 25% and 75% public land). As government property the land is not salable and its true worth is unknown. Currently, businesses approach government and lease access rights for grazing, timber, oil, etc. This leads to environmentally unsound decisions because most businesses only understand the land as is relevant to their work. And politicians make the deals because it adds jobs, builds the economy, and improves their re-election chances. If the land was sold, the market would bring a wider range of buyers: developers, businesses, speculators, and environmentalists. Land important to wildlife would be prized by conservationists and their respective charities. They could buy and protect that land, and only permit sustainable development. Farmers could no longer lease cheap graze land from the government, they would have to buy it (and treat it sustainably) or lease it from private owners. Oil producers would have an incentive to work cleanly: if they work clean, the land will resell at a higher price when they finish. Land is an asset of various values. Setting price tags stops it from being undervalued.
  - hsmyers 16y ago
    In an ideal world what you say may well be true. In this world, strip-mining and clear-cutting argue otherwise. As one who lives in one of those western states mostly owned by the federal government and one with an over whelming republican government I note that even at that, no one is reckless enough to sell off (or even sue to gain possession) the assets that this represents. I'd point out that in the 'bad' old days, private enterprise created one of the largest hazardous waste clean up sites in the country. The notion that this would all be somehow different now, flies in the face of history... I may not trust the feds, but I most assuredly don't trust private enterprise.
    - dpatru 16y ago
      Immunity from liability (or limited liability) is a fundamental reason why governments and corporations are not to be trusted. When government officials, financers, and corporate (stock) owners are shielded from liability, they tend to take on more risk. An easy way to make them consider the risks is to take away their immunity.
- rayiner 16y ago
  Putting a price tag on nature is crucial. As it is, the debate goes: A $100m mining project versus the beauty of a forested mountain. People go "protect people, not plants!" and build the mine. If it becomes a debate about: A $100m mining project versus a mountain ecology that provides $120m in ecological services to the surrounding community, then the public reaction is different. People have to understand that environmental protection isn't just about protecting aesthetic value. It's about the very real fact that when a land developer fills in a wetland to make a condo complex, everyone in the surrounding community has to spend $$$ to replace the water purification, flood control, etc, services the wetland was providing. It's literally about private parties being able to make a profit at the cost of the public.
uvdiv 16y ago
Economics is the study of decision-making in the presence of scarcity. Scarcity exists. Tradeoffs exist. The tradeoff between money and natural environments exists, and making choices by definition involves making comparative value judgments. It's willful ignorance to deny this. "The utilitarianism also troubles some environmentalists: What happens when the filtration plant becomes cheaper than conservation easements?" Or in less loaded language (and generalizing the monetary cost to encompass all ethical and aesthetic utility functions): what happens if building a filtration plant is a better choice than conserving a watershed? Is this thought unspeakable? If that is never a better choice, than environmentalists having nothing to worry about; and if it could be a better choice, than refusing to consider it is irrational and destructive. This is the unpleasant reality: there is a tradeoff between environmental protection and human labor. When conservation is monetarily the more costly choice, conservation means people are forced to spend more labor to obtain the same resource. A more expensive water supply means more hours of work expended to pay utility bills. You make comparative value judgments here whether you acknowledge it or not: to make an ethical proclamation saying environments are "priceless" is to simultaneously value human labor as worthless.
- rayiner 16y ago
  > what happens if building a filtration plant is a better choice than conserving a watershed? Is this thought unspeakable? If that is never a better choice, than environmentalists having nothing to worry about; and if it could be a better choice, than refusing to consider it is irrational and destructive. In any case, the worry of environmentalists is far in the future. Today, we generally make our economic decisions by pricing the ecological value of the environment at $0. Say a developer wants to buy forested land for $10m and create a housing complex worth $30m. We consider that an economically beneficial transaction, resulting in $20m in net benefit. But that's not the actual calculus. What if the forest is providing $50m in ecological services? Carbon sequestration, groundwater purification, prevention of soil erosion, etc. Our error results from treating the $10m price of the forest as the actual cost of constructing the housing complex. That is, of course, not true. The $10m is simply the value of one slice of property rights: the right to exclusive possession of the land. It's not the net value of the land. When the developer comes in and builds that housing complex, it does so not because it's economically efficient overall, but because it is advantageous to the developer. It yields $20m in net benefit for the developer, even though it costs society as a whole $30m. Environmentalism, in my opinion, fails in not couching its arguments in this manner. People aren't sympathetic to arguments that a $30m housing complex should be stopped in order to preserve the beauty of the forest. They are likely much more sympathetic to the simple fact that in return for that developer profiting $20m from the destruction of the forest, the surrounding community will have to spend $50m in air and water purification, wastewater treatment, erosion control, etc.

29 points by robg 16y ago

bobds 16y ago

Put a price tag on nature? I am not liking this idea.

eru 16y ago
Our actions often put an implicit price tag on nature. Rejecting the idea often just leads to a lower implicit price tag. One anecdote, I heard from a co-worker [0]: There was a elementary school that had some asbestos in its walls. A consultant did some maths and presented his report, starting with "Suppose the live of a child is worth 40,000 Pounds" and went on to conclude that the replacement would probably avoid enough future deaths / illnesses to justify their rather great costs. The council that received the report rejected it outright, "We can't put a price tag on children." In the end they never replaced the walls. Moral of the story, the consultant shouldn't have started with the price tag, but just concluded: If you don't do the replacements, you are valuing our children's lives at less than x thousand GBP. And you wouldn't put such a low value on them, would you? [0] I can ask him for the source, if you are interested.
- illumin8 16y ago
  It seems like one could pretty easily point out the logical fallacy there. Another thing is that most governments and corporations don't necessarily look at the positive benefits so much as the negatives. That's one reason why I like this dollar amount idea. You shouldn't say "each child's life is worth 40,000 pounds," but rather "the potential cost of a lawsuit brought by relatives of a deceased child is in the millions of pounds." The same method could be applied to valuing nature. You can simply say something like "the value of fisheries from the coast of Japan is $20 billion per year. Any release of radioactivity into the ocean could put TEPCO at risk of this amount in lawsuits." Corporations and governments don't want to put a price tag on people (even though there are well established pricing models, based on historical disasters). By putting a price tag on the environment they can hopefully do better risk management. Maybe they can make smarter decisions like: "Increasing the size of the Tsunami protection wall will cost an additional $200,000, but will prevent the potential $20 billion in cleanup costs from a radioactivity release incident."
- AngryParsley 16y ago
  In first-world countries, most calculations value human lives in the millions of dollars. A bit less for infants and elderly, a bit more for young adults. http://squid314.livejournal.com/260949.html http://squid314.livejournal.com/260949.html explains the math pretty well: Contrary to popular belief, you can put a dollar value on human life. That dollar value is $5.8 million. Denying this leads to terrible consequences. Let me explain. We can do the same sort of thing with the environment. Of course, people get outraged if you frame it the wrong way, since they don't like trading "sacred values" for secular ones. (http://faculty.haas.berkeley.edu/tetlock/Vita/Philip%20Tetlock/Phil%20Tetlock/2001-2003/2003%20Thinking%20the%20unthinkable....pdf http://faculty.haas.berkeley.edu/tetlock/Vita/Philip%20Tetlo...)
  - eru 16y ago
    Thanks. That was an interesting link.
- rayiner 16y ago
  Spot-on about the "lower implicit price tag" bit. When the EPA was trying to ban leaded fuel in the 1980s, the debate was largely over the increased costs from the switch (on the order of $1 billion a year) compared to the savings in maintenance from the switch to unleaded fuel. Health effects were factored in, but because of the uncertainty of the resulting benefits most of the cost-benefit analysis focused on measurable factors such as maintenance benefits. It turned out that when you considered the neurological effect of high blood lead levels in children (decreased IQ) the savings was on the order of billions of dollars per year: http://www.meca.org/galleries/default-file/lead0103_(final).pdf http://www.meca.org/galleries/default-file/lead0103_(final).... (12)
warrenwilkinson 16y ago
Today most of the environment is federally owned as crown or public land. 89% of Canada and at least 20% of the US are in this state (some western states are between 25% and 75% public land). As government property the land is not salable and its true worth is unknown. Currently, businesses approach government and lease access rights for grazing, timber, oil, etc. This leads to environmentally unsound decisions because most businesses only understand the land as is relevant to their work. And politicians make the deals because it adds jobs, builds the economy, and improves their re-election chances. If the land was sold, the market would bring a wider range of buyers: developers, businesses, speculators, and environmentalists. Land important to wildlife would be prized by conservationists and their respective charities. They could buy and protect that land, and only permit sustainable development. Farmers could no longer lease cheap graze land from the government, they would have to buy it (and treat it sustainably) or lease it from private owners. Oil producers would have an incentive to work cleanly: if they work clean, the land will resell at a higher price when they finish. Land is an asset of various values. Setting price tags stops it from being undervalued.
- hsmyers 16y ago
  In an ideal world what you say may well be true. In this world, strip-mining and clear-cutting argue otherwise. As one who lives in one of those western states mostly owned by the federal government and one with an over whelming republican government I note that even at that, no one is reckless enough to sell off (or even sue to gain possession) the assets that this represents. I'd point out that in the 'bad' old days, private enterprise created one of the largest hazardous waste clean up sites in the country. The notion that this would all be somehow different now, flies in the face of history... I may not trust the feds, but I most assuredly don't trust private enterprise.
  - dpatru 16y ago
    Immunity from liability (or limited liability) is a fundamental reason why governments and corporations are not to be trusted. When government officials, financers, and corporate (stock) owners are shielded from liability, they tend to take on more risk. An easy way to make them consider the risks is to take away their immunity.
rayiner 16y ago
Putting a price tag on nature is crucial. As it is, the debate goes: A $100m mining project versus the beauty of a forested mountain. People go "protect people, not plants!" and build the mine. If it becomes a debate about: A $100m mining project versus a mountain ecology that provides $120m in ecological services to the surrounding community, then the public reaction is different. People have to understand that environmental protection isn't just about protecting aesthetic value. It's about the very real fact that when a land developer fills in a wetland to make a condo complex, everyone in the surrounding community has to spend $$$ to replace the water purification, flood control, etc, services the wetland was providing. It's literally about private parties being able to make a profit at the cost of the public.

uvdiv 16y ago

Economics is the study of decision-making in the presence of scarcity. Scarcity exists. Tradeoffs exist. The tradeoff between money and natural environments exists, and making choices by definition involves making comparative value judgments. It's willful ignorance to deny this. "The utilitarianism also troubles some environmentalists: What happens when the filtration plant becomes cheaper than conservation easements?" Or in less loaded language (and generalizing the monetary cost to encompass all ethical and aesthetic utility functions): what happens if building a filtration plant is a better choice than conserving a watershed? Is this thought unspeakable? If that is never a better choice, than environmentalists having nothing to worry about; and if it could be a better choice, than refusing to consider it is irrational and destructive. This is the unpleasant reality: there is a tradeoff between environmental protection and human labor. When conservation is monetarily the more costly choice, conservation means people are forced to spend more labor to obtain the same resource. A more expensive water supply means more hours of work expended to pay utility bills. You make comparative value judgments here whether you acknowledge it or not: to make an ethical proclamation saying environments are "priceless" is to simultaneously value human labor as worthless.

rayiner 16y ago
> what happens if building a filtration plant is a better choice than conserving a watershed? Is this thought unspeakable? If that is never a better choice, than environmentalists having nothing to worry about; and if it could be a better choice, than refusing to consider it is irrational and destructive. In any case, the worry of environmentalists is far in the future. Today, we generally make our economic decisions by pricing the ecological value of the environment at $0. Say a developer wants to buy forested land for $10m and create a housing complex worth $30m. We consider that an economically beneficial transaction, resulting in $20m in net benefit. But that's not the actual calculus. What if the forest is providing $50m in ecological services? Carbon sequestration, groundwater purification, prevention of soil erosion, etc. Our error results from treating the $10m price of the forest as the actual cost of constructing the housing complex. That is, of course, not true. The $10m is simply the value of one slice of property rights: the right to exclusive possession of the land. It's not the net value of the land. When the developer comes in and builds that housing complex, it does so not because it's economically efficient overall, but because it is advantageous to the developer. It yields $20m in net benefit for the developer, even though it costs society as a whole $30m. Environmentalism, in my opinion, fails in not couching its arguments in this manner. People aren't sympathetic to arguments that a $30m housing complex should be stopped in order to preserve the beauty of the forest. They are likely much more sympathetic to the simple fact that in return for that developer profiting $20m from the destruction of the forest, the surrounding community will have to spend $50m in air and water purification, wastewater treatment, erosion control, etc.