Ecosystems do a lot for us. Among other things, they provide food, clean water, and clean air. And they do so largely for free. As the 2005 Millennium Ecosystem Assessment points out, we mismanage our resources because we fail to understand and capture their value. Most any conventional development or business decisions do not factor in the ways that ecosystems keep us alive. The logical solution: figure out a way to value these things. Only by better recognizing nature’s value can we manage resources in a way that sustains life. The big question then becomes: how do we determine this value? Or should we even try?

In May of 1997, Robert Costanza published a study in Nature that put a price tag on the natural world. The study suggested that the price of our world’s ecosystem services and natural capital totaled about 33 trillion dollars, or over 140 trillion in today’s dollars. Costanza’s controversial exercise of pricing nature helped split ecologists and conservationists into two camps that persist today. Though Costanza’s Nature study helped fuel the debate about valuing nature, to assume that the study falls cleanly on the side of pricing nature is to harmfully oversimplify that study as well as the valuable work of Costanza’s field, ecological economics. Ecological economics, largely ignored by mainstream economic thought, has spent the last 25 plus years looking at ways to value ecosystem services that go beyond pricing schemes. The field’s collective perspectives may not reconcile the opposing gut reactions we have to the concept of ecosystem services, but they do suggest how we might approach the concept in a way that won’t kill us all.

Like so many other political conflicts, the conflict at the heart of ecosystem services hinges on philosophy, and specifically one’s faith in the free market. One end of the conservation spectrum views any attempt to quantify nature’s value as blasphemous. Largely in response to Costanza’s Nature study, Timothy Weiskel, then a professor at the Harvard Divinity School, wrote an essay titled, “Selling Pigeons in the Temple: The Danger of Market Metaphors in an Ecosystem.” The essay concludes, “Exchanging, selling, calculating trade-offs or otherwise commodifying biodiversity in the global sanctuary of creation simply to maximize immediate human gain represents the primordial blasphemy of confusing sacred space with the market place.” A number of prominent ecologists agree. Robert Soule, a founder of the field of conservation biology, has argued tirelessly for the intrinsic value of biodiversity. He says that we should conserve ecosystems and other species not because of any economic logic, but because these things are priceless, worth more than any market value or fleeting human desire. Both Weiskel and Soule express real and well-founded fears about the fatal act of trying to fit nature’s majesty into a spreadsheet. By ascribing prices to nature, we cheapen it. We hasten its loss by allowing it to compete against the value of technology and human invention.

Another camp, and a far more politically entrenched one, embraces the power of markets. This group, generally referred to as environmental economics, extends neoclassical economic theory into the realm of solving environmental problems. It largely aims to internalize externalities, as economists say, or to price natural resources and their benefits to humans. Internalizing the values of forests, for example, means creating markets in addition to the one for timber, such as for the services of carbon sequestration or water filtration that forests also generously provide. One of the most outspoken supporters of these types of schemes is the head scientist of the Nature Conservancy and leader of the New Conservation movement, Peter Kareiva. In a 2012 piece published by the Breakthrough Institute, Kareiva writes, “Instead of scolding capitalism, conservationists should partner with corporations in a science-based effort to integrate the value of nature’s benefits into their operations and cultures.” In theory, pricing nature allows ecologists and economists to speak the same language, or use the same currency, freed of complicated value judgments. By this logic, markets constructed the right way will motivate landowners to make socially desirable decisions. Some major companies have already bought into this approach. Puma and Dow Chemical, for example, are both refining programs that will, in technocratic speak, “operationalize sustainability.” These companies state that better accounting will lead to more accountability, and better use of natural resources.

A conflict over the utility of markets begs for a mediator that doesn’t accept a priori the logic of capitalism, a logic that by definition works to conserve nature only when considered measurably profitable. Enter ecological economics. Despite the splash that Costanza and his colleagues made by putting a price tag on nature with their 1997 Nature study, the field of ecological economics doesn’t blindly assume that price serves as the only, or even best, way to assess nature’s value. Instead, the field has spent nearly thirty years ferreting out the utilitarian edges of market solutions to problems of ecological scope.

From its birth in the late 1980s, ecological economics defined itself in opposition to the neoclassical assumptions of environmental economics. Ecological economics takes a wider view of value, or of what can and should be internalized, than does any neoclassical approach. In one of the early issues of Ecological Economics, Costanza says that the field “is built on the three integrated goals of sustainable scale, social fairness, and economic efficiency.” Any good valuation, he says, needs to address all three goals. In addition to expanding the scope of of value, ecological economics holds to one other fundamental ethos that liberates it from market-based thought. It takes seriously concerns for finite resources. Building on the Club of Rome’s famed publication, The Limits to Growth, as well as economists like Herman Daly, the field views our economy as a subset of a much larger one, the greater ecosystem in which we live. In other words, it proposes that our economy doesn’t exist in a philosophical or physical vacuum; it depends on the health of the natural capital that buoys it. As Costanza says, “Everything in our economy comes from nature and returns to it.” By placing the human economy firmly and humbly within a natural one, ecological economics begins from a very different starting point than does environmental economics, which ignores biophysical realities by assuming that we can always invent or price our way out of resource scarcities.

If we concede that the earth has limits, and that some resources aren’t fungible, then market solutions begin to look more wasteful and unjust. Costanza and fellow Gund Institute economist Joshua Farley have written extensively about how market solutions are often poorly suited to allocating essential public resources, or those shared resources like air and water that we depend on for life. To allocate these kinds of resources equitably, Farley says, we must overcome large-scale prisoner’s dilemmas, for which the best outcomes occur when individuals act in the interests of the group instead of the interests of the individual. He says that such resources “should be insulated from markets,” not blindly integrated with them. Effectively managing public resources requires more than well-defined property rights, though those help. It requires institutions and laws that motivate collective action and long-term thinking rather than selfish behavior. Farley frequently sites a growing body of biological and sociological research that cracks the neoclassical faith in selfish behavior. Researchers from many different fields, from Joseph Heinrich to E.O. Wilson, argue that humans make pro-social decisions when motivated to consider the good of society rather than the good of self. These findings beg for future analysis of increasingly pressing and interdisciplinary questions: What kinds of institutions and policies motivate collective action? And where do selfish motives truly overlap with collective ones?

For ecologists and ethicists like Soule or Weiskel, accepting the premises of ecological economics requires a major concession. They would need to accept some form of valuation. Such a concession currently requires playing in an unfairly rigged game, controlled by neoclassical rules, and this may be too much to ask. But will removing oneself from the valuation process really save our souls, or stop the bleeding of our support systems? In a 1998 statement in Ecological Economics, “The Value of Ecosystem Services: Putting the Issues in Perspective,” Costanza and his colleagues answer the question strongly:

“We (humans — both as a society and as individuals) are forced to make choices and trade-offs about ecosystems every day. These imply valuations. To say that we should not do valuation of ecosystems is to simply deny the reality that we already do, always have and cannot avoid doing so in the future. “

In other words, the choices we make everyday – from business choices that shape supply chains to individual choices about how to get to work – imply valuations. So we need to get better at making them. Making better decisions requires not shrinking from valuation, but digging into the process of how to do it well. What constitutes doing it well, according to Costanza, serves as the main difference between ecological and environmental economics. So far, the latter way of thinking, and its faith in market solutions, has largely determined the narrative about ecosystem services.

One explanation for this is probably predictable. Ecological economics, and its deep dive into the nature of value, represents a challenge to an economic system that habitually avoids questions of ethics. Mark Sagoff, via the Breakthrough Institute, has another explanation. Sagoff argues that, rather than being ignored, the field has been engulfed and compromised by the torrid flow of neoclassical economics. He writes, “ecological economics is now a more pro-environmental wing of standard environmental economics, depleted of its energy.” Sagoff says that ecological economics has already peaked in influence, and will continue to decay. A search for the phrase “ecological economics” on Google’s Ngrams Viewer, a tool that measures the frequency of a phrase’s appearance in books over time – a measure of cultural influence and a good one for any academic field – could support Sagoff’s theory. Usage of the phrase appears to have flat-lined since about 2001, while phrases like ecosystem services and natural capital continue explosive trajectories.

But if the lurching body of neoclassical economics has indeed swallowed ecological economics, as Sagoff suggests, then the meal appears to have given some economic analyses a new consciousness, or the precious seeds of one. While companies and organizations compete to develop frameworks and tools to capture the values of ecosystem services, many of these systems echo core principles of ecological economics. Two leaders in the field of ecosystem service assessment, Natural Capital Project and Economics of Ecosystems and Biodiversity (TEEB), have developed systems that lean on values other than price. And early efforts at deploying these frameworks may encourage both market-believers and market-skeptics to have faith in alternative ways of assessing value. Gretchen Daily, a co-founder of the Natural Capital Project, says that one of the most surprising findings from a handful of pilot projects has been that stakeholders frequently make decisions about natural resources not based on price, but based on their ties to their surroundings. They base decisions on values that run deeper than price – values of the cultural, biological, and spiritual kind. In a lecture, “Mainstreaming Natural Capital into Decision Making,” Daily says that stakeholders are considering price only at the end of the decision-making process, when weighing the feasibility of one option against another.

To free ourselves from the metaphors of the marketplace, or to prevent them from driving our value systems, Weiskel suggests that we need to rediscover “radically different forms of valuation.” He writes, “Public leadership now needs to define, declare and defend the public good in terms that transcend private self-interest.” Working in the fringes and the cracks of our economic system, ecological economics serves as one of the few tools we have to do this. A truly interdisciplinary field, it welds science to social science. It uses what we know about the biophysical limits of our resources to determine the kinds of institutions and policies best suited to manage these resources in an equitable and efficient way. Critics may dismiss this approach as a form of centrally controlled allocation. It’s not. It’s not any kind of singular economic system. It’s the opposite. Like any worthwhile discipline, ecological economics presents a new way of looking at the world, and one that allows room for more than one value to determine our world’s shape.


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