Economic Growth and Valuation of the Environment
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Economic Growth and Valuation of the Environment

A Debate

Edited by Ekko C. Van Ierland, Jan van der Straaten and Herman Vollebergh

The debate on the valuation of nature and the environment, sustainable national income and economic growth is one of prime importance in environmental economics. Economic Growth and Valuation of the Environment deals with the fundamental approaches to calculating sustainable national income and their implications for the valuation of the environment.
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Chapter 9: Valuing nature

David Pearce, Kirk Hamilton and Giles Atkinson

Extract

9. Valuing nature David Pearce, Kirk Hamilton and Giles Atkinson 1 INTRODUCTION Roefie Hueting’s New Scarcity and Economic Growth (Hueting, 1980) has a deserved place in the history of environmental economics. Roefie warned that slavish adherence to gross national product (GNP) as an indicator of human well-being was totally misleading because of its exclusion of so many of the factors that contribute to that well-being, not least the quality of the services provided to us by the natural environment. While this observation is today a commonplace, we often risk forgetting the pioneers who drew the issue to our attention. Much the same goes for the other messages of New Scarcity: the need to integrate economics and ecology, the distortionary effects of economic policy that neglects non-market values and the need to embrace sustainability as a goal of society. But Roefie has always insisted that, in practice, one of the ways of correcting the failure to account for non-market values is illicit. He has never believed that we can, or even should, measure the shadow prices of many non-market functions. A shadow price in this context is the willingness to pay for securing a change in a non-market value such as clean air, species preservation or a fine landscape. It measures what people are willing to pay indirectly through surrogate markets, or what they would be willing to pay if only there was a market. An example of the former would be the hedonic house price approach,...

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