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The Economics of Nature and the Nature of Economics

Edited by Cutler J. Cleveland, David I. Stern and Robert Costanza

This book discusses important recent developments in the theory, concepts and empirical applications of ecological economics and sustainable development. The editors have assembled a fascinating collection of papers from some of the leading scholars in the field of ecological economics.
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Chapter 5: The challenges of valuation: ecological economics between matter and meaning

Sabine U. O’Hara


Sabine U. O’Hara INTRODUCTION The issue of valuation is central to the discipline of economics. Its pursuit has been cast in questions of what constitutes value, how value is created and how value is expressed in economic activity and economic institutions. While the interest in value and value creation is equally pertinent to ecological economics, ecological economists have framed valuation questions differently than their mainstream colleagues. For today’s economic mainstream, prices are fundamental to the expression of value. Prices state the revealed preferences of consumers and the profit-seeking behaviour of firms. They are thus a ‘democratic’ expression of the self-interested behaviour of consumers and producers as well as a reflection of the organization and coordination of consumers’ and producers’ competing human needs and wants in decentralized markets. In fact, it is not the individual expression of utility or profit maximization per se but this process of coordinating and negotiating competing interests that ultimately assigns value. Ecological economists generally view the reliance on prices as primary expression of value with scepticism. The reason for this ambiguity is that ecological economics has added considerable complexity to the model of market exchange advanced in mainline economics. Ecological economics views economic activity as taking place within a larger context of material flows which originate in the environment, are processed in economic activity and released back into the environment as high entropy waste (Boulding, 1993; Georgescu-Roegen, 1971; Daly, 1991). Further complexity is added by those who contend that material flows are not simply an expression...

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