Natura economica in Environmental Valuation

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Natura economica in Environmental Valuation

Katrine Soma

Environmental Values 15(2006): 31-50. doi: 10.3197/096327106776678979

ABSTRACT

Cost-benefit analysis is widely acknowledged to be an appropriate tool for providing advice to policy makers on the optimal use and management of natural resources. However, a great deal of research has indicated that the assumptions made in cost-benefit analysis concerning the natural environment diverge from real world observations. In this paper I discuss these observed divergences. To do so, I introduce the concept of Natura economica. Natura economica is the environment as it is understood in economic analysis in general, and cost-benefit analysis in particular, namely as a bundle of commodities with potential market value. I argue that if this understanding of nature and its value is very different from what is generally observed, it reduces the value of the resulting policy recommendations. I then suggest four questions that policy makers should ask when they evaluate their choice of appraisal methods. If the answer is 'yes' to all of them, then cost-benefit analysis can provide valid information. However, if the answer to any of these questions is 'no', other methods, such as multicriteria analysis and participatory processes, should be considered in order to arrive at better-founded policy recommendations.

KEYWORDS: Cost-benefit analysis, policy-making, environment, ethics

REFERENCES to other articles in Environmental Values:

Cost-Benefit Analysis, Incommensurability and Rough EqualityJonathan Aldred

Is Valuing Nature Contributing to Policy Development? Jonathan Burney

Environmental Economics: The Meaning of an 'Objective' Policy Science Marian K. Deblonde

Environmental Values and Adaptive Management Bryan G. Norton and Anne C. Steinemann

Conceptions of Value in Environmental Decision-Making John O'Neill and Clive L. Spash

In Search of Value Literacy: Suggestions for the Elicitation of Environmental Values Theresa Satterfield

What is the Value of Rangitoto Island? Dan Vadnjal and Martin O'Connor

The Environment as a Commodity Arild Vatn

CITATIONS in other Environmental Values articles

Editorial. Clive L. Spash