Friday, April 16, 2010

Price of Nature

The Economist published an article on why it is important to put a price on nature. This article and the story it presents is a step into the right direction. There is a lot of danger though. First -- ideally -- we should not be a profit-driven society. It is not a sign of healthy living and a mature society that everything has to have a price tag. Some things are simply priceless. Today a value of zero is attached to nature for most purposes. All such cost is "externalized". As the article correctly says "the profit is for the private pockets, the indirect costs (to nature, our health) are to be paid by the tax payer or the general public". Coming from such a misled system, putting a price onto nature is a step forward. Not ideal, but better than putting a tag of $0 on it.

Other dangers of such a system are: How do we agree to the price tag? How much is a species worth? As the article says "pandas are cute, bugs aren't". Should we put a higher price tag on pandas than on cock roaches? Further down the road we are running into a situation as we doing now with CO2. We will start trading with nature, I will kill some natural habitat here, but offset it by buying some "habitat" or "species credit" there. Everything will be bought and sold and traded. The only guaranteed winners are then traders and banks. Just like CO2 or emissions trading does not reduce or eliminate emissions, habitat and species trading will not reduce or eliminate habitat and species destruction.

It is good that people and companies start recognizing that nature has value and that it provides innumerous services to us "freely". It is good to include these values in our decisions. But we need to remind us, as an example, that when we use such tools to decide where we build our next factory, we only try to find the least detrimental solution. "Least detrimental" still is bad for us. We should first ask us if we can avoid building the factory all together through other means such as consuming less.

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