PRICING THE ECOSYSTEM: What is wrong with putting a price on nature?
Traditionally, intrinsic value of the ecosystem was the main drive for the protection and conversation of nature. Basically, the value of the ecosystem was not purely on its economic gains but also on other aspects such as climate change and balancing of nature. Putting a price on nature is the new proposed idea for enhancing the conservations and protection of nature. The ideas of valuing the nature on economic basis have been proposed because of realizing the previous techniques used by the scientists, conservationists and politicians have not yielded much result.
This research paper examines the negative side of putting price on nature as well as explains the underlying issues on putting price on nature.
Putting price on nature
Putting price on the ecosystem services means that services offered by nature will be passed from one party to the other on price agreement. The main problem with the pricing concept is that the ecosystem services goes beyond the tangible aspects, a factor that makes it difficult to derive the actual value of the ecosystem. Nature provides essential benefits including food and water. The nature also provides intangible benefits that are psychologically and culturally important to human well-being. The intangible benefits include recreational purposes, tourism, learning, biodiversity and cultural practices.
According to Comberti et al (2015), examining the actual value of nature can be very difficult because of the complexity of coming with an effective and workable formula. Economists argue that nature can be valued just like any other capital investments such as buildings and land. However, the problem is coming up with the right formula to calculate the actual value of nature. It is very difficult to put a monetary value on nature when some of its benefits are indirect.
Pricing the ecosystem does not directly mean that all the services of ecosystem will completely be solved. There are some functions of nature whose market is inaccessible. For example, the market for ecosystem services such as refining of air, soil formation and water purification cannot easily get the buyer. Pricing of ecosystem will only attract buyers who can forecast the future monetary benefits of nature. According to the economic principles, the buyers will only spend their money with return motives. Therefore, pricing of nature does not give the full solution of the degradation and loss of biodiversity in the world.
Pricing the ecosystem will risk losing the intrinsic value of nature. When all the conversation is geared towards economic benefits, it will lower the actual value that has been placed on nature. On the other hand, the paying for nature services means that the government will be the owner of nature and the wealthy will be the only able buyers. This brings in the aspect of excluding other groups from accessing some of the benefits of nature. For example, there are communities that conduct cultural practices that indirectly help conserve nature, and they can greatly be affected when economic gains become the driving factor. Poor trade-off due to struggle of wealth and power can disadvantage some parties in addition to affecting the environmental conservation programs (Ninan & Inoue 2013). Pricing is wrong because it can only focus on tradable factors of nature and overlook other equally important but untradeable factors. For example, climate change will not be given much attention because it cannot be traded and because it has often been termed as an impediment for production.
Ecosystem is an example of public goods, its consumption cannot completely exclude other people from benefiting, and consequently, its destruction also has indirect impact in the society. For instance, when water of the river is polluted upstream, it affects users of the water downstream. This clearly shows that ecosystem conservation requires a holistic approach because of the indirect impact of ecosystem and interconnection of the ecosystem and its usage.
Legal framework for payment on ecosystem services (PES)
The other challenge of pricing ecosystem is the issue of structuring and sustaining a legal framework to guide the process. Structuring a legal framework is a challenging process because of the political influence which is usually driven by self-interests. Structuring an effective legal framework is essential for the implementation of PES program. For instance, in Britain, the government’s plan to sell part of the forest was strongly opposed because the government did not work with all the stakeholders such conservationists. This generally means valuing of ecosystem does not provide the full solution of the challenges facing the nature. Food and clean water service can be valued, but it is impossible to value the benefits such as the ability to counter climate change and global warming.
The other aspect of valuing the ecosystem is that it will create private ownership thus barring other people from using the nature. The ratification of strict laws preventing the usage of various natural resources such as forests leads to unwanted activities such as illegal lumbering, mining and poaching with very low conversation. In a research that was conducted in Nepal by the University of Cambridge (2014), areas that were conserved by the local communities showed positive results than the areas that were conversed by the government. Additionally, strict measures on the ecosystem only lead to poverty and lack of essential products such as food and clean water. Instead of pricing the environment, the movement should engage with the local communities in conservation. Pricing the nature does not help conserve but reduces its gains to economic benefits. The politicians may be tempted to only focus on the monetary benefits and overlook other essential benefits.
The concept of pricing the nature is a contentious issue because of the stands held by different parties. Economists suggest that valuing the ecosystem will help enhance the level of conversation and protection of nature, unlike the previous methods that have failed to achieve the anticipated results. However, the main challenge with the pricing concept is determining the actual value of nature. There is no single formula that can include both tangible and intangible benefits in deriving the actual value of nature. Pricing affects equal accessibility of nature services because it brings in the aspect of a buyer and a seller. In addition, designing a legal framework for the implementation of payment of the ecosystem services (PES) programs can be influenced by politicians with self-interest.
Comberti, C., Thornton, T. F., Echeverria, V. W., & Patterson, T. (2015). Ecosystem services or services to ecosystems? Valuing cultivation and reciprocal relationships between humans and ecosystems. Global Environmental Change, 34, 247-262.
Ninan, K. N., & Inoue, M. (2013). Valuing forest ecosystem services: what we know and what we don’t. Ecological economics, 93, 137-149.
University of Cambridge (2014), Does it Help Conservation of Put a Price on Nature? Retrieved September 30, 2016 from http://www.cam.ac.uk/research/news/does-it-help-conservation-to-put-a-price-on-nature.