Quantcast
Environmental News for a Healthier Planet and Life

Researchers Assign Monetary Value to Nature to Promote Sustainability

Imagine that you are considering selling stocks that you own in a company. You would probably consider how much the shares are worth today, how much they might be worth in the future and how much you might receive in dividend payments for each year you hold onto the stock. Much of your decision is informed by market wisdom and research.

Now imagine that you manage acres of old-growth forest—or another natural resource, like some fish in the ocean. How do you decide whether to use the resource now or conserve it as natural capital for the future?

Researchers at the Arizona State University are working to calculate the dollar value of nature in an effort to promote sustainability.
Photo courtesy of Shutterstock

In a study published recently in the Journal of the Association of Environmental and Resource Economists, researchers from Arizona State University (ASU) and Yale University have developed a first-of-its-kind, interdisciplinary equation to estimate the current monetary value of natural resources such as fish stocks, groundwater or forests in the U.S. In assigning natural capital monetary value, the approach will have widespread implications for policymakers and various stakeholders, and will also advocate for the creation of robust asset markets for natural capital, a much-needed advance.

Nature Is Capital

“It is often said that nature is capital, but this has largely been a metaphor thus far; former measurement methods have lacked necessary inputs from experts from various disciplines, resulting in vast gaps of information,” said Joshua Abbott, associate professor at ASU’s School of Sustainability who coauthored the study with Eli Fenichel, assistant professor at the Yale School of Forestry and Environmental Studies.

“This approach to valuation is forward-looking and inherently interdisciplinary,” added Fenichel. “It accounts for the role of ecological dynamics in shaping the future direction of natural capital stocks, and also incorporates the role of human behavior in shaping this direction, as well as how real-world management policies mold this behavioral feedback.”

Unlike earlier approaches, the method takes into consideration the “opportunity cost” of losing future units of natural capital that could have helped replenish the resource, providing economic benefits in the long run. It is underpinned by the economic principles also used to value physical or human capital.

The Value of a Fish in Water

Consider the example of reef fish in the Gulf of Mexico. During their research, Abbott and Fenichel found that the value of preserving live reef fish was more than $3 a pound in 2004, a price that jumped to almost $9 in 2007 after policymakers implemented management reforms that incentivized conservation. Under the scheme, fishermen were assigned individual tradable quotas or shares of the fish stock, which created a market for the fish as a capital asset.

The Gulf’s reef fish contributed more than $256 million to U.S. national wealth in 2004—and three times that after management reforms.

“We know from experience in the corporate world that changes in management practices can enhance the overall value of a company’s assets; it is no different with natural capital—our management of it can either enhance or detract from its value,” said Abbott.

According to him, what goes unmeasured often goes unvalued. The ability to treat fish in the water as a capital asset encouraged fishermen to preserve the natural resource, in turn enhancing sustainable fishing practices that led to higher returns.

Implications for Sustainable Policymaking

In assigning a dollar value to natural capital, Abbott and Fenichel’s approach will have widespread implications for policymakers and various stakeholders, putting natural capital on an equal footing with other, more easily measured parts of society’s wealth. The researchers hope to apply the method to measure the value of all U.S. fish stocks, as well as other natural assets like groundwater and forests.

“Sustainability can be defined as ensuring that the assets the next generation inherits are worth at least as much as they were when the previous generation received them,” said Abbott. “As humans, we are not going to have zero impact on the environment, but we want to make sure that the value of human, physical and natural capital that we pass on to future generations is worth no less than when we inherited them.”

“We are pursuing this research to help provide better measurements of society’s wealth, so we can know whether we’re moving in a sustainable direction,” Abbott concluded. 

--------

YOU MIGHT ALSO LIKE

10 Reasons Why We Must Save the Indonesian Peatlands

7 Places With Unexpected Forest Restoration Potential

Species Are Going Extinct 1,000 Times Faster Because of Humans 

--------

EcoWatch Daily Newsletter

Derrick Jackson

By Derrick Z. Jackson

As much as hurricanes Katrina and Maria upended African American and Latinx families, the landfall of the coronavirus brings a gale of another order. This Category 5 of infectious disease packs the power to level communities already battered from environmental, economic, and health injustice. If response and relief efforts fail to adequately factor in existing disparities, the current pandemic threatens a knockout punch to the American Dream.

Read More Show Less
President Donald Trump speaks during a roundtable meeting with energy sector CEOs in the Cabinet Room of the White House April 3 in Washington, DC. Doug Mills-Pool / Getty Images

By Andrea Germanos

A coalition of climate organizations strongly criticized President Donald Trump's in-person Friday meeting with the chief executives of some of the biggest fossil fuel companies in the world, saying the industry that fueled climate disaster must not be allowed to profiteer from government giveaways by getting bailout funds or preferred treatment during the coronavirus pandemic.

Read More Show Less
Sponsored
Pexels

By SaVanna Shoemaker, MS, RDN, LD

An Important Note

No supplement, diet, or lifestyle modification — aside from social distancing and practicing proper hygiene ⁠— can protect you from developing COVID-19.

The strategies outlined below may boost your immune health, but they don't protect specifically against COVID-19.

Read More Show Less
Pexels

By Zak Smith

It is pretty amazing that in this moment when the COVID-19 outbreak has much of the country holed up in their homes binging Netflix, the most watched show in America over the last few weeks has been focused on wildlife trade — which scientists believe is the source of the COVID-19 pandemic. Make no mistake: Tiger King: Murder, Mayhem and Madness is about wildlife trade and other aspects of wildlife exploitation, just as surely as the appearance of Ebola, SARS, MERS, avian flu and probably COVID-19 in humans is a result of wildlife exploitation. As a conservationist, this is one of the things I've been thinking about while watching Tiger King. Here are five more:

Read More Show Less
Pexels

By Hector Chapa

With the coronavirus pandemic quickly spreading, U.S. health officials have changed their advice on face masks and now recommend people wear cloth masks in public areas where social distancing can be difficult, such as grocery stores.

But can these masks be effective?

Read More Show Less