CHAPTER 5 • Chances for Nature - A Matter of Substitution
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towards allocative efficiency and possibly also towards sustainable development. Sustainable development however, pertains to both allocative efficiency and to intergenerational income distribution, since sustainable development is defined as maintaining
the welfare generating capacity of our capital stock without decreasing the welfare per
capita of future generations. Note: Theoretically using correct prices does not ensure
allocative efficiency, since there are dynamic effects. As soon as decisions are made using
presently correct prices which are based on present capital endowments, reallocation
of resource endowments takes place along with price changes. Consequently the
allocative optimum shifts to a new (unknown) position. These dynamics make it impossible to determine whether society has actually reached the optimum; it is however possible ensure a movement in the direction of the optimum (Ganley and
Cubbin 1992).
Valuation of unpriced natural capital is however not an easy task. Several valuation
methods have been developed to determine the value of natural goods and services,
and from this the value of the natural capital stock can be derived. Often used valuation methods are Contingent Valuation, Travel Costs, Hedonic Pricing and Averting
Behaviour (Freeman 1986; HoevenageI1994). These methods can only measure specific
components of the total economic value of the natural capital stock. Nature performs
several functions that are valuable to society, because they provide welfare. In order to
determine the total socio-economic value of nature it is necessary to value all welfare
generating functions of nature. In the functions of nature approach a distinction is made
between regulation, production and information functions (de Groot 1994). Since nature performs many functions which can be valued by different valuation methods, it
is very difficult to determine the total economic value of nature in practice.
If nature is valued in practice, this is usually done in ecological terms since the ecosystems qualities are easier to measure than human preferences. Besides this, policy
makers operate on two levels:
• At operational level, where the core question is how obtain a maximum natural qualities, given a fixed budget.
• At strategic level, where the core question is whether or not to allocate a budget to
the protection or development of nature.
Mostly valuation studies take place at operational level and therefore ecological
valuation studies prevail over socio-economic studies. At strategic level decisions are
often made without valuation, based on political and other considerations. This is not
surprising since we are probably only on the verge of shifting from a conservation view
which calls for ecological valuation, towards a coevolution view which adds socio-economic valuation studies (Ruijgrok et al. 1998).
Whether the presented advantages of coevolution will be realized in the coming
decade will very much depend on the operationalisation of the trade off concept. Carrying out coevolution in practice, requires institutional embedding of both the concept and its instruments. Presently both are lacking in the decision making processes.
Thus, one may conclude that in theory the shift towards the coevolution view might
entail a revived interest in the valuation of nature to prevent an unbalanced trade off
and thus unsustainable use of nature. Socio-economic valuation in addition to ecological valuation could serve as instrument to make the coevolution concept operational
97
towards allocative efficiency and possibly also towards sustainable development. Sustainable development however, pertains to both allocative efficiency and to intergenerational income distribution, since sustainable development is defined as maintaining
the welfare generating capacity of our capital stock without decreasing the welfare per
capita of future generations. Note: Theoretically using correct prices does not ensure
allocative efficiency, since there are dynamic effects. As soon as decisions are made using
presently correct prices which are based on present capital endowments, reallocation
of resource endowments takes place along with price changes. Consequently the
allocative optimum shifts to a new (unknown) position. These dynamics make it impossible to determine whether society has actually reached the optimum; it is however possible ensure a movement in the direction of the optimum (Ganley and
Cubbin 1992).
Valuation of unpriced natural capital is however not an easy task. Several valuation
methods have been developed to determine the value of natural goods and services,
and from this the value of the natural capital stock can be derived. Often used valuation methods are Contingent Valuation, Travel Costs, Hedonic Pricing and Averting
Behaviour (Freeman 1986; HoevenageI1994). These methods can only measure specific
components of the total economic value of the natural capital stock. Nature performs
several functions that are valuable to society, because they provide welfare. In order to
determine the total socio-economic value of nature it is necessary to value all welfare
generating functions of nature. In the functions of nature approach a distinction is made
between regulation, production and information functions (de Groot 1994). Since nature performs many functions which can be valued by different valuation methods, it
is very difficult to determine the total economic value of nature in practice.
If nature is valued in practice, this is usually done in ecological terms since the ecosystems qualities are easier to measure than human preferences. Besides this, policy
makers operate on two levels:
• At operational level, where the core question is how obtain a maximum natural qualities, given a fixed budget.
• At strategic level, where the core question is whether or not to allocate a budget to
the protection or development of nature.
Mostly valuation studies take place at operational level and therefore ecological
valuation studies prevail over socio-economic studies. At strategic level decisions are
often made without valuation, based on political and other considerations. This is not
surprising since we are probably only on the verge of shifting from a conservation view
which calls for ecological valuation, towards a coevolution view which adds socio-economic valuation studies (Ruijgrok et al. 1998).
Whether the presented advantages of coevolution will be realized in the coming
decade will very much depend on the operationalisation of the trade off concept. Carrying out coevolution in practice, requires institutional embedding of both the concept and its instruments. Presently both are lacking in the decision making processes.
Thus, one may conclude that in theory the shift towards the coevolution view might
entail a revived interest in the valuation of nature to prevent an unbalanced trade off
and thus unsustainable use of nature. Socio-economic valuation in addition to ecological valuation could serve as instrument to make the coevolution concept operational