teeb training session 4: criticisms of valuation

The Economics of Ecosystems & BiodiversityThe Economics of Ecosystems & Biodiversity

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Session 4:Criticisms of valuation


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Outline

The Process of Valuation– Assumptions– Does the process of eliciting values change our

perceptions? – How the process affects outcomes– What negative changes might the process of valuation

provoke?Valuation and time lagsDrawing the boundary on what we can/should valueHow to choose how to value


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Assumptions: the process of valuation

When asking Willingness To Pay we assume that people:– Hold values in advance or can easily generate them

– Have sufficient information and understanding of what they are valuing

– Can decide (alone) on the values they attribute to ecosystems

– Value consistently

– Value according to individual rationality


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Does the process of eliciting values change our perceptions?

Valuation promotes a universal notion of the environmentBy placing values on nature we change existing concepts

of ownership and propertyAs values have not been previously defined the process of

valuation changes how we appreciate nature– Individual preferences outweigh consensus building and

collective decision making

– Are we constructing markets that are set up to fail?


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Does the process of eliciting values change our perceptions? cont…

The psychological viewpoint considers that valuation assumes (and champions) rational choice over intuition: – Economics focuses on the outcome of decisions not the

process

– Empirical studies of behaviour do not back up economic theories of preference


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What negative changes might the process of valuation provoke?

On-going debate about attaching new forms of property rights to nature and culture– Linked to the granting of resource rights to ‘traditional’

indigenous groups and rural populations

– Often assumed that such groups have inherent knowledge that allows them to act as ‘stewards of nature’

Such policies significantly change the relationships within and between groups over the rights to control, exclude and exploit resources


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Valuation and time lags

Potentially critical time-lag in the valuation feedback mechanism– As values are an outcome of existing, current institutional,

cultural and social constructs then adaptation to environmental change is required (when the change occurs)

– As ecosystems are degraded and biodiversity lost, attitudes and values towards nature will change, but the time-lag may be long


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Drawing the boundary on what we can/should value

O’Connor and Frame (2008) propose two thresholds beyond which assessing trade-offs or monetary choice is inappropriate

- Either estimation is scientifically difficult; or

- The implied trade-off is deemed morally inappropriate


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How to choose how to value

The choice of valuation method will define the outcome of the valuation process (Vatn, 2005)


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Module 4 SummaryThe TEEB tiered approach

• RECOGNISING VALUE Sometimes sufficient Often the case where cultural and spiritual values are strong

• DEMONSTRATING VALUE In economic terms, costs and benefits Useful to policy-makers and businesses Economic valuation exercises

• CAPTURING VALUE Putting ecosystem values into decision-making Through incentives and price signals Market-based solutions not necessarily best


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Applying the tiered approach

Step 1: Identify and assess the full range of ecosystem services affected and the implications for different groups in society

Step 2: Estimate and demonstrate the value of ecosystem services using appropriate methods, including linkages over time and scale, local v global, current use v future use

Step 3: Capture the value of ecosystem services and seek solutions to overcome their under-valuation through economic policy instruments (subsidies, fiscal incentives, charges for access and use, payments for ecosystem services, property rights, eco-labelling and certification etc.)


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THANK YOU!

teeb training session 4: criticisms of valuation

Documents

teeb training valuation

process of valuation

criticisms of valuation

teeb training assumptions

valuation process vatn

teeb training module

teeb training session

process of eliciting