Putting a Price on Nature

A thought-provoking piece on Yale’s Environment360 blog about protecting nature by pricing ecosystem services for trade in the marketplace. The payment for ecosystem services (PES) concept is at once old fashioned and cutting edge. It’s old fashioned because we long ago commodified the products of nature – lumber, salmon, water – for trade in the marketplace. But PES also seeks to attach market values to ecosystem services, such as the value wetlands provide by filtering pollutants from urban run-off, forests by purifying the headwaters of municipal water supplies, and native prairies by sequestering carbon. Conservationists first placed market values on ecosystem services to communicate the value of nature in terms politicians, corporations, and the public could understand. But PES is evolving into the idea that allowing ecosystem services to be valued, bought, and sold in a global marketplace just might save the environment.

The Yale360 piece points to a number of criticisms of the PES concept, and I know that readers of Free the Commons! could outline several concerns based on discussions we’ve had about the economics of nature, beginning with questioning how these “values” are derived, and when exactly did we agree that the Commons were privatized for trade? Those arguments being known, I’d like to offer a few of my own thoughts on why PES might not be the right idea.

First, the entire concept of buying and selling nature tells me that society (or at least parts of society) still consider nature as a commodity to be used, degraded, and potentially destroyed. Why else create a market if not to purchase the right to dispose of something the way you see fit? The idea of valuing, say, a wetland that is then traded in a market ensures only that the going market price is paid for the wetland before it is degraded or destroyed. That wetland has not been protected; that wetland is gone.

Second, consider this argument from the article in support of PES:

PES proponents can also point to early success stories: Vittel-Nestlé Waters recognized a few years ago that its aquifer in northern France was being polluted by nitrate fertilizers and pesticides from nearby farms. It devised a scheme to pay farmers to change their methods and deliver the ecosystem service of unpolluted water.

I think the first question to ask is why are individuals being allowed to pollute the aquifer? Now, let me make a point that PES supporters should understand: Nestle’s payment to these farmers represents a double loss for Nestle: the first loss is the cost associated with paying farmers to stop engaging in harmful activities – something they probably shouldn’t be doing anyway; the second loss is the foregone opportunity costs associated with using scarce financial resources to pay off the farmers. In what other ways could that money ($31.4 million according to the article) have been used? This is a tremendous waste of resources.

Third, I’ve seen something very similar to PES play out before, in Kansas. As a boy I could always find a place to hunt birds by asking my classmates if I could hunt their farms, or by hunting a neighbor’s land. We usually found some small way to pay the farmer for his kindness. But this practice began to change when, in an effort to sell farmers on the benefits of conservation, our federal farm agencies promoted the economic value of pheasants and quail: Protect some of your farmland, they said – we’ll show you how – and look at the money to be made by selling hunting rights. Now I do not criticize the farmers – it is their land and they have a right to its revenue. But the unintended consequences of this idea, to create a market where none existed before, has resulted in the loss of a hunting heritage that was far more open, neighborly, and communally beneficial than the network of high-cost hunting services that have replaced it.

I don’t know how PES will play out, but I will watch with interest as this debate unfolds. From a positive perspective, I am pleased that we recognize the need to protect the environment, even if I don’t think we’ve yet hit upon the right way to do it. We should always encourage new ideas and the dialogue that follows. All this requires is the willingness to listen to others, to engage their ideas with respect, and to proceed with a bit of humility. That’s why we’re here at Free the Commons! We aren’t certain we have the answers, but we hope to find the future of environmental protection and, with any luck and a lot of work, be a productive part of the dialogue.

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