Why do mainstream economists still insist on using out-dated and highly flawed methodologies to value non-market goods, namely the environment, when in many cases there is market evidence, such as the many Payments for Ecosystem Services (PES) schemes conducted around the world? (see previous post Tasmania Forest Conservation Fund).

One of the recent developments in this field has been the use of ‘benefit transfer’, which uses economic data captured at one place and time to provide inferences about the eco-value at another place and time. Mainstream economists claim proprietary rights over this innovation, however it has been common practise by the valuation profession for centuries prior to the foundations of modern economics, and could be dated back to the Domesday Inquest. The valuation profession call it ‘comparable sales’, which along with summation (of land and improvements) and capitalisation (of the net income), form a suite of values, which the valuer then compares and by using his best judgement, arrives at a figure. This is known in the scientific world as ‘convergent validity’. A Land Economist is no different from a valuer in their approach, however they can be more prospective in their assessments.

The Domesday Inquest also introduced the modern valuation concept of highest and best (legal) use, as one of the questions that had to be answered by the assessor was “can more be had than is had?”

An entire issue of the Elsevier Journal, Ecological Economics, was devoted to Benefit Transfer, which largely emphasised the need to justify the relative ‘comparability’ of the benefit being transferred. Again, this is no different from the Land Economist’s or valuer’s in depth assessment of the measure of comparability of the sample.

The lack of communication between these various branches of economics continues to be a source of concern