Ross Gittins, Economics writer for the Sydney Morning Herald, published an article entitled “Environmental accounting is closer to reality”, in Weekend Business Opinion (June 23-24). It was a good article. However it failed to acknowledge, or even give cognisance to what has really been going on.
My (not yet acknowledged) emailed response to him is here:
“As an economist you would be aware of the many attempts to value the environment using welfare economics practice, such as ‘willingness to pay’, ‘travel cost’, ‘hedonic pricing, etc., all of which have been heavily criticised as biased (many forms of bias), although hedonic pricing is regarded as the most rigorous of the methods, as it relies on an empirical database, namely the property market.”
“Costanza’s first attempt in the ’90s aroused a lot of interest and the practice has grown, however for my PhD (2003), I developed a completely new and pragmatic approach to value ecosystem services, or Natural Capital, drawing on the rigor of hedonic pricing, and including an ecological assessment of the ecosystem in question, which none of the neoclassical economists have ever attempted.”
“There are also many examples now of PES (payments for ecosystem services), one of which I delivered (Tasmanian Forest Conservation Fund). These are usually what is called a reverse auction, when in fact they are a reverse tender! In my view there have been enough of these now for the environment to be no longer referred to as a ‘free good’, and a market could be said to exist, hence the proliferation of ‘benefit transfer’ which incorporates both PES and other studies to transfer eco-value in one place and time to another place and time, adjusting for inflation, income parity etc.”
“I recently valued the loss of ecosystem services due to an illegal logging project in the Western Province of PNG using a combination of ‘opportunity cost’ and benefit transfer. A year later (2011), the National Court awarded the customary landowners (my clients) PNG Kina 226 million (about AUD$97 million). This was the first such judgement ever in PNG, and as such was a landmark decision (legal precedent). I was referred to the legal agency in PNG by the EDO of NSW, who know my work.”