10/22/08ESPP-781 Fighting about Prices Basic point: economic choices are always also ethical choices Choices can be made (democratically) in two major ways –Public choice: legislation –Private choice: market Choices can also be imposed –What if someone wants to buy and the owner does not want to sell?

10/22/08ESPP-782 How do we know what something is worth? This house would be worth 1/4 As much if it were in Ithaca, NY and not Cambridge, MA. Is this fair? This is the largest banyan tree in the world. If it is killed by climate change, can Kolkata ask reparations? This snail darter blocked a dam because it is an endangered species. How did we know its worth?

10/22/08ESPP-783 US Environmental Laws and the Economic Model in Action Some protection of absolute values –Clean Air Act health-based ambient air quality standards –Endangered Species Act –(former) Delaney Clause of FFDCA Balancing statutes –“Unreasonable” risks and adverse consequences to the environment

10/22/08ESPP-784 Approaches to Valuation in US environmental law and policy Assign absolute value to some aspect of nature –Endangered Species Act Create hierarchy of standards –Clean Air Act’s primary standard and secondary standards for health and welfare Require balancing of costs and benefits –Pesticides, toxic substances Promote selected interests or values –Environmental equity

10/22/08ESPP-785 Philosophical/Ethical/Legal Problems Assigning monetary value is not politically neutral: clean or cheap development? Current values overlook past overuse and exploitation Nature has intrinsic worth Valuation denies nature’ sacred or transcendental quality of nature Legal rules foreclose valuation

10/22/08ESPP-786 Political Problems Who is doing the valuation? (e.g., North or South; countries with or without “nature”; public or private bodies; experts or laypeople?) What methods were chosen and why? How transparent is the process? (Do affected people know where and how valuation is occurring ?) How is the right kind of participation obtained? How are disputes resolved?

10/22/08ESPP-787 Methodological Problems Perceptions of scarcity or abundance may be wrong Discount rates are controversial Many environmental amenities are not “naturally” marketized Values are context-dependent (e.g., wealth of a community) People are ambivalent or disagree on various grounds

10/22/08ESPP-788 Alternatives? Make new markets or extend them (GHG emissions; “debt for nature swaps”; ecosystem services) Auction (highest bidder sets price) Referendum (collective valuation) Stakeholder negotiation (collective valuation) Grant rights to nature (to be revisited) Sacralize and set beyond pricing (heritage sites, sacred places)