May
28
2010

A few weeks ago, I assumed that some of our readers were bored with the same ol’ climate change arguments. I know you know what I’m talking about: the Cuddly-Animals-are-Dying and the Catastrophic-Disasters-Will-End-the-Human-Race arguments come to mind first. Now, I’m not saying there isn’t some merit to these frames, but c’mon! Can’t we get a little variety?

Stephen Polasky: This UofM professor and IonE fellow has some BIG ideas about $, the earth, and climate change.
Stephen Polasky: This UofM professor and IonE fellow has some BIG ideas about $, the earth, and climate change.Courtesy University of Minnesota

Lucky for you, University of Minnesota professor and Institute on the Environment fellow Stephen Polasky thinks creatively. In April, he gave a presentation on how adopting inclusive wealth could ultimately reduce climate change and its effects. And since virtually everybody likes money, I’m going to go out on a limb and bet you want to know more about the ca-ching!$

Here’s the skinny:

Economists say that just about everything has a monetary value, and how much something is worth plays largely into the decisions politicians make. Scientists like Polasky are increasingly saying that these traditional accounting methods do a poor job assessing value to natural resources, and these mistakes are leading us to make irrational choices. As an alternative, Polasky suggests adopting inclusive wealth theory.

This is not going to cut it.: Inclusive wealth is a really complicated theory for both scientists and economists.
This is not going to cut it.: Inclusive wealth is a really complicated theory for both scientists and economists.Courtesy happyeclaire (Flickr)

Ready for the good stuff??

Economists and scientists both agree that the environment has worth, called natural capital, but they disagree on how much. In fact, not only do economists and scientists disagree with each other, but they disagree amongst themselves! To be fair, determining something’s worth can be extremely difficult. Because there are already economic markets for some natural resources like trees (i.e. lumber) and metals (i.e. gold), it’s easier to assess their value. Most ecosystem services, however, like the flood control provided by wetlands, are more difficult to put a dollar value on.

Inclusive wealth theory says that our decisions should be made on economic assessments that include true representations of the value of natural resources (difficult as that may be).

Politicians make important decisions regarding environmental policies, including actions that affect climate change. When politicians are choosing between multiple policy options, they are conducting policy analysis. One criterion that politicians pretty much always use is a cost-benefit ratio, or cost efficiency. In order to do that, politicians must determine the value of each policy option and weight the outcome against the rest. (It might sound complicated, but you do this same process informally everyday when you make decisions regarding what to eat for breakfast and whether to walk or ride your bike to school/work.)

Timber!: Land use changes, like logging, release greenhouse gases like carbon dioxide into the atmosphere, ultimately contributing to climate change.
Timber!: Land use changes, like logging, release greenhouse gases like carbon dioxide into the atmosphere, ultimately contributing to climate change.Courtesy Ben Cody

Polasky and other like-minded individuals argue that under traditional accounting methods, politicians’ cost-benefit ratios are distorted – they are not accurately representing the true worth of the environment. Furthermore, as a result, we’re making some pretty big, bad decisions. According to Polasky, the solution is simple in theory, but difficult in practice: adopt inclusive wealth theory to more accurately measure environmental worth. If we increase the value of the environment in our analysis, the cost-benefit ratios will change and perhaps favor decisions that are more environmentally friendly. That is, under inclusive wealth, we might finally see how important it is to take climate change-reducing actions such as reducing our fossil fuel consumption, protecting forests from logging, and stopping eating so much meat… or not.

What do you think?

How much $$ is the environment worth to you? What about individual ecosystem services like pollination by bees or decomposition of waste by microbes?

Are politicians doing an accurate job of assessing the value of natural capital?

Post your comments below!

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Your Comments, Thoughts, Questions, Ideas

Anonymous's picture
Anonymous says:

thats great stuff i just love math dont you

posted on Thu, 06/10/2010 - 12:40pm
Anonymous's picture
Anonymous says:

I love the math and I would love to teach by that standard. It is so interesting and fun. If anyone knows other websites that give good standards for every subject please list them. Thank you, Ariel.

posted on Thu, 01/27/2011 - 12:42pm
KelsiDayle's picture
KelsiDayle says:

What can you do within a 20-minute walk or bike ride from your bedroom?

Portland's mayor, Sam Adams, wants to build more 20-minute neighborhoods (what city planners refer to as 'mixed-use developments'). The idea is based upon the realization that roughly two-thirds of all car trips in most American cities are NOT commuting to and from work, but rather to the grocery store, schools, parks, etc., and if the grocery store, school, and park were within a 20-minute walk or bike ride, citizens would drive less. Besides the perk for the environment in the form of less CO2 emitted into the air and less traffic congestion for everybody, 20-minute neighborhoods also strengthen the local business economy:

"...every dollar that we don't spend elsewhere, will stay in Portland's economy. There's about $850 million that stays in Portlanders's pockets because we drive less."

How's that for incentive to walk or bike ride??

posted on Wed, 06/23/2010 - 11:58am
Anonymous's picture
Anonymous says:

It is not only a problem of assesing or recognizing value, but looking at LONG term benefits and costs. People tend to look for immediate gain or benefit instead of considering future payoffs-especially for future generations.

posted on Mon, 08/23/2010 - 6:56pm
Autumn Smith's picture
Autumn Smith says:

A natural resource that will demand great value in a an economy of natural resources will be water. Consider disputes between states over rights to the Colorado River in the West and the Catawba River in North Carolina. How are coal ashes being dumped in holding ponds of power plants impacting ground water? Policies enacted today will effect sources of water for generations. Just as climate change caused by man's actions can not be reversed, only mitigated, water supply cannot be replenished, only protected.

posted on Thu, 10/14/2010 - 3:40pm
Autumn Smith's picture
Autumn Smith says:

Human health, specifically a reduction in the obesity rate in American, would benefit further from walking to carry out errands. Would someone please close the drive-throughs at restaurants? At the least, we could get out of the car to order a hamburger that takes months to decay.

posted on Thu, 10/14/2010 - 3:47pm
KelsiDayle's picture
KelsiDayle says:
posted on Thu, 02/10/2011 - 12:00pm
Anonymous's picture
Anonymous says:

Very interesting discussion. I am an aerospace engineer working on fuel combustion. So far fuel efficiency with no consideration to the environmental impact of the fuel used to be the prime concern in our research. The department of environmental engineering used to do separate research to control pollution. Last year we took an initiative to do combined research with environmental engineering department to do research on increasing fuel efficiency having environmental impact as a consideration.

posted on Fri, 01/13/2012 - 10:57pm

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