Ecological Economics 25 (1998) 49–52
SPECIAL SECTION: FORUM ON VALUATION OF ECOSYSTEM SERVICES
How should a parasite value its host?
William E. Rees *
Uni6ersity of British Columbia, School of Community and Regional Planning, 6333 Memorial Road, Vancou6er,
BC V6T 1Z2, Canada
Accepted 13 November 1997
1. Introducing the question
Let’s be clear on what is being discussed here.
The valuation of nature represents the commodification
of global life support. This is worrisomely
serious business. For the first time in human
history, it seems necessary to some to put a price
on the biophysical structures and functions that
make higher life possible on Earth. Until now, the
essentials to life have been free.
The felt need among environmental economists
to price ‘the environment’ implies a sense of impending
scarcity.1
Making sound decisions in a
context of scarcity is what economics is all about.
Price in this context is a tool—it is the means by
which individuals and communities decide how to
choose among mutually exclusive possibilities,
how to exercise their preferences for the many
competing things life has to offer.
Of course, assigning a price to something implies
the ability to compress a great deal of information
about that thing into a single indicator or
metric. In theory, this compacted information
should enable us to make ‘better informed’ decisions
about the allocation of that thing among
competing interests or about its disposition in the
event that it may have to be ‘traded off’ in some
economic development decision (Pearce, 1994;
Vatn and Bromley, 1993).
There can be little question that the contributions
of nature to human welfare are not presently
well represented in markets and ‘are therefore
often given too little weight in policy decisions’
(Costanza et al., 1997). Historically, there has
been an ‘‘asymmetry of valuation’’ Pearce (1994).
The economic playing field is biased against conserving
the functions of nature because, without
markets or prices, their contribution to the economy
is not reflected in the either the individual or
social choices made. Such classic market failure
necessarily results in inefficient economic and policy
decisions. Thus, the relevant question here is,
can present efforts to evaluate ecosystems goods
and services lead to more efficient and legitimate
decisions about economic development?
* Tel.: +1 604 8222937; fax: +1 604 8223787; e-mail:
wrees@unixg.ubc.ca
1
To many ecologists, this particular form of scarcity indicates
an increasingly dysfunctional relationship between the
human enterprise and the ecosphere.
0921-8009/98/$19.00 © 1998 Elsevier Science B.V. All rights reserved.
PII S0921-8009(98)00015-9
W.E. Rees / Ecological Economics 25 (1998) 49–5250
2. The economy as parasite
Approaching this question first requires an understanding
of the physical relationship between
the economy and nature. Conventional environmental
economics tends to see the economy and
the environment as separate and rather independent
systems. This is the economics of environmental
‘externalities’, of confidence in the
capacity of technology to substitute for failing
natural resources and of unfettered growth. The
question of appropriate economic scale doesn’t
arise. By contrast, ecological economics sees the
material economy as an inextricably integrated,
completely contained and wholly dependent growing
subsystem of a non-growing ecosphere. From
this perspective, there are no externalities and we
are more humble about prospects for substitution.
Most important, there are real limits to material
growth and the issue of optimal economic scale is
a critical concern (Daly, 1996).
Ecological economics also recognizes the economy
as a complex, far-from-equilibrium, self-organizing
system subject to the second law of
thermodynamics. This is a critical distinction
given that the economy is embedded in the ecosphere.
In particular, modern interpretations of
the second law suggest that all self-producing
systems, including the economy, can maintain or
increase their internal order only by importing
available energy/matter from their host environments
and exporting degraded energy/matter back
into them. That is, complex systems develop and
grow ‘‘at the expense of increasing the disorder
(entropy) at higher levels in the systems hierarchy’’
(Schneider and Kay, 1994).
By this interpretation, the economy is but one
level in a nested hierarchy of systems in which the
survival of each sub-system is dependent on the
productivity of the system immediately above.
For the economy, the superior system is the ecosphere.
This relationship is no problem for either
the economy or the ecosphere as long as material
consumption and residuals production by the former
does not significantly exceed resource production
and waste assimilation by the latter.
Unfortunately, both conditions are being violated
today. Deforestation, fisheries collapse, falling
water tables and biodiversity loss are examples of
over-consumption while stratospheric ozone depletion,
greenhouse gas accumulation, acid lakes
and polluted air imply waste sinks are filled to
overflowing. Little wonder that ecological
economists see physical scale as a central issue. In
effect, the economy has become parasitic on nature—its
growth and vitality are increasingly purchased
at the expense of the health of the
ecosphere (see Peacock, 1995). The relevant question
now becomes, how should a parasite value its
host?
3. (In)validating valuation
As noted, if decisions using money prices are to
be truly ‘better informed’, the prices should reflect
all significant values contributing to the worth of
the entities being considered. Pearce (1991) shows
that in some circumstances even a crude ‘‘total
economic value’’ approach has significant potential
to change development decisions in nature’s
favor. He estimated a range of non-market values—e.g.
carbon sink, biodiversity and existence
values—accruing to the world at large from the
Amazon rain-forest. In a perfect world, Brazil
could reasonably claim several billion dollars per
year, particularly from wealthy northerners, in
compensation for market benefits foregone if
Brazil chose not to ‘develop’ the forest.
In lauding the total economic value approach,
Pearce (1991) argues that ‘‘it does not deny other
rationales (e.g. ethical considerations) for conserving
tropical forests… Yet it may be unnecessary
to resort to such moral arguments. Economic
arguments alone could well be sufficient to justify
a dramatic reduction in deforestation’’.
But it is not a perfect world. As Pearce acknowledges,
there are presently no mechanisms to
tax northern free-riders for benefits received nor
to transfer these benefits to Brazil (and given the
uncertainties in both the economic calculus and
global change—to say nothing of geopolitics—
none can be anticipated any time soon). Meanwhile,
Brazil receives only a small share of the
non-market gains from preservation but reaps all
the benefits of economic development. This leaves
W.E. Rees / Ecological Economics 25 (1998) 49–52 51
the country with no ‘rational’ choice but to proceed
with rain-forest development, a choice that
may well be uneconomic in the global context.
This is a textbook example of the so-called
common property—public good problem. It implies
that regardless of the value of nature’s services,
we may be propelled to the brink of
ecological and social chaos ‘‘not so much by the
evil acts of selfish people as by the everyday acts
of ordinary people whose behavior is dominated,
usually unconsciously, by the remorseless self-destructive
logic of the commons’’ (Ophuls and
Boyan, 1992).2
Those who would commodify nature face many
other problems. Two of the most important relate
to properties of ecosystems themselves. Many of
the valuable flows functions associated with natural
capital stocks are difficult to quantify and
price. More critical, however, are those ecosystems
elements whose precise contribution ‘‘is not
known—indeed, is probably unknowable—until
(they cease) to function’’ (Vatn and Bromley,
1993). Because of this ‘functional transparency’,
hypothetical values for natural capital inevitably
suffer from ‘‘a non-trivial loss of information’’
and are therefore dangerously misleading. In these
circumstances, ‘‘so-called ‘contingent valuing’…
somewhat paradoxically, may contribute minimally—if
at all—to the revelation of values’’
(Vatn and Bromley, 1993).
The marginal pricing of nature’s services may
also be invalidated by erratic systems behavior.
Catastrophe theory predicts that key variables of
any ecosystem under stress will be characterized
by unpredictable discontinuities, particularly lag
and threshold effects. Human impacts on ecosystems
only ‘‘slowly accumulate to trigger sudden
changes (which directly affect) the health of people,
the productivity of renewable resources and
the vitality of societies’’ (Holling, 1994). In these
circumstances the marginal value of critical
ecosystems services may suddenly break toward
infinity, without warning and with little possibility
of an orderly recovery (Rees, 1995). Thus, even as
the economy expands with little apparent friction,
there is a finite possibility that we could actually
be ‘‘on the verge of extinction, blissfully unaware
that a mathematical fiction in the space of the
possible is about to become reality. And the really
nasty feature is that may take only the tiniest of
changes to trigger the switch’’ (Cohen and Stewart,
1994).
4. A risk-averse strategy
It seems that the best efforts at assigning monetary
value to nature may fail absolutely to produce
safe measures of ecological scarcity. This in
turn makes it impossible rigorously to determine
how much natural capital to preserve. How, then,
should we parasites value our host? Since adequate
stocks of critical natural capital are necessary
to maintain the life-support functions of the
ecosphere, the risks associated with their depletion
are unacceptable and there may be no possibility
for technological substitution, simply
‘‘conser6ing what there is could be a sound riskaverse
strategy’’ (Pearce et al., 1990, [emphasis
added]). This is exemplary advice to a species that
is depleting its resource base, confronting the
possibility of erratic global change and yet remains
dedicated to further material growth.3
Fortunately, ‘conserving what there is’ does not
necessarily mean totally abandoning the efficiency
of economic incentives. These can be incorporated
into a ‘zero net impact’ approach to development.
Project proponents would be required to regenerate,
at some other location, a stock of natural
capital equivalent to that used or destroyed in
3
‘Conserving what there is’ implicitly recognizes that humans
have already exceeded the long-term carrying capacity of
Earth. Accordingly, the marginal benefits of any further
throughput growth may be less than the marginal costs associated
with lost ecosystem services. (Further population growth
implies that we may actually have to enhance existing natural
capital stocks to maintain a constant stock of wealth per
capita.) (Rees, 1995).
2
The ‘common-property’ (or better, the ‘common pool’)
dimension in this example comes from the use of the atmosphere
as a CO2
waste dump by all. Also, while Brazil owns
much of the world’s rain forest, it provides many life support
services required by everyone. This property of natural capital
blurs the usual distinction between common and private prop-
erty.
W.E. Rees / Ecological Economics 25 (1998) 49–5252
project implementation. The value of the sacrificed
assets would be accounted for in the form of natural
capital replacement costs. To the extent that these
added costs affect project design, scale, operation
and demand they would contribute to more ecologically
sustainable and economically efficient development.
In theory, Environment Canada has had
such a ‘no net loss’ policy respecting development
in marsh and other wetland habitats since the mid
1980s.
To be sure, some biophysical services are neither
technically nor economically substitutable. Consider
the Gulf Stream. This thermal ‘conveyer belt’
from the South Atlantic releases heat over the
North Atlantic and Europe ‘‘at the rate of a trillion
kilowatts (1015
W), an amount equivalent to 100
times the world’s energy consumption’’ (Rahmstorf,
1997). Evidence is now emerging that global
warming could possibly disrupt this flow, ‘‘(plunging)
most of Europe into a big chill (5°C cooler)
lasting 100s of years…’’ with disastrous consequences
both there and beyond (Rahmstorf, 1997).
Humans have no hope of replacing this free heating
service. In short, at the present critical stage of
world development, we must regard many of nature’s
services as we would an expensive yacht. If
we have to ask the price, we probably can’t afford
it.
5. Epilogue
The accelerating erosion of ecosystem services is
a major problem in light of human dependence on
the ecosphere and the general scarcity of Earth-like
planets. A parasite that destroys its host and has
nowhere else to go will be culled by natural
selection. Unfortunately, for all its theoretical attractiveness,
ascribing money values to nature’s
services is only a partial solution to the present
dilemma and, if relied on exclusively, may actually
be counterproductive.
The message for humans is to learn to live in
harmony with nature—well-adapted parasites go
virtually unnoticed by their hosts. To the extent
that the partial pricing of life-support services is a
means to this end, so much the better.
However, true harmony will require a sea change
in prevailing human values. At the least, effective
solutions to the sustainability crisis reside in a solid
sense of ecologically enlightened self-interest. Some
even argue for adoption of a more purely ecocentric
ethic. Certainly our humanity has been diminished
by the loss of humility and any sense of awe before
the sheer wonder of nature. These would be restored,
in part, by the extension of moral rights to
nature’s creations. To inversely paraphrase Pearce
(1991), this ethics-based approach does not deny
arguments to conserve nature based on monetary
valuation. However, with a more balanced system
of values, it may not be necessary to resort to crude
economic analyses. Indeed, the question of how to
commodify the living world would never come up.
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