Readings

Invasions– Pimentel et al. 2000. Environmental

and economic costs of nonindigenous species in the United States. BioScience 50:53-65.

Environmental Economics– R. Costanza et al.1997. The Value of the

World's Ecosystem Services and Natural Capital. Nature 387:253-260.

Resources

– Steve Hackett (HSU) links to economic and environmental economic websites: http://www.humboldt.edu/~envecon/resources.html

– EPA’s national center for Environmental Economics: http://yosemite1.epa.gov/ee/epa/eed.nsf/pages/homepage

Outline• Introduction to environmental

economics• “free market” economics• Valuing non-market commodities• Approaches to ameliorating market

failure• Case study: guest speaker Becky Niell

– Simulation model of vegetation dynamics linking costs, benefits, and vegetation

Environmental economics• What is it?

• What does it include?

Environmental economics• What is it?

– Expansion of traditional economics to include non-market values

– Risk assessment and cost-benefit analyses

• What does it include?– Includes non-market values (esthetic,

cultural, emotional), ecosystem services, environmental health and safety concerns, sustainable development, carbon accounting etc.

“Free Market” economics• Market provides mechanism to allocate

resources to best (highest valued) uses• Prices provide information about values• Ideally, resources are allocated in a way

that optimizes efficiency • However, does not always optomize for

environmental resources:– Information is incomplete, some resources

have no market, future discounting devalues conservation, “tragedy of the commons”

Valuing environmental resources

• What are environmental (non-market) values?

Valuing environmental resources

• What are some environmental values?

– Health, wellbeing– Intrinsic values of wilderness and

wildlife– “Ecosystem services”– “natural capital”– Future potential values (e.g. new

discoveries)

How to place values on resources?

• $ value on non-direct costs and benefits – Estimate cost to use technology to perform

actions conducted by ecosystems (e.g. water or air filtration)

– Estimate costs of amelioration (e.g. healthcare costs VS prevention of environmental pollution)

– Surveys: ask people what things are worth (“what would you pay to maintain ecosystem X”)

How to place values on resources?

• $ value on non-direct costs and benefits – Estimate cost to use technology to perform

actions conducted by ecosystems (e.g. water or air filtration)

– Estimate costs of amelioration (e.g. healthcare costs VS prevention of environmental pollution)

– Surveys: ask people what things are worth (“what would you pay to maintain ecosystem X”)

Non-market values in range and forest

ecosystems• What are some values that might

apply? How would you account for them?

“Market Failure” caused by non-market resources

– Market failure= non-optimal allocation of resources.

– How can it be remedied? Account for non-monetary values, or bypass market mechanism and impose policy.

Can non-monetary values be accounted for by

traditional economics?

Can non-monetary values be accounted for by

traditional economics?

• Yes: we can translate all values into common metric ($) and can assess using free-market economics

Can non-monetary values be accounted for by

traditional economics?

• Yes: we can translate all values into common metric ($) and can assess using free-market economics

• No: some things have no $ value. Some decisions (environmental and social policy) must be made outside the realm of the market

Case study: modeling costs, management, and

vegetation• Simulation model predicting

outcomes of various management strategies

• non-market values (e.g. environment values) must be considered external to the model to make management decisions