Sustainable DevelopmentSust. Dev. 8, 165–166 (2000)

BOOK REVIEWS

ECONOMIC VALUATION OF THE ENVIRONMENT:METHODS AND CASE STUDIES by G Garrod and KGWillis, 1999. Elgar, xiv+384 pp, £65.00 (hbk). ISBN1-85898-684-2

This book describes environmental valuation techniquesand provides a useful guide for policymakers and re-searchers to ensure the identification and the correct useof the appropriate tools for each particular situation. Itexamines estimates of environmental values based onrevealed preference techniques and expressed prefer-ence techniques, with reference to the assessment ofliability for environmental damage and the formation ofpublic policy.

The revealed preference technique derives valuationsfrom observed consumer choices. In certain situations,consumers of environmental goods reveal through theiractions the values they would place on these goods.People make trade-offs, which include the sacrifice ofsome benefits to limit the use of environmental re-sources or gain some environmental benefits. In con-trast, expressed preference techniques, such as thecontingent valuation method, estimate environmentalvalues by deriving information from a survey; it ispossible, therefore, to know the price people would liketo pay for improvements in environmental quality.

Despite the widespread use of the contingent valua-tion method, there is a long-standing criticism of thevalidity of this method to provide estimates of economicvalues for environmental goods. The authors are there-fore correct in their belief that, for example, experimen-tal economics could be a useful research tool toinvestigate some environmental economic issues in or-der to improve or eliminate anomalies of individualpreferences that characterize the subject’s answers tocontingent valuation questions.

The book addresses the reader to the choice of thebenefit estimation technique and examines problemsthat can arise in transferring a derived value for anenvironmental good to another good in a different situa-tion. The book is particularly strong in emphasizing anumber of issues that often receive inadequate attention.In particular, it looks at how values are derived acrosssome environmental valuation studies by analysing sev-eral case examples, which would provide excellent read-ing for a course in Environmental Economics. Forexample, the authors focus on problems that may arise

by using travel-cost and hedonic price methods to valuethe benefits of landscape protection and analyse theadvantages stemming from the use of alternative meth-ods, useful to overcome those limitations. Another caseexample considered in the book is the biodiversity forwhich the use of a multi-criterion analysis is suggestedin order to estimate the most efficient set of areas forbiodiversity protection. Also in this case, the authorsshed some light on the main problems that can arise inthe choice of the relative weightings to be attached tothe different criteria, and try to suggest some reasonablesolutions, although, as they say, it is not always easy toobtain unambiguous results. Finally, the chapter on pol-icy use and decision-making mainly provides an analy-sis of the different approaches used to implementbenefit transfer of environmental values and discussesthe validity of each.

To conclude, this book is written clearly and providesan attractive approach to applications of environmentalvaluation methods. It is absolutely thorough in both itscomprehensive coverage and references. I believe, there-fore, it is a must for readers interested in EnvironmentalEconomics.

Elisabetta VeneziaDipartimento di Scienze economiche,

University of Bari,Italy

NATURAL CAPITALISM: THE NEXT INDUSTRIALREVOLUTION by Paul Hawken, Amory B Lovins and LHunter Lovins, 1999. Earthscan, xix + 396 pp, £18.99(hbk). ISBN 1 85383 461 0

This book entertains, motivates, informs and annoys inbroadly equal measures, though perhaps part of theexplanation for its annoying sections relate to the de-mands of educational and inspirational writing e.g. us-ing textbook economics principles as a straw doll oreven object of derision, even though they are not in-tended to be used as unqualified guides to contempo-rary economic policy. In essence the book features threemain elements. First, in the interests of sustainable de-velopment it makes a case for much wider currency andappreciation of the value of natural capital (the servicesof flora, fauna and ecosystems) in business and govern-mental decision-making. Second, it presents several ex-ercises in futurology or expert speculation relating tovarious aspects of our urban and rural landscapes andlivelihoods, and third, on the basis of the foregoing, itCopyright © 2000 John Wiley & Sons, Ltd and ERP Environment.

BOOK REVIEWS

suggests a number of policy prescriptions. The core andsubstance of these three elements are spread throughoutthe book rather than occupying a clear and logicalsequence of sections and chapters. The authors acknowl-edge early on that the notion of natural capitalism is nota new theoretical advance but they contend that whatwas needed was a workable popular exposition, withthis book being the result. The dressing up of thisexisting body of theory into the next big idea might besomewhat galling to some readers familiar with thearea. Yet that would miss the point, since they are notthe intended audience. If a wide and influential generalaudience is sought and to be inspired, then academicwriting style really does needs to be cast aside and amore punchy big idea-driven style pursued. The authorsdo this admirably, and, judging by the readers’ com-ments used on the front and back covers, seem to havewon over the minds of readers such as Bill Clinton andAnita Roddick. What defines the idea of natural capital-ism for them is an inevitable shift in commercial think-ing that can be accelerated and made smoother, awayfrom human productivity and towards greater resourceproductivity. This is wonderfully expressed as puttingthe couch potato of industrialism on a diet.

Most general environmental and future resourceproblems, as they see them, reduce to the existence ofinappropriate incentives and price signals in markets,which need rectifying. The authors give a number ofinteresting and amusing examples to buttress their case.Further, they argue that once they are rectified then thiswill typically generate cost savings, improve our envi-ronment and support more sustainable work opportuni-ties for the population. For economists there is nothingnew here in the articulation of market failure, thoughthere is an implicit challenge to them regarding the roleof efficient markets, if, as is suggested by the authors,substantial cost savings are being systematically over-looked through not operating in a more environmen-tally benign manner. Part of this neglect may beattributed by economists to governmental regulatoryfailures, but amongst corporate strategy academics thisphenomenon can be readily conceived in terms of their

existing body of research. For them it is simply a mani-festation of the Porter thesis – advanced by the Harvardbusiness guru, Michael Porter. The upshot of this notionis that, largely because of imperfect information in mar-kets, firms do systematically overlook cost saving op-portunities and hence competitive advantages. Accord-ingly, if increasingly more stringent environmental reg-ulations are sensibly applied, a win – win outcomeemerges, with firms becoming more competitive/profitable and the environment being improved. Theauthors of this book do not acknowledge the contribu-tion of Porter but certainly do seem to lean heavily onsome of his thinking, as well as on much re-statement oftheir own earlier works published under the titles TheEcology of Commerce and Factor Four. Arguably, NaturalCapitalism provides a broader overall social and biologi-cal framework than those earlier works.

I would suspect that this book will be a successfulpopular source of ideas, communicating how one canharness the market to better use the environment in theinterests of business and society. In many ways, bookssuch as these serve an essential purpose. Sustainabledevelopment really does need as wide as possible aconstituency of inclusion to function effectively. Com-municating existing core ideas in an accessible frame-work is thus very important. The book can also serve asuseful trigger or stimulus material in classroom teachingand seminar sessions. However, as a genuine fount oforiginal ideas for guiding us on a more sustainable pathof development, I am less convinced, even though this iswhat seems to be claimed to be provided by the authors.Alternatively, it may just be that they know what makesgood marketing strategy for a popular volume on envi-ronmental ideas and policy.

Alan CollinsDepartment of Economics,University of Portsmouth,

Locksway Road,Milton,

Southsea, Hampshire PO4 8JF,UK

Copyright © 2000 John Wiley & Sons, Ltd and ERP Environment Sust. Dev. 8, 165–166 (2000)

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