Tag Archives: economics

What does a tree cost, and what is its value?

“You know the cost of everything and the value of nothing,” was a common insult when I was a child. However, some environmentalists say that it’s a genuine problem. The World Forum on Natural Capital meeting today and tomorrow is going to attempt to change how we see the value of nature. They’ve put together an infographic to explain what they mean.

Natural Capital Infographic

What is Natural Capital?

This looks good, but there are some issues. What value do you put on Spirituality? There is more to assigning value than simply picking some numbers you like, but because some of the benefits are so intangible then there are going to be difficulties valuing them.

This has already been an issue in UK policy this year. There is a badger cull ongoing in the UK, in order to protect cows from bovine tuberculosis. A cost-benefit analysis was in favour killing the badgers. However when government minister was asked what value he put on the life of a badger he wou;dn’t give a numerical answer (spin on to 2m20s into the stream for the interview). If you don’t assign any value or benefit to a badger, but you do to a cow, it’s going to be much more difficult to perform an unbiased analysis.

In the EU, in contrast, the idea of valuing natural assets has been taken more seriously. This does require research on modelling ecosystem services, so there will be plenty of argument over the methods and details of valuing.

There is also a question of whether this is the right way to value the environment. To what extent is a protection of nature a moral argument, and to what extent is economics a suitable method for determining what is moral? However, as long as there are people who believe the two subjects are the same, Natural Capital could be an effective way of expanding the argument of what the cost of actions are.

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Natural Capital Infographic from the World Forum on Natural Capital.

Feeding the World – who pays?

Agricultural research The Economist, not noted for its bleeding heart liberal tendencies, has a special report in the February 24th issue on feeding the world. The print edition asks Should we increase spending on agricultural research?, and the website has an online poll. Unsurprisingly, in both cases, the answer is yes. The report includes an interesting account of the history of the Broadbalk field at Rothamsted Research station:

The 1.6-hectare (4-acre) Broadbalk field lies in the centre of Rothamsted farm, about 40km (25 miles) north of London. In 1847 the farm’s founder, Sir John Lawes, described its soil as a heavy loam resting on chalk and capable of producing good wheat when well manured. The 2010 harvest did not seem to vindicate his judgment. In the centre of the field the wheat is abundant, yielding 10 tonnes a hectare, one of the highest rates in the world for a commercial crop. But at the western end, near the manor house, it produces only 4 or 5 tonnes a hectare; other, spindlier, plants yield just 1 or 2 tonnes. Broadbalk is no ordinary field. The first experimental crop of winter wheat was sown there in the autumn of 1843, and for the past 166 years the field, part of the Rothamsted Research station, has been the site of the longest-running continuous agricultural experiment in the world. Now different parts of the field are sown using different practices, making Broadbalk a microcosm of the state of world farming.

Asking for more money for research (at a time when prestigious institutions such as Imperial College are sacking plant scientists right left and centre) is a no-brainer, but The Economist puts forward a compelling case which gets to the heart of both the scientific and economic issues:

By the 1990s most agricultural problems seemed to have been solved. Yields were rising, pests appeared under control and fertilisers were replenishing tired soil. The exciting areas of research in life sciences were no longer plants but things like HIV/AIDS. The end of the era of cheap food has coincided with growing concern about the prospects of feeding the world. Around the turn of 2011-12 the global population is forecast to rise to 7 billion, stirring Malthusian fears. The price rises have once again plunged into poverty millions of people who spend more than half their income on food. The numbers of those below the poverty level of $1.25 a day, which had been falling consistently in the 1990s, rose sharply in 2007-08. That seems to suggest that the world cannot even feed its current population, let alone the 9 billion expected by 2050. Adding further to the concerns is climate change, of which agriculture is both cause and victim. So how will the world cope in the next four decades?

A.J. Cann, Leicester, UK.