How Much Is the World Worth?

In an ambitious bid to put a price tag on Mother Nature, a group of conservation-minded ecologists and economists has estimated that it would cost $33 trillion per year to replace the Earth's "ecosystem services": environmental resources such as fresh water and soil, and processes such as climate regulation and crop pollination. The authors of the study, which appears in tomorrow's issue of Nature, say societies must overhaul their policies to avoid facing a bill of this magnitude. But some critics counter that the final estimate is too high, and others say the whole exercise is pointless.

Lead author Robert Costanza, an ecologist who directs the Institute for Ecological Economics at the University of Maryland, and a dozen colleagues from Brazil, the Netherlands, Sweden, and the United States first agreed on a list of 17 categories of goods and services provided by nature, including processes such as nitrogen fixation and resources such as crop varieties. They then partitioned Earth's surface into 16 "biomes," or environmental types, such as oceans, estuaries, and tropical forests (see table), and judged which services each biome provides.

Finally, they sifted through scores of published studies for estimates of the value per hectare of each service in each biome. For example, a 1981 study estimated that for each hectare of U.S. wetlands destroyed, the lost ability to soak up floodwaters increased annual flood damages by $3300 to $11,000. The group then tallied the lowest and highest estimates for each item, and concluded that all of the items put together were worth $16 trillion to $54 trillion per year, for an average of $33 trillion. In comparison, the U.S. gross domestic product in 1996 was about $6.9 trillion.

Pricing the biosphere is useful, Costanza says, because it dramatically illustrates that "there is a value [to natural systems], even if we aren't paying it in our normal transactions. ... There is no free lunch." But the prices Costanza's group assigned to many ecosystem services, such as seafood and estuaries, are too high, says David Pimentel, an ecologist at Cornell University in Ithaca, New York. In a similar study in press at the journal BioScience, Pimentel and co-authors pin the yearly benefits from the global ecosystem at just $3 trillion.

And the main policy recommendation Costanza sees emerging from the study--a new tax on the depletion of natural capital such as wetlands--has its own foes. Because each ecosystem is different, a general usage tax "will lead to overprotection in some areas and underprotection in others," says Jerry Taylor, director of natural resources studies at the Cato Institute, a Washington, D.C., think tank that has taken conservative positions on issues such as taxation. Others, however, find value in the Costanza group's valuation. Says Stanford University economist Lawrence Goulder, "Having this number calls people's attention to the fact that ecosystem services are absolutely essential for human life, and that there's no price we could pay that would be enough" to replace them. >

Posted in Environment, Climate