Valuing nature?

By: Lykke E. Andersen*

“Nature is like love: one of the most beautiful things on earth,
but if you put a price on it, it becomes prostitution.”
Nele Marien

Every time somebody converts a hectare of forest into a hectare of agricultural land, they have – implicitly or explicitly – compared the value of standing forest to the value of agricultural land, arriving at the conclusion that agricultural land is more valuable to them.

The calculation they have made is probably quite accurate, because millions of years of evolution have made people quite good at evaluating which of two options is best for the survival of their family.

However, what they do not take into account is that the standing forest is also valuable to other people than their immediate family. To people nearby, to people far away, to people living now and to people living in the future, and even to other species. The benefits that other people derive from your forest are called positive externalities, and even millions of years of evolution have not prepared people to take these into account.

Any person should do what he thinks is best for his family (within the limits of the law, of course). If his best option for improving the lives of his loved ones is to convert a bit of his forest into agricultural land, so be it. Nobody can criticize him for not taking into account what the other 7 billion people on Earth thinks.

However, the other 7 billion people could try to include their preferences into the farmer’s decision by presenting him with an even better option. They, or some global institution representing them, could, for example, present the farmer with the following alternative: “As long as you refrain from deforesting further, we will provide the technical and financial assistance needed to double productivity on the land you have already cleared, we will pay the education of all your children, so that they don’t have to be farmers for lack of other options, and we will guarantee a job for at least one family member on some of the municipality’s development projects, which we also finance.”

Obviously, financing such an option for all interested rural families would be very expensive. However, that is more or less what it would take to ensure that the land remains forested permanently. Just paying the value of the food not produced is insufficient. You also have to make sure the farmer is spending his freed up time either on agricultural intensification or in a non-agricultural job, because otherwise he could just start working for the neighboring cattle rancher, possibly causing even more deforestation than he would have on his own plot. You also have to change the options for the next generation, making sure they are so educated that they would not be interested in laboring on a plot of agricultural land under the hot tropical sun. And you have to make sure that other poor families do not arrive to fill the agricultural output gap. Only after doing all this for at least a generation, would the forest be more or less safe.

Would the international community be willing to finance such a mechanism of reduced deforestation for a couple of decades? That depends on how much they value Bolivian forests.

*Dr. Lykke E. Andersen is Director of the Center for Environmental-Economic Modeling and Analysis (CEEMA) at the Institute for Advanced Development Studies (INESAD) in La Paz, Bolivia. She can be reached by e-mail at: landersen@inesad.edu.bo.

This article was first published in the development communications magazine “Sociedad que Inspira” No. 17, August 2012, here.