Course:ECON372/OK2019WT2/Topic3
Valuing Natural Resources: Willingness to Pay/Demand
Group #1
https://indiaclimatedialogue.net/2019/08/02/it-is-high-time-to-pay-for-ecosystem-services/\
Summary:
This article comes from the Indian climate dialogue publication and focuses on attributing a monetary value on valued ecosystem components in the Himalayas. These are aspects of the environment that are deemed as significant to resident’s livelihoods. It portrays a good picture of how the consciousness towards ecosystems and their use by society will have to change in order to combat arising issues such as climate change. In case of a developing country like India, the world’s fastest growing economy and population. It depicts a good picture of how lower income countries will have to reorganize governmental systems in order to cope with fast growing populations as well as the changing climate and depleting natural resources. This article looks into how Himalayan states in the north of idea are trying to tackle this problem by demanding payment for the preservation of important ecosystem services. Like the watersheds located in the north but that southern states rely on for water availability. Though a large portion of India’s population is dependent on the availability of this water other regional governments are unwilling to pay to preserve natural resources that are not under their jurisdiction. This has hindered the ability of conservation efforts in the country and slowing the possible solutions to managing important natural resources.
Analysis:
This article demonstrates a want by regional powers in India to attribute a monetary value to these ecosystem components on which people's lives depend. Doing this would help in the conservation efforts of the country by incentivizing preservation of these ecosystems by the residents.This type of system known as environmental valuation enables the weighing the importance and use of natural systems by attributing a monetary value to them. This article delves into the complications that arise from the implementation of this system, not only in valuing ecosystem services but the juridical challenges that arise as a result. As these ecosystem components are valued differently by different regional government of the country and the failure of the states to look at the bigger picture. Though southern states depend on the use of water from watersheds in the north they are unwilling to see how the importance of conservation for their population. These regional governments are failing to consider aspects like groundwater flow, the complexities of the water cycle and the synergistic nature of the environment. Water management in the north will affect southern states regardless of whether or not it came directly from the north. This failure to compromise at the political level is another barrier in the transition to a more environmentally conscious world. On the other hand this demonstrates how India as a third world country is aware enough to not only deal with its third world issues but also try and combat environmental issues by using first world frameworks such as attributing monetary value to valued ecosystem components. However this particular problem emulates how developing countries are struggling with not only attributing a monetary value but also communicating the probable negative effects but most importantly actually implementing these changes and regulations regardless of the internal politics in the country.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 40 | The public good and/or free riding issue, part of the chapter, is relevant here and you didn't talk about it. Southern states are 'free riding' on the environmental services provided by northern states. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 90 |
Group #2
Summary:
The article mainly focuses on coal as a source of energy to produce electricity, before the emergence of natural gas, the use of coal to produce electricity was the most popular and widely accepted method. In recent years however, natural gas is taking over as a result of the society favouring the environment, reducing carbon emissions and using clean energy in general. Thus, the use of coal is starting to see a drastic decline in usage and demand.
Analysis:
With more people preferring a cleaner source of energy with little carbon emission, the use of coal to generate electricity has seen a dramatic decrease of 38% over the last four years. Moreover, the decline seems to be a irreversible trend since with the increase of technology there are only going to be more ways and cheaper ways to produce energy. It is clear for us to see the coal sector lost not only its competitive edge, it also lost the consumer's WTB alone with the greener initiative. Furthermore, majority of the coal plants are shutting down and some legacy companies is struggling to find ways to keep both the company as well as the industry to survive. As such, the article successfully exemplify the effect of keeping a competitive advantage, maintaining a high WTB in the consumer's eyes in relative to demand.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 10 | |
| Course Related Analysis (30-50) | 35 | |
| Extended Analysis (10-20) | ||
| Presentation (10) | 10 | |
| Total | 75 |
Group #3
Summary:
The rapid approach of Brexit has caused the unveiling of a new bill, which includes a set of regulations which will govern agricultural practices in England once current EU regulations cease to be in effect. The bill will change prior EU focus on the size of the area which is farmed to one which is intended to protect wildlife, landscape quality,water supply quality and so on. The bill includes a pledge of £3.4 billion, matching the current expenditure under EU regulations. Despite this, the change in focus on "public goods" such as air and water quality is pedicted to transform British farming over the period in which these new regulations will be enacted, 7 years from 2021 to 2028. The new focus on the additional public goods that agricultural land provides has been celebrated, though criticisms remain due to the lack of clauses which prohibit the import of goods whose production do not meet the new standards set by the Bill.
Analysis:
The shift in the political climate of the United Kingdom has forced a period of political reorganization, including within the domain of regulation governing publc subsidies. Without commenting on causality or the direction theirof, another shift in the prevailing belief in the UK in this period has been a growing degree of value placed upon traditionally external concepts such as biodiversity and ecosystem health. Now firmly associated with the ideas of nautral capital as a public good, these attritbutes have seen a rise in the publics willingness to sacrifice public funds already set asside soleley for the production of food. This is notable in a country that has already been importing more than half of its food since 2016. However, the lack of an increase in funding may indicate that the willingness to pay for these public goos has already peaked sometime before these regulations were drafterd, or at least during. The presence of calls for additional action in this case may represent a minority opinion.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 45 | |
| Extended Analysis (0-20) | ||
| Presentation (10) | 8 | A number of spelling errors |
| Total | 93 |
Group #4
Link:https://www.iied.org/accounting-for-value-natural-resources
Summary: The International Institute for Environment and Development, wrote this article which talks about how the process of valuing resources executed. This was done by partnering with the World Bank and pursuing the a project Called WAVES with the main goal of finding the total value In resources taking into account multiple factors. To find the total contribution of wealth to nations. Achieving sustainability in natural resources is another goal they have in mind, using the NCA as a tool to achieve this backed up by the SEEA. This project was deployed in 8 countries to find out as accurately as they can the value these resources held.
Analysis: The IIED worked with NCA teams in the 8 countries to make a connection between opportunities of new policy and development polices from the data they would collect using the nation capital accounts. IIED used 6 key points which would clearly lay out the potential the countries would have if they implemented the project. This was very important because it provided relevant results such as, showing poverty nations sustainable strategies that would reduce poverty. This also supported policies by showing value added to development of national plans or green growth strategies. These ideas for the potential gain on such as massive scale is quite convincing that this is a great program, but this was made even more clear when we started to research beyond this write up. Since the launch of WAVE and the initial round being performed, it has since been added as policy for the Global Program of Sustainability. So when Governments or policy makers are making a decision, they have accurate information on ecosystems thanks to the WAVE program.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 15 | |
| Course Related Analysis (30-50) | 20 | There is little relationship to class concepts or things we talked about in class. In particular, we talked about the role of information on environmental performance to help investors. The material here is related, and this role of information should have been described. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 8 | |
| Total | 63 |
Group #5
Summary:
People believe that putting a price on nature is an impossible task. However, economists believe that they can find a way to calculate the value of nature resources. People think that it is useless or worthless to spend their own money on nature resources. However, these investments should be viewed as an investment into the future instead of cost. The National Academy of Sciences discovered a formula to calculate and compare the value between “natural capital” (water, forests, minerals, etc.) and “traditional capital” in order to make better investment decisions in the future. The formula considers depreciation or appreciation of the natural resource over time and the overall value that the ecosystem service contributes to society. Also, individuals may think that the term “ecosystem services or income” is the same as the “natural capital”. They are closely related but differ as ecosystem services are defined as a flow measure where natural capital is described as a stock measure. Further, you will benefit immediately from the using the resource (ex. Water) but your overall amount of the resource has decreased. It is important to notice that the same or different resources in similar or different areas will have contrasting values due to several circumstances. Lastly, if you can demonstrate how natural capital compares in monetary terms to be a more traditional form of capital, this allows policymakers to make better calculated decisions about where to place their investments.
Analysis:
When it comes to matters of spending revenue, every organization, whether profit or non-profit making organization, considers gaining as article articulates. Thus the need for valuing nature despite it is an impossibility. I concur with the article that nature can be placed value just like goods or services. Generally, when pricing commodities value is set depending on the satisfaction derived from the good or service. This an indication that prices of products will vary depending on the willingness of the buyer. The case of pricing nature evidences a similar instance. The rate will be quoted depending on the benefits expected to be derived from that specific nature.
Besides time, the value of natural resources will depend on the factors, just as the article mentions. This show how a given nature might have different price despite it being the same. I agree with the material bearing in mind the benefit value is the key when it comes to valuing a resource. Some of the resources are located in places where their demand is too low. These are forcing their value to be different from other sites. Despite the differences, as seen in the article, the primary concern is the value of return on capital spent on ensuring the safety of the resources.
However, despite articulating evident the pricing of nature, they do not seem to consider that nature cannot be quantified like the other commodities. These are since some resources are literally invaluable. For instance, water is infinite value to human beings, and therefore despite the efforts of an economist, its value cannot be paid infinitely due to the limit of money.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 18 | |
| Course Related Analysis (30-50) | 35 | One of the striking things in the article, most closely related to the chapter, was the observation that when irrigation technology got more efficient, the value of an aquifer decreased. The WTP for water fell, which reduced the value of the water, at least when calculated as price times quantity. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 83 |
Group #6
Link: https://www.financialdirector.co.uk/2020/01/02/focusing-on-natural-capital-balance-sheets
Summary：The value of natural resources is used to be undervalued. This article is shown that the value of forest are seriously undervalued in England, which a forest is estimated £2.5 billion by annual public report in 2018-2019. However, there is a huge difference with accurate value which is £26.1 billion included sequestered carbon, plants and seeds. As much as natural resources are monetized, which represents human begin to appreciate environmental goods. For example, the timber can be used for establishing and wood is raw material for paper goods, which are all natural resource. Therefore, the government encourage people to manage the land to invest long-term view of assets and ecosystem services. Environmental pollution is also a type of assets depreciates in the future.
Analysis: Forest is a typical natural capital as the main character of the natural ecosystem. Forests play a decisive role in improving the ecological environment, maintaining ecological balance, and achieving sustainable socio-economic development. In the early days, people did not understand the value of forests in natural capital, which led to unreasonable development and utilization. Then the forest structure was unbalanced and the ecological environment deteriorated. In the past 20 years, the value of the forests has become a popular topic in the fields of ecology and economics. The measurement of the value of natural capital has become the first problem to be solved.
The establishment of a sound balance sheet of forest natural resources is to account for the stock of forest resource assets and their changes. Comprehensively record the occupation, use, consumption, restoration and multiplication of forests (ecological assets) by the natural environment and economic entities in a fixed period. And the researchers assess the changes in the physical and value of the forest (ecological assets) during this period. The purpose is to build a regional natural asset value evaluation model and evaluation system that needs to accurately and completely reflect the value of forest capital.
Forests and land belong to the relationship between supply and demand. Forest has many economic benefits, such as the provision of wood. Timber is one of the essential raw materials in various industrial constructions, and it is inseparable from building wood and building railways. Wood is also a raw material for the paper industry, the rayon industry, and the organic synthetic chemical industry. As countries require different forest resources, it has become more difficult for economists to estimate land values.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 17 | |
| Course Related Analysis (30-50) | 30 | More connection to WTP needed. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 77 |
Group #7
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | ||
| Article Relevance (10) | ||
| Summary (20) | ||
| Course Related Analysis (30-40) | ||
| Extended Analysis (10-20) | ||
| Presentation (10) | ||
| Total | 0 |
Group #8
https://www.weforum.org/agenda/2015/03/can-you-put-a-dollar-value-on-nature/
Summary:
Putting a dollar value on nature is a hard thing to do because of all the inputs and the uncertainty of each resource. Estimates are made but the numbers are too big to make economic sense and too small to describe the essentials of life. This article written by Paul Sutton tries to put a monetary value on nature and how it will affect the economy and the way we live.
Paul uses bees and the possibility of them going extinct as a great example. If bees are to go extinct humans will have to distribute pollen to flowers which will cost approximately 217 billion dollars a year. This would be good for the economy suggests Paul but is this really what we want to happen to the nature around us. Although the extinction of bees would be good for productivity, job creation and tax revenue our world views are broader than just economics. Paul argues that we must put a value on our ecosystem because without putting a value on it we cannot argue against the fact that killing the bees would be better for the world. We must treat the environment as our first concern and economics as second in order to stop ourselves from hurting the environment like we have been doing for the past 2 centuries.
Analysis:
This article relates to chapter three “Valuing Natural Resources: Willingness to Pay/Demand” because it talks about the need of putting a value on natural resources. The article uses a good example on the value of water that connects to the willingness to pay portion of the chapter. Paul mentions that water has an infinite value to humans, yet we are willing to pay so little for it because it is not scarce and is readily available.
The bee example also shows how the willingness to pay and the demand for pollination helps put a value on the bees as a natural resource. Since pollination is needed people would be willing to pay more which would put the value of bees at a significantly higher amount. It is critical that we put a value on these resources as without them they could impact the economy and the world in a drastic way.
The articles view somewhat contradicts the economic side of willingness to pay as it values the resource not by what someone is willing to pay but what it will cost in repercussions to using the natural resource. The cost of fixing the issue or providing a solution to the declining resource is something that the article takes into account when valuating the resource but, the willingness to pay model does not.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 50 | Good summary, especially noting that valuation in this article is based on replacement cost, not WTP. Total WTP would generally be higher. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 100 |