The Argument Of This Chapter

In later chapters, I shall try to show that moral, aesthetic, cultural, and spiritual arguments are enough; they provide compelling reasons to preserve the magnificent aspects of the natural world. In this chapter, I shall defend two theses. First, I shall discuss large-scale atmospheric or biospheric processes or forces of nature. Planetary atmospheric systems are what economists sometimes call "lumpy" goods, that is, goods that cannot be provided incrementally, divided in pieces, or sold in units. Either we protect (or "buy") the whole system or forgo it; there is no way to trade in marginal amounts. Accordingly, political will and legal institutions maybe required to transit industry away from technologies that threaten to destabilize the planetary climate. To be sure, the most effective policies to reduce or limit "greenhouse" gases will rely on market forces and incentives; nevertheless, there is no meaningful way to "price" units of the global climate incrementally or at the margin.

Second, I shall discuss those goods - such as arable land - that are or can be sold in incremental amounts and therefore do trade in markets and thus do receive competitive prices. The productive services of nature, such as the ability of fertile soil to grow crops, receive low market prices not because markets fail or because a resource such as fertile soil is a "public good" but because the resource, in this example good cropland, is quite abundant relative to effective demand. This is the case generally. Even when one takes a service for granted - the wind that pollinates cereal crops, for example - one may pay the full market price for it, even if it is zero, because the supply is adequate and free.

I shall begin this chapter by introducing the theory that led John Locke at the end of the seventeenth century to conclude that nature has little if any economic value as he understood that concept. I shall use the context of the labor theory of value - from Locke to Marx - to discuss the prices nature or its products or services command or could command in a competitive market. As I have argued in earlier chapters, price coordinates economic activity in ways that lead to prosperity by providing information about such conditions as scarcity relative to demand. I shall argue that market exchange generally succeeds in setting prices for goods associated with ecosystems, such as farmland, timber, and water. Absent well-known distortions caused by governmental subsidies, markets work well for these commodities, and their prices represent how willing buyers and sellers trade marginal or incremental units of these goods.

In this chapter I ask whether any ecosystem product or service that does not now trade between willing buyers and sellers could do so - that is, if it could receive a competitive market price - if property rights were established or some impediment to exchange were removed. Is there any ecosystem product or service that does not already receive a more or less objective market price - and thus which should receive a "shadow" or imputed price in our spreadsheets and cost-benefit analyses? This chapter asks, to quote law professor Barton Thompson, "whether there is a more robust and direct role for markets in preserving the environment."4

This essay will argue that nature and its services are either (1) of such general and broad importance, such as global atmospheric systems, or so related to pollution (a form or coercion) that the the concept of "marginal utility" or "competitive market price" does not apply to them; (2) actually priced by extant markets; or (3) too plentiful to command a price at the margin ("too cheap to meter"). In other words, I shall argue that the attempt to attach hypothetical market prices to ecological services will fail because these services - if they can be sold in incremental units -have competitive market prices, even if because of the abundance of supply relative to demand, the prices are negligible.

Of course, we depend completely on nature's largess. The appropriate response to dependency, however, is gratitude. You do not respect a gift by inquiring about its price. It is not as if God markets nature to us. This is especially true if nature's services are so plentiful (as they generally are) that they overwhelm demand and are free to all. What would price tell us about plenty? I will argue that it is hard to find instances in which markets would establish prices for environmental goods or services but for "ignorance, institutional inadequacy, and the problems inherent in public goods."5 By "putting a price on it" we regard nature as a resource to exploit rather than a heritage and an endowment to maintain. This is the most self-defeating path environmentalists can take.6

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