Session 4 Criticisms of valuation TEEB Training Outline

Session 4: Criticisms of valuation TEEB Training

Outline q The Process of Valuation – Assumptions – Does the process of eliciting values change our perceptions? – How the process affects outcomes – What negative changes might the process of valuation provoke? q Valuation and time lags q Drawing the boundary on what we can/should value q How to choose how to value TEEB Training

Assumptions: the process of valuation q When asking Willingness To Pay we assume that people: – Hold values in advance or can easily generate them – Have sufficient information and understanding of what they are valuing – Can decide (alone) on the values they attribute to ecosystems – Value consistently – Value according to individual rationality TEEB Training

Does the process of eliciting values change our perceptions? q Valuation promotes a universal notion of the environment q By placing values on nature we change existing concepts of ownership and property q As values have not been previously defined the process of valuation changes how we appreciate nature – Individual preferences outweigh consensus building and collective decision making – Are we constructing markets that are set up to fail? TEEB Training

Does the process of eliciting values change our perceptions? cont… q The psychological viewpoint considers that valuation assumes (and champions) rational choice over intuition: – Economics focuses on the outcome of decisions not the process – Empirical studies of behaviour do not back up economic theories of preference TEEB Training

What negative changes might the process of valuation provoke? q On-going debate about attaching new forms of property rights to nature and culture – Linked to the granting of resource rights to ‘traditional’ indigenous groups and rural populations – Often assumed that such groups have inherent knowledge that allows them to act as ‘stewards of nature’ q Such policies significantly change the relationships within and between groups over the rights to control, exclude and exploit resources TEEB Training

Valuation and time lags q Potentially critical time-lag in the valuation feedback mechanism – As values are an outcome of existing, current institutional, cultural and social constructs then adaptation to environmental change is required (when the change occurs) – As ecosystems are degraded and biodiversity lost, attitudes and values towards nature will change, but the time-lag may be long TEEB Training

Drawing the boundary on what we can/should value q O’Connor and Frame (2008) propose two thresholds beyond which assessing trade-offs or monetary choice is inappropriate - Either estimation is scientifically difficult; or - The implied trade-off is deemed morally inappropriate TEEB Training

How to choose how to value q The choice of valuation method will define the outcome of the valuation process (Vatn, 2005) TEEB Training

Module 4 Summary The TEEB tiered approach • RECOGNISING VALUE ü Sometimes sufficient ü Often the case where cultural and spiritual values are strong • DEMONSTRATING VALUE ü In economic terms, costs and benefits ü Useful to policy-makers and businesses ü Economic valuation exercises • CAPTURING VALUE ü Putting ecosystem values into decision-making ü Through incentives and price signals ü Market-based solutions not necessarily best TEEB Training

Applying the tiered approach Step 1: Identify and assess the full range of ecosystem services affected and the implications for different groups in society Step 2: Estimate and demonstrate the value of ecosystem services using appropriate methods, including linkages over time and scale, local v global, current use v future use Step 3: Capture the value of ecosystem services and seek solutions to overcome their under-valuation through economic policy instruments (subsidies, fiscal incentives, charges for access and use, payments for ecosystem services, property rights, eco-labelling and certification etc. ) TEEB Training

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