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VI. CBA, CV And Planning Institutions

What are the implications of the environmental value debate for planners and policy makers? Why are techniques of CBA and CV, not notably widespread in their use in past decades, now apparently gaining ground? The approach to such questions is better set in a political context, and the language must be comprehensible to planners and policy makers of differing disciplines who actually use CBA and CV techniques rather than to academics who debate their validity.

A useful summary of the valuation debate (Pearce, 1994, pp. 1330-1337) emphasizes that values either transcend costs or must be traded against costs. The discussion which leads to the latter conclusion means more attention to incorporating the choice in a planning context loosely democratic and not dependent solely on CBA or CV. Pearce confirms that the philosophical discussion is academic and separated from actual policy decisions. Some of the valuation difficulty follows from lack of clear definition of environmental rights, which are necessary for market based approaches to environmental problems. How are the rights to conservation implied by unqualified ownership to be reconciled with other human rights such as access to land and subsistence for the poor? Are rights relatively unqualified and individual, or more broad-based and communal with management in the hands of the state owned institutions or NGOs?

Note that the debate on property rights is no less divided between committed ideological camps than the debate on values. Those who prefer market-based solutions to environmental problems tend to favor extensive allocation and precise definition of private property rights. Others consider property rights to be dynamic and dependent for enforcement on social consensus, which suggests communal ownership. Private property rights attract market failure where they are fettered, the market is subject to government intervention, and does not incorporate active redistribution. Communal ownership requires institutional management, and suffers more from government failure and, possibly, agency problems. This debate is not helpful for policy makers, especially in countries attempting to introduce markets and forms of tenure that replace state ownership. The preferred view on private or communal ownership seems to depend on the political prejudice of the beholder.

Equally confusing for policy makers is the reviving debate (Cookson, 1996, pp. 59-74) on welfare economics, which Arrow described as a choice between alternative policies and institutions (Arrow and Scitovsky, 1969). Sagoff's (1994, pp. 285-310) recent critique of welfare economics advocates more emphasis on institutions in that, "no market ever fails to be efficient. Different institutional arrangements... make one society more productive than another," (Cookson, 1996, p. 62). Cookson rejects Sagoff's views on market failure, which properly "embodies a utilitarian concept of equity in addition to the concept of Pareto efficiency," (Cookson, 1996, p. 62). So what are the planners to make of that? Perhaps, intuitively, that policies based on welfare economics are also driven by political prejudice dressed up in the deceptive transvestite clothing of relative impartiality, or "fairness."

Cookson's aggressive and well-documented defense of welfare economics extends to revealed preferences, welfare, and the invisible hand. He illustrates from recent literature that preference revealed by CV can be made more familiar for unfamiliar goods, e.g., environmental goods. Cookson rejects Sagoff's criticism that welfare does not include ethical or citizen values (reminiscent of the choice between the individuals' own personal discount rate and the individuals greater preference for a lower social discount rate) by referring to two senses of utility: The older perception of well-being (welfare) and the newer mathematical function consistent with rational choice (utility) (Cookson, 1996, pp. 64-65).

Cookson says a subjectivist, thinks preferences the only ultimate source of value. The objectivist thinks that they are a good measure of value. The subjectivist thinks that environmental protection is valuable because it is preferred, and the objectivist that it is preferred because it is valuable. Economists have different theories of value (Cookson, 1996, p. 65), in which Sagoff is too Kantian by half! There is increasing discussion of objectivist individual welfare (the feel-good factor - a measure qualified by other considerations) rather than subjectivist individual welfare with preferences the ultimate source of value.(Griffin,1986; Broome, 1991; and Sen and Nussbaum, 1993.) Cookson (1996, p.66) suggests objectivist welfare or feel-good, are spreading in environmental economics (Dasgupta and Nolan, 1994 pp 319 - 348). Whereas feel-good cannot be measured in market transactions, welfare economics is constrained by rational utility and subjective values. So, CBA provides a partial valuation in a wider objectivist concept of feel-good in which welfare based on utility is a component part (Dasgupta and Maler, p. 319-348).

In terms of academic complexity, this debate rivals the most turgid attempts to circumvent deconstruction and discover what follows démodé postmodernism in other social sciences. It mirrors the role of narrative in social understanding of discourse defining ill-being or sickness where perception trumps medical "truth." See also Krebs (1997, p.275). This debate is "hopelessly anthropocentric" (ibid. p.271) and "discourse ethics cannot be saved " (ibid., p.275) because, broadly, morality based on protecting bodily integrity independent of free acceptance is paternalistic and teleological and so incompatible with consensus central to discourse ethics.

Pursuing discourse ethics into the depths of deep ecology, Mason (1997, p. 281) concludes that discourse in public decision making is incompatible with biocentric wilderness values and objectives of preservationists, and that environmental rights must be democratic (Mason, 1997, p. 300). But what are the planners to conclude? Cookson thinks that Sagoff's view that value beyond welfare economics is important, but is relevant only if CBA were an end not a means towards political decisions. However, CV values in CBA should reflect only "existence values" (Krutilla, 1996, pp. 787-796) not other non-use values, political, religious, moral, ethical, traditional and so on (Cookson, 1996, p.67). Two practical problems result.

1. CV is the only explicit method for measuring many indirect environmental effects on known human welfare, and

2. Surveys cannot separate welfare and non- welfare values.

Further, welfare theory does not allow welfare and non-welfare values to be compared.

So to this extent, Sagoff cannot be dismissed as cursorily as by Pearce (1996), who rejects Sagoff's reasoning as circular in favor of existing CV method. Pearce (1994), a long time advocate of CBA and CV based on WTP, also pursues a less esoteric defense of these methods. Pearce sees the main if not the only weakness of CBA and CV as the unrecognized inability to translate non-cash into cash in poor countries (Pearce, 1994, p.333). Pearce recognizes the potential for elitism in rejecting CV, whether it is Sagoff's distinction between welfare and feel-good, or influencing the discourse on what is worth valuing (Vatn and Bromley, 1994, p.139.) This does not remove the essence of the problems of CV discussed above. Pearce seems to think CV can do all the things Bowers(1993) thinks it cannot).

What is vital for practical decisions is the degree of disagreement between acknowledged experts in the field. Criticism based on a distinction between citizen and individual preferences "has no implication in terms of the validity of WTP measures, " (Pearce, 1994, p. 335) nor for future generations, since morality and commitment can be captured in WTP. Pearce mocks Sagoff's doubt that people can indicate what they really prefer as logically inconsistent. But this does not seem to capture the notion that certain types of benefit/welfare and feel-good cannot be aggregated. Current survey techniques and discourse do not lead to an adequate numeraire even if they could.

Lastly, for the defense, CV and CBA do not subvert the political process, and are no worse than politico-legal alternatives that are not democratic anyway. Well perhaps, but often a number in a CV is useful exactly because it is convenient for developers, planners, sources of public finance, courts of inquiry, the judges and the agent who produces numbers, exactly because numbers short-circuit public debate and a more expensive approach to consensus.

Pearce (1994, p. 1336) hammers Vatn and Bromley (1994) for misunderstanding valuation procedures, particularly the use component of functional values; but also on functional transparency, where the argument is obscured by what seems a misprint (Pearce, 1994, p. 1337). Problems of functional uncertainty are no worse in economic valuation than anywhere else. The niceties of this debate are less significant here than the strong defence by Pearce of CV in the face of trenchant critics like Beckerman, Bowers, Bromley and Sagoff, all attacking from different angles.

The reader may think the debate reflects a difference of view between disciplines, economics versus the rest. Economists in the utilitarian tradition who have developed welfare economics can field a strong team. The Cookson list (1996, p. 69) is one short of a soccer team, comprising Smith, Bentham, Mill, Sidgwick, Marshall, Pigou, Hicks, Samuelson, Arrow and Sen. There have been a few celebrated own-goals, notably by Arrow (1967), on the concept of an aggregate social utility function. A former colleague of Arrow recently said Arrow had since recanted on the grounds he had written this critique in callow middle age, and was now wiser and a Democrat! Clearly, Cookson could not have been leaving a place on his team for Beckerman. The risk would not be own-goals, but kicking the ball in the opposite direction.

Clearly economics cannot solve ethical dilemmas. But within economics, Beckerman and Pasek (1997) offer morphine to CV (or any technique measuring environmental values as commensurate with ordinary market values) in case its recent revival in environmental valuation should herald its recovery. They recognize economists' criticisms may be most powerful, but concentrate on the philosophical, advocating a plurality of values. Nevertheless they reject consumer sovereignty and maximization of utility on grounds of criticism by economists, including Sen (1993) that utility maximization neglects underlying moral preferences discussed above. It is "a travesty of the way the consumer approaches environmental choice," (Beckerman and Pasek, 1997, p. 68). There is a long tradition of plural values, whereas commensurability is essential for CV and CBA in environmental valuation.

A critique of CV in environmental values concludes "CV is a deeply flawed methodology which does not estimate what its proponents claim to be estimating," (Diamond and Hausman, 1994, p.65). This is reflected in negative response to CV questionnaires (Beckerman and Pasek, 1997, p. 69, Barry, 1995) indicating that environmental goods cannot be valued like other goods. Although this weakness might be reduced by more detailed inquiry, plurality of values means preference for environmental goods is not commensurate with market goods in any relevant single metric for CBA (ibid, 1997, p. 70). For the confused, one can compare one's children but not their value. But since decisions are made in practice, are some or all implicit environmental values quasi-commensurable in a national context? Beckerman and Pasek plausibly argue the reverse but many decisions circumvent incommensurability. Nor do they think the environment is in a unique moral class or that "moral values trump productive values or other intrinsic values," so trade off is inescapable.

The concept of plural or multiple values seems most relevant. Anderson (1993) sets plural values in the context of society's expectations as Bromley approaches property rights or the social anthropologist embraces narrative. Incommensurable goods are valued but in different metrics. Having dismissed CV and CBA, how is rational choice to be made where trade off is inescapable?

On a broader front of evaluation in ecology, Rees (1994, p. 1651) says that data gaps, the functional transparency of natural processes (we do not know they are valuable until they are gone), and other theoretical problems render futile any attempt at quantifying, let alone pricing, many critical ecological goods and services. The relentless anthropocentrism of the profit motive and other economic incentives, together with the market's inherent antagonism to the future, have produced the moral conundrum confronting us in the first place. Set the discount rate high enough and the incentive is to liquidate any economically viable but slower growing species. However Bowers (1993 p. 99) says the real market failure in CBA follows from "the control of the appraisal process by those with an interest in the outcome."

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