Cost/Benefit analysis, into a future of lower value

Today, I attended both seminar given in the 3rd biannual OURANOS scientific symposium on climate changes on local climatology. These talks were focused on hydrological problems on solutions but the projects were highly condensed due to lack of time.

Nevertheless, I would like to address another subject then the main subject of those talks. During the second presentation, one of the speaker seemed to be convinced by the efficiency of cost/benefit analysis for solving environment problem. The person seemed to be a well know member of OURANOS, often dealing with municipalities and government. This method has some strong negative aspects, especially when few is known about the environmental problems. In this case, sandbank erosion in Sept-Iles region was in the line of fire. The actions have mostly been undertaken there without the scientific datas, which is great (as if the were precautionnarious), but now that some of these datas are available, they want to execute cost/benefit.

First of all, let’s all agree the cost/benefit analysis is based on a common value, which in this case is money. It enables us to compare cost and returning value of an investment. In a world where money is already use, no problem. Where it becomes difficult, is where we attempt to put a value on a natural system without completely understanding it. Furthermore, things likes species and beauty are hardly moneyable. Converting these value into money deprives the land of it’s original value, as it becomes another number on a listing.

Cost/benefit analysis also has a problem with time for two reasons. For one it is hard to predict what will happen in the future. Nothing protects an area from being blown away by a hurricane. Then it’s bad for the investor. Furthermore, it has problem defining for how long the land will benefit the owners and we hardly ever see a long term cost benefit analysis in environment preservation. Wouldn’t it be logical to apply those lasting benefit to a time period? After all, we do it when we plan on building a dam or a supermarket.

But even then, money has these weird proprieties which makes it hard for investments in the present. The principle of discounting cannot be negleted when applying a cost/benefit analysis. That is caused by the fact that we would rather like to have one dollar today then one + x in a certain amount of time. In the case of environment, it could be centuries or millenas, what man in his right mind would give a dollar to get 10 in an hundred years. Thus a dollar today is worth more then a dollar tomorrow. Therefore, we discount the future value of land to make up for that difference. In economy, this probably makes sense, but in ecology, this is a curse. The land can’t be discounted. Ecological damages functions neglect the fact the land is rare and that reversion the process may be impossible.

Therefore, applying cost/benefit analysis when presenting a protection program the gives me the chill. I do think that it’s important that the problem be acknowledge by the authorities so that they can invest. But cost/benefit has nothing to do with environment, it’s all about maximising benefits. Im not saying that cost efficient methods are exclude from environmental action, simply that we should think before preoritising only those that are economically friendly.

One Response to “Cost/Benefit analysis, into a future of lower value”

  1. patagonia says:

    I agree with you completely. very nice argument, well laid out too! Your comments about economy being an obstacle to effective cost-benefit analysis for environment are very interesting; as you said, economy does place value in the present for environment, and only in the future if directly related to a natural resource (eg. oil, a river that powers a dam). I feel that this brings us back to the need for a new world paradigm. Human beings need a world view other than conventional economics with which to study and preserve the environment. Including cost-benefit analysis, other methods of environmental assessment based within the overarching framework of modern economy will inevitably fail to give full value to the environment. Moreover, we consistently fail to understand environment when it is framed wihtin the anthropogenic world economic system. This leads me to another point I have been thinking on: what is environment. This grand definition that is at the back (or front) of all of our minds. Can we define environment looking at it from our current worldview? As Jaye Ellis pointed out, it is difficult to even imagine a view, other than anthropogenic, from which to form our values, ethics, understanding and our definition collective definition of environment. It would be muh easier to come up with several definitions according to various proposed worldviews, i.e.: ecocentrism, antrhopocentrism, land ethic, deep ecology. Also, it would be easier, but important not to i think, to have our definintion closely reflect present environmental, social, economic and political conditions. The point I am hoping to make here is this; I think we should be careful of where we would place our definition of enviroment. Will it be placed wihtin the dominant Judeo-Christian macroeconomic worldview?; an environmental worldiew?; or caught floating around in limbo somewhere in between, like ecological economics. I vote for environmental worldview, but would settle for limbo because that is more relistically the world we live in today. So I have gotten quite far from cost-benefit analysis, so here is an attempt to bring it back: we must carefully balance the costs and benefits of defining the environment in terms of world views. We must think of it as, value will be given to this defination, and actions and policies will be carried out accordingly. What could be the costs-benefits of defining environment by monatary value within the economic worldview? In an environmental worldview, like Aldo Leopold’s Land Ethic?