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The Price-value paradox: special section - forum on valuation of ecosystem services

Author: Ayres, Robert U. INSEAD Area: Economics and Political ScienceIn: Ecological Economics, vol. 25, no. 1, April 1998 Language: EnglishDescription: p. 17-19.Type of document: INSEAD ArticleNote: Please ask the Library for this articleAbstract: A recent article in "Nature" suggests that the economic value of global ecosystem services is between 16 and 54 trillion dollars, with the average of 33 trillion dollars, which far exceeds the aggregate gross world product (GWP) (18 trillion dollars) (Costanza et al., 1997). This comment is motivated by that result and the underlying analysis. It may be true that the "consumer surplus" of ecosystem services is far more than all other economic goods and services put together. However, paradoxically, this cannot be true of the price-quantity product proxy. In an evolutionary equilibrium the shadow price of most ecological services, supplied at optimum levels, would be zero. For practical purposes, the cost of control and maintenance of environmental capital is the best proxy for the value of the service flows derived therefrom
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A recent article in "Nature" suggests that the economic value of global ecosystem services is between 16 and 54 trillion dollars, with the average of 33 trillion dollars, which far exceeds the aggregate gross world product (GWP) (18 trillion dollars) (Costanza et al., 1997). This comment is motivated by that result and the underlying analysis. It may be true that the "consumer surplus" of ecosystem services is far more than all other economic goods and services put together. However, paradoxically, this cannot be true of the price-quantity product proxy. In an evolutionary equilibrium the shadow price of most ecological services, supplied at optimum levels, would be zero. For practical purposes, the cost of control and maintenance of environmental capital is the best proxy for the value of the service flows derived therefrom

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