In a new paper in Ecological Economics, Mark Sagoff criticizes ecologists for trying to find general, broadly applicable values for ecosystem services.  Real values, Sagoff argues, are “dispersed, contingent, particular, local, transitory, and embedded in institutions and practices.”   He cites an example of citrus growers in the San Joaquin valley of California.  While pollinators have been held up by many ecologists as providers of a valuable ecosystem services, pollinators are a pest to these farmers:

Chris Lange, a mandarin orange grower, lamented that honey bees by pollinating his crop [thus producing seeds in seedless oranges] ruin it for anything but juice. “You can’t grow the crop for the juice market,” he said. “You have to grow for the premium crop or you won’t recover your costs.”

Such local variation in value, Sagoff argues, can never be captured by ecological methods but must emerge from the individial choices of economic actors.  “What do scientists know that the farmers…do not know?” he asks.

I see two major flaws in Sagoff’s argument.  First, most ecosystem services are public goods or unconstrained goods.  This means that their value is enjoyed by society as a whole or at least a group that isn’t bound by a transaction.  Often the value of a service to a decision maker is very different from the value to other beneficiaries, leading to externalities that aren’t captured by our institutions.  If forests on your land filter the water that later is used by others who draw from groundwater elsewhere, no transaction occurs, and thus no value can be easily assigned.  If you cut down the forest, there’s generally no recourse and no mechanism by which water users can pay to recover the service - the collective value of the resource is squandered.  While the value for individuals may vary, the aggregate value is most important for making policy decisions or designing institutions to manage the resource collectively.

Secondly,  Sagoff seems to subscribe to the myth of perfect information - that farmers and other private actors already know all they need to know to appropriately value ecosystem services.  This seems absurd on its face.   One huge driver of agricultural productivity in the U.S. has been the extension system, where farmers can go to technical experts and scientists from governments and universities to learn farming techniques to improve their bottom line.  I agree that, as Sagoff argues, scientists should make more efforts to learn from users of ecosystem services, but there’s no way that information can only flow in one direction.  Sagoff’s claim that, “Ecological knowledge, like any kind of empirical knowledge that is relevant to economic activity, is too spread out among people and too sensitive to the moment to be captured” seems to dismiss that there are any meaningful or predictive patterns in nature.

Sagoff concludes with a primer on Hayek and Austrian school economics.  I’m no expert on the subject, yet I’m fairly certain that Hayek’s work is influential but by no means the only or dominant school of thought in economics.  (For an aweome take Austrian vs. Keyensian perspectives, watch this.).  If Sagoff’s claim that “from a Hayekian perspective, ecosystem services as a general rule already receive more or less appropriate quantification,” is true, then the overwhelming weight of evidence shows that the Hayekian perspective is wrong. 

This post was chosen as an Editor's Selection for Mark Sagoff (2010). The quantification and valuation of ecosystem services Ecological Economics, In Press :