The currency of the intrinsic and existence values of biodiversity is money

William M. Adams and Kent H. Redford ask what would be the currency for the quantification of the intrinsic and existence values of biodiversity. The answer is money.

The debate about ecosystem services and biological conservation is about humans making decisions. Making decisions means making sacrifices. If we decide to plant a piece of land with eucalyptus to sequester carbon, we are giving up the opportunity to, for example, plant corn for food, or restore a forest for biodiversity. If we instead opt for some of the latter actions we are giving up the opportunity to sequester more carbon.

What are we willing to sacrifice in order to preserve the intrinsic and existence values of a species or an ecosystem? The set of things, such as alternative uses of land, human effort or human-made capital, that we are willing to sacrifice is the relevant measure of the intrinsic and existence values of biodiversity or nature. We can quantify this set of things using money.

Some values are easy to estimate. Prices reflect the value of things when costs and benefits accrue only to the people engaging in voluntary market transactions. As market prices are public, the information on values is readily available. Prices do not capture the true value of things when there are externalities. Thus, prices do not reflect the true value of nature because nature is valuable to many other people besides those directly engaged in markets for natural products. People make sacrifices for the sake of preserving nature and it is straightforward to quantify those sacrifices in terms of money. However, free-riding problems and other transaction costs discourage people from making as many sacrifices as nature is worth of.

So, the problem of quantifying the intrinsic and existence values of natural objects is not the lack of currency. The problem is that we can not accurately estimate the difference between what people actually pay for nature and what we would pay if all the relevant transactions were free from coordination friction. In the absence of explicit markets for intrinsic and existence values, the challenge is to analyze aspects of human behavior that give us clues about how much we really value nature. This information will help us to make better decisions.