New Zealand producers and consumers get much value from natural assets. Much of this value is intangible. This is a fundamental reason to make special effort to measure the value of natural assets, to make sure we make the right decisions about their use and conservation.
But a key barrier to using economic valuation is the cost and uncertainty of values obtained from the variety of techniques being used. This is a real issue, to the extent that doubts are being expressed in resource management cases whether economics has much to add when considering environmental effects.
To remove this barrier, valuations need to be cheaper and easier to compare. A standardised technique could provide relative values for different types of natural asset or service. This would make economic value estimates from across a range of natural asset settings more consistent.
Developing a practical, reliable standardised technique would involve:
- building on studies done to date , showing how much economic activity depends on natural assets in a robust and comparable way
- carrying out a meta - analysis, to obtain consistent and comparable value estimates for a range of ensure economic activities from economic impact studies done to date
- learning how biophysical cause - and - effect relationships translate into economic value, to identify the sensitivity of econo mic activity to changes in natural assets , such as biodiversity
- commissioning a stated preference study of the value of broad categories of natural assets, as a starting point for identifying value in specific situations.
Decision - makers need to understand how and where economic valuation can support their decisions. Providing them with explanatory materials will help.
It is important to make progress. There is currently a gap in the knowledge about the full contribution of natural assets to New Zealand’s economic well-being. This creates a risk that natural assets will be undervalued. Ecosystems and the valuable services they provide may be lost or damaged.
Economic valuation of environmental assets can fill the knowledge gap. To date, non-market valuations in New Zealand do not appear to have been used much to make management choices in conservation, whether those relate to responding to pest incursions or to economic development.
A less ad hoc approach to weighing up the value of natural assets can make treatment of natural assets more consistent in decisions, and increase the efficiency of use of natural resources. A better approach is needed so studies inform policy and decisions about New Zealand’s natural assets. Our proposed approach could improve understanding of the value of natural assets — giving them more consistent weight in decisions, and improving the way we manage them.