The Economics of Natural Environments: Studies in the Valuation of Commodity and Amenity Resources

The Economics of Natural Environments: Studies in the Valuation of Commodity and Amenity Resources

The Economics of Natural Environments: Studies in the Valuation of Commodity and Amenity Resources

The Economics of Natural Environments: Studies in the Valuation of Commodity and Amenity Resources

Synopsis

In this pioneering study, Krutilla and Fisher put the amenity resources of natural environments into an analytical framework comparable to that for the extractive resources. The models and theoretical background of their techniques are illustrated by case studies which include the controversial Hells Canyon dam, the Mineral King ski resort, and the Trans-Alaska pipeline. The authors point out that resource development activities undertaken on public lands often receive financial advantages---preferential tax treatment, subsidized capital, and access to public resources---that are not taken into account in the costs of the project. True evaluation of the costs and benefits of a development project often tips the balance in favor of preserving an area in a natural state.

Excerpt

This volume represents a synthesis of selected work undertaken in the Natural Environments Program at Resources for the Future. It addresses the valuation, allocation, and management of the resource-- commercial and otherwise--of natural environments. In particular it seeks to engage the range of amenity resources that, while long recognized in public policies providing, for example, for National Parks, Wildlife Refuges, and Wilderness Areas, have not been explicitly included in economic analyses. In this respect then, the present work represents a "first generation" effort to incorporate the noncommercial, or amenity, resources of natural environments into the body of economic theory and application. At the same time, the analysis of the more conventional, commercial uses of natural environments has been extended to deal with such important issues as how progress in thermal electric power technology will affect the valuation of a site for hydroelectric power production.

An institutional point worth noting here is that observations and remarks in the text generally apply to the management of public lands in the United States. This is because, as suggested by the empirical cases considered in chapters 5 through 10, most of the remaining natural and scenic areas of any great extent, and related resources, are in fact found on the public lands. It hardly needs to be added that most theorems about resource valuation and allocation are not dependent on the ownership status--public or private--of the resource in question, so that most of our results apply to the socially efficient use of any substantial wilderness area currently in private ownership as well.

As an early effort, this volume doubtless raises more issues than it is capable of resolving satisfactorily. Nevertheless, since the value of the resources it addresses is of considerable magnitude, it is hoped that the effort will stimulate others to a wider and more intensive application of analytical inclinations and talent. With this in mind, both theoretical and practical issues are raised and addressed in this volume. The theoretical apparatus has been presented and advanced as far as our capabilities permitted in the time available. There is, nonetheless, much theoretical work . . .

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