Technical Change, Relative Prices, and Environmental Resource Evaluation

Technical Change, Relative Prices, and Environmental Resource Evaluation

Technical Change, Relative Prices, and Environmental Resource Evaluation

Technical Change, Relative Prices, and Environmental Resource Evaluation

Excerpt

During the past decade, legislation intended to protect and preserve specimens of the natural environment has imposed a substantial burden of analysis and evaluation on land management agencies. The Wilderness Act of 1964, for example, directed public land management agencies to review all unroaded areas of 5,000 acres or larger within their jurisdictions for possible inclusion within the national wilderness preservation system. The Wild and Scenic Rivers Act of 1968 similarly obligated public land managers to evaluate the relative benefits from alternative uses to which wild land and water areas may be put. Literally many hundreds of tracts of land will require such evaluation over the span of a relatively few years.

The problem of weighing the relative value of alternative, incompatible uses of wild lands and rivers was a matter of some expressed frustration by the Public Land Law Review Commission, whose June 1970 report complained of the absence of information in public land management agency files specifically relevant to such analysis. There are perhaps two difficulties here. Since each parcel of land will differ in important respects from any other, the relative value of alternative, incompatible uses will. not be uniform for all tracts of land. At the same time, a careful, independent analysis of each specific tract involves analytical resources quite outside the ability of land management agencies, as presently staffed, to mobilize.

Apart from the problem of mobilizing resources, a special problem of methodology may arise when evaluating the benefits from different purposes to which a given tract of land or site may be put. The influence that technology has had on the relative annual benefits of the service flow of alternative uses must be taken into account if there is reason to suspect that it causes systematic change over time in those relative benefits. In traditional benefit-cost analysis, the convention of assuming that price levels remain constant has been adopted largely to avoid confusing simply pecuniary with real output effects in evaluation. Not until rather recently, and in relation to the evaluation of environmental modifications affecting wild and scenic lands and rivers, has the potential significance of systematic changes in relative benefits induced by differential incidence of technological change been perceived and incorporated into analysis.

In this study Kerry Smith investigates the conditions that would need to obtain on both the supply and demand side for goods and services . . .

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