Econometrics Allow Us to Value What is Truly Priceless

            Greetings, readers! We continue our discussion of valuation in Environmental Economics.

            Economists have developed several methods to value nonmarket goods, like clean air and water. These include “direct use value—the value derived from the direct use and exploitation of the environmental good, the ecological value—defined by the benefits that environmental goods provide to support forms of life and biodiversity, and the option value—related to future use opportunities of the good. Non-use values are composed of the existence value—the value that individuals give to environmental goods for their mere existence—and the bequest value—the value estimated by individuals when considering the use of goods in the future by their heirs” (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7178272/).

Taking clean water as the example, we calculate the value of water by totaling all of its many forms of value, including the value of all agricultural, manufacturing, construction, and utilities output as these industries require the direct use of water to function. In 2021, California’s manufacturing sector generated $397.26 billion, its agricultural sector generated $41.96 billion, its construction sector $90.57 billion, and its utilities sector $35.28 billion (https://www.statista.com/statistics/304869/california-real-gdp-by-industry/).

But truly, when we consider that fact that ALL economic output is generated by humans, all of which are water-based life-forms, it becomes clear that water is the most valuable resource on Earth, sustaining life itself primarily and our complex economic system secondarily. The true value of water is astronomical, incalculable. Even recognizing that salty ocean water is not suitable for human consumption, we can still value the habitat, or perhaps value the $253 billion global sea food market (https://www.statista.com/statistics/821023/global-seafood-market-value/). Everything the planet provides for us is valuable and although the dollar is a crude metric, it is one we all understand.

Similarly, we might calculate the benefit of clean air by comparing it to the saved heath care costs associated with reduced instances of asthma, heart disease, premature mortality, and other cardiovascular health complications. A 30-year analysis drafted in 2011 indicates that the benefits of the Clean Air Act (i.e. the Cross-State Air Pollution Rule, the Utility Mercury and Air Toxics Rule, the Industrial Boiler Rule, and the Cement Kiln Rule) will result in $612 billion in direct benefits as saved health care costs as well as indirect benefits such as increased worker productivity and environmental benefits like improved visibility and increased agricultural output (https://www.edf.org/sites/default/files/saving-lives-and-reducing-health-care-nov2011.pdf).

A brief health-related aside: particulate matter from fossil fuel combustion and wildfires can lodge itself deep into our lungs and arteries, even reaching our bloodstreams (https://www.health.ny.gov/environmental/indoors/air/pmq_a.htm). Heck, apparently, we even have microplastics polluting our veins (https://www.smithsonianmag.com/smart-news/microplastics-detected-in-human-blood-180979826/). As a reminder, plastic is a petroleum product, another symptom of our addiction to fossil fuels. We consume fossil fuels faster than nature can regenerate them, and we produce plastic waste faster than nature can break it down and recycle it.

When we poison the environment, we poison ourselves. For our immediate health and for our long-term climatic viability, we simply must harness forms of energy that are not dependent upon combustion. Our planet is far too valuable for us to keep spoiling and igniting it.

“Anything else you’re interested in is not going to happen if you can’t breathe the air and drink the water. Don’t sit this one out. Do something. You are by accident of fate alive at an absolutely critical moment in the history of our planet.” – Carl Sagan.

Anyone at any point can choose to protect and cherish our beautiful blue marble, our speck of dust in space. Our existence is in and of itself a miracle more precious than currency can consider.

Environmental Economics Part 1: The Tragedy of the Commons?

            Welcome back! Summer is sweet in California.

            The flowers are blooming—a fragrant perfume of red bud, poppy, lupine, orchid, paintbrush. The rich aroma of petrichor followed the rain. These priceless scents are precious to me like water. There are infinite fantastic natural wonders freely available to us.

            Environmental Economics is a relatively new branch of study, originating with our growing awareness of depleting natural resources and environmental services (https://en.wikipedia.org/wiki/Environmental_economics). Basically, it seeks to give an estimated price to goods (like clean air and water) or bads (like pollution and contamination) that do not have a market value as they are not sold. Functioning within a capitalist framework requires that everything be translated to currency, quantified in dollar amounts. This allows decision-makers and stakeholders to weigh costs and benefits, compare options, and plan strategies and contingencies.

            A brief overview of a key economic concept: The Tragedy of the Commons partly explains our current climate catastrophe. Every individual shepherd is free to graze their flock in the grassy commons. No one is excluded. But as every individual’s flock consumes more grass, no grass remains. The individual gain comes at great cost to all others. The same concept holds true for overfishing.

            In climate collapse, the atmosphere is “the commons” because anyone is free to pollute it but we all reap the damage sewn. I am very much in support of the Polluter Pays Principle: the companies polluting must pay the cost of remediation, clean-up, abatement, prevention, etc. Regarding CO2 emissions, fossil fuel companies are largely responsible for selling a damaging product and lying about it, but we do nothing to hold them accountable. In my opinion, all fossil fuel companies should be financing our transition to renewable energy, whether through taxes or fines.

I believe unfettered, unmitigated, unbridled greed is the only reason why U.S. oil companies, knowing full well 40 years ago that climate change was worsening over time (https://www.scientificamerican.com/article/exxon-knew-about-climate-change-almost-40-years-ago/), didn’t just reform themselves as solar, wind, hydro, and geothermal companies, phasing steadily over the last four decades. Fearing future loss of profit, they launched massive misinformation campaigns, well-funded by deep pockets, hiring the same consultants as the tobacco industry. If we burn, ExxonMobil won’t help us. We must demand they shoulder the financial burden of the problems they created and exacerbated with their deception.

This short article had an optimistic take, suggesting we actually aren’t doomed to tragedy: https://ccs.sciences.ncsu.edu/climate-change-and-the-tragedy-of-the-commons/. Essentially, the author notes that in a true commons, one individual’s choice to not graze their flock allows another shepherd to seize the opportunity, and the grass still continues to degrade. But in climate change, reducing one’s CO2 emissions at any level (personally, locally, regionally, nationally) does not incentivize others to emit more. Reductions always accrue universal benefits. If we go renewable, we won’t incentivize China and India to pollute more. They are seeking to improve air quality as we did. Likely the reduction in U.S. emissions combined with our advancements in technology will inspire (or in certain instances, put geopolitical pressure on) other nations to reduce emissions as well. I’ll gently remind leaders that China generates 3 times more renewable energy than we do.

Sometimes, as I enjoy the bright red brick buildings of historic Main Street, I daydream of the Weaverville of tomorrow. I picture an electric streetcar going up and down the main drag, from Trinity Brew Co. to TAPAC, which will have a multi-level parking garage in the space between the theater and the Redding Rancheria Trinity Health Campus. I envision the multi-use path from TAPAC to Lee Fong Park, lots of bicycles riding safely, with only a few individual vehicles on the road traveling from the coast inland or vice versa. We have electrical vehicle chargers already! Let’s keep it up and pray we don’t reach dead pool.

I don’t mean to end so grimly. It’s just my realism.

Instead, I offer deep gratitude to the many wonderful friends and acquaintances I have met and the opportunities they have graciously provided, to those who have written kind words of encouragement in the paper, and as always, to the Trinity Journal for helping me share these ideas and dreams.