Ensuring all costs (and benefits) are included in the final price that is charged to consumers for a product is essential if we are to take full advantage of the market forces that can allocate resources so efficiently. A big challenge for this lifecycle approach, of course, is the pricing of natural capital -- assets from the natural environment that, to date, have either been free or close-to-free and, as a result, have been taken-for-granted and over-consumed. The article in the url below illuminates this challenge by attempting to value the National Parks in the US:
"According to the National Park Service (NPS), over 300 million visitors collectively spent over a trillion hours at U.S. national parks in 2015. … Attendance numbers are often provided as a crude measure of how much people like and value America's national parks. But that is only a rough proxy for determining the parks' economic value—a number that could have implications for how the parks are managed and funded. So a group of researchers recently looked into that question: How much is the NPS—the parks and the services it provides—worth to Americans?"
The challenge, of course, is to quantify this value (beyond mere public popularity):
"[The researchers] estimate that NPS parks and programs are together worth about $92 billion. They arrived at this figure by using methods similar to those that federal agencies use in analyzing proposed regulations. First, they sent a survey to about 4,000 U.S. households asking how much residents were willing to pay in additional federal income taxes in order to keep America's national parks. An estimate was then made based on the answers of the 700 households that responded, and those who didn't respond were ascribed a value of zero. The $92 billion number breaks down into $62 billion for National Park lands and $30 billion for NPS programs, which include recreational activities, efforts to protect landmarks, and educational programs."
An important takeaway from the study was that the National Parks are valued not only by those who use them, but also as an idea that shapes the nature of the country:
"Sure, people who use national parks for hiking or camping value them, but what this estimate suggests is that for those who don't use the parks, it seems that just the idea of having national parks around is attractive enough to be worth tax dollars. Additionally, … $92 billion is a conservative estimate, since those who didn't answer the survey were given zero values and a post-survey audit found that most of those who didn't respond didn't have time to fill out the survey—so it's likely not the case that the parks are worth nothing to them. Separately, the demographics of park attendance could hurt the NPS's long-term valuation given that the majority of its visitors are older white Americans, even as the U.S. becomes increasingly diverse."
The conservative approach of valuing non-responses as zero likely makes up for the gap between what respondents say they are willing to spend and what they would actually spend if they had to part with their money. At a minimum, however, the $92 billion number puts the annual budget for the parks in greater context:
"[Last year] the Obama administration [submitted] a budget of $3.1 billion for the NPS for 2017—an amount that includes a bump for restoration and upgrades."
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How Much Are America's National Parks Worth?
By Bourree Lam
July 19, 2016