National Academies Press: OpenBook

Assigning Economic Value to Natural Resources (1994)

Chapter: Front Matter

Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
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ASSIGNING ECONOMIC VALUE TO NATURAL RESOURCES

Commission on Geosciences, Environment, and Resources

Commission on Behavioral and Social Sciences and Education

National Research Council

NATIONAL ACADEMY PRESS
Washington, D.C.
1994

Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.

The overview section of this report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine.

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences.

The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering.

The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine.

The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Robert M. White are chairman and vice chairman, respectively, of the National Research Council.

LIBRARY OF CONGRESS CATALOG CARD NO. 94-69496

INTERNATIONAL STANDARD BOOK NUMBER 0-309-05143-6

Additional copies of this report are available from
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B-507

Copyright 1994 by the National Academy of Sciences. All rights reserved.

Cover art by Terry Parmelee. The artist expresses emotion with movement, symbol, and geometric form to create a poetic and imaginative version of nature. Parmelee is represented by the Jane Haslem Gallery in Washington, D.C.

Printed in the United States of America.

Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
×

COMMISSION ON GEOSCIENCES, ENVIRONMENT, AND RESOURCES

M. GORDON WOLMAN, Chair,

The Johns Hopkins University, Baltimore, Maryland

PATRICK R. ATKINS,

Aluminum Company of America, Pittsburgh, Pennsylvania

EDITH BROWN WEISS,

Georgetown University Law Center, Washington, D.C.

JAMES P. BRUCE,

Canadian Climate Program Board, Ottawa, Ontario

WILLIAM L. FISHER,

University of Texas, Austin

EDWARD A. FRIEMAN,

Scripps Institution of Oceanography, La Jolla, California

GEORGE M. HORNBERGER,

University of Virginia, Charlottesville

W. BARCLAY KAMB,

California Institute of Technology, Pasadena

PERRY L. McCARTY,

Stanford University, California

S. GEORGE PHILANDER,

Princeton University, New Jersey

RAYMOND A. PRICE,

Queen's University at Kingston, Ontario, Canada

THOMAS A. SCHELLING,

University of Maryland, College Park

ELLEN SILBERGELD,

Environmental Defense Fund, Washington, D.C.

STEVEN M. STANLEY,

The Johns Hopkins University, Baltimore, Maryland

VICTORIA J. TSCHINKEL,

Landers and Parsons, Tallahassee, Florida

Staff

STEPHEN RATTIEN, Executive Director

STEPHEN D. PARKER, Associate Executive Director

MORGAN GOPNIK, Assistant Executive Director

JEANETTE SPOON, Administrative Officer

SANDI FITZPATRICK, Administrative Associate

ROBIN ALLEN, Senior Project Assistant

Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
×

COMMISSION ON BEHAVIORAL AND SOCIAL SCIENCES AND EDUCATION

JOHN A. SWETS, Chair,

Bolt Beranek & Newman, Inc., Cambridge, Massachusetts

ALFRED BLUMSTEIN,

Carnegie Mellon University, Pittsburgh, Pennsylvania

ANN L. BROWN,

University of California, Berkeley

KAREN DAVIS,

The Commonwealth Fund, New York, New York

RICHARD ELMORE,

Harvard University, Cambridge, Massachusetts

BARUCH FISCHHOFF,

Carnegie Mellon University, Pittsburgh, Pennsylvania

JAMES GREENO,

Stanford University, California

ROBERT M. HAUSER,

University of Wisconsin, Madison

PATRICIA KING,

Georgetown University Law Center, Washington, D.C.

CHARLES MANSKI,

University of Wisconsin, Madison

DANIEL McFADDEN,

University of California, Berkeley

DAVID MECHANIC,

Rutgers University, New Brunswick, New Jersey

JANE A. MENKEN,

University of Pennsylvania, Philadelphia

WILLIAM A. MORRILL,

MATHTECH, Inc., Princeton, New Jersey

W. RICHARD SCOTT,

Stanford University, California

CHRISTOPHER A. SIMS,

Yale University, New Haven, Connecticut

RICHARD F. THOMPSON,

University of Southern California, Los Angeles

WILLIAM J. WILSON,

University of Chicago, Illinois

DAVID A. WISE,

Harvard University and National Bureau of Economic Research, Cambridge, Massachusetts

Staff

BARBARA BOYLE TORREY, Executive Director

EUGENIA GROHMAN, Associate Director for Reports

CHRISTINE L. MCSHANE, Editor

PAULA J. MELVILLE, Administrative Associate

ANN G. POLVINALE, Administrative Officer

Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
×

Preface

On July 1-3, 1993, the National Research Council's (NRC's) Commission on Geosciences, Environment, and Resources (CGER) and Commission on Behavioral and Social Sciences and Education (CBASSE) convened a retreat at the J. Erik Jonsson Study Center in Woods Hole, Massachusetts. This workshop on "Valuing Natural Capital in Planning for Sustainable Development" investigated the prospects for, and problems of, incorporating natural resource and environmental assets into economic frameworks, particularly into the national income accounts (such as gross national product or gross domestic product). Within this context, the specific goals of the workshop were to identify crucial technical and conceptual issues, uncover points of consensus and controversy, chart directions for future research and action, and select areas for high priority attention.

The workshop assembled individuals with a wide spectrum of views on environmental, scientific, public policy, and economic issues (see Appendix). Attendees included prominent researchers in environmental and natural resource economics, behavioral, social, and decision sciences, and biologic and earth sciences. Commissioned papers and background articles were distributed in advance to the workshop participants. Together with the presentations, these materials were designed to establish a common basic level of understanding. On this basis, the workshop organizers hoped to increase the sensitivity of different disciplines to the concerns and perspectives of those in other fields, foster common understanding, and summarize some of the major issues of environmental accounting for scholars and policymakers unfamiliar with the debate. At the workshop, basic theoretical issues including the implications of the different concepts of "sustainability" were outlined, work in progress that applied economic techniques to valuing natural resources was presented, and procedures for representing environmental and natural resource issues in an economic framework were suggested. There was considerable disagreement about the definitions and implications of many of the concepts discussed, and no consensus emerged as to immediate remedies for the perceived weaknesses in the present system of accounting.

One major theme dominates this volume: the rationale for, and the problems faced in expanding conventional measures of economic activity to encompass changes in natural capital—that is, in the stock of renewable and nonrenewable natural resources and in the quality of the environment. Short-hand and somewhat casual references to such conceptual and staffs

Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
×

tical reform ideas have sometimes employed the term "greening the GDP." Without wishing to be pedantic, we have chosen to avoid the "green" characterization. For one thing, the word suggests only the environmental part of our dichotomous concern. (Depletion of, say, copper ore is not viewed as primarily an environmental issue.) Moreover, in a number of countries, "green" frequently describes political institutions or platforms that go beyond both environmental and natural resource problems. In this overview, we therefore adopt the term ''natural resource and environmental accounting'' when discussing the problem of integrating these two elements into the prevailing system of economic measurement.

Secretary of the Smithsonian Robert McC. Adams chaired the workshop and was a speaker. Nobelist Robert Solow delivered the keynote address. Other speakers included Peter Bartelmus, Norman Bradburn, Carol Carson, Paul Craig, Pierre Crosson, Eric Fischer, Baruch Fischhoff, Thomas Lovejoy, Mohan Munasinghe, Henry Peskin, Francis Pierce, Raymond Prince, Claudia Sadoff, David Simpson, and Brian Skinner. M. Gordon Wolman delivered the closing remarks. The workshop sessions and panels were chaired by Robert McC. Adams, Edith Brown Weiss, Joel Darmstadter, Helen Ingram, and William Morrill.

The planning group that organized the workshop was chaired by Joel Darmstadter. It included Edith Brown Weiss, Pierre Crosson, Ernst Lutz, Mohan Munasinghe, Raymond Prince, Stephen Rattien, Craig Schiffries, Miron Straf, Michael Toman, E-an Zen, and M. Gordon Wolman.

This volume includes both an overview of major issues in valuing natural capital and more technical background papers contributed by individual authors. The material presented reflects the wide variety of views and opinions expressed, at times contentiously, by those participating in the event. The overview section draws on the proceedings of the retreat, on the background papers, and on selected scholarly literature listed in the bibliography. It attempts to show the reader the lay of the land without claiming to have discovered a road map for traversing it.

The CGER and the CBASSE gratefully acknowledge the generous contributions of time and expertise by the retreat participants. Special thanks are extended to those who made formal presentations and acted as session chairs, to Alice Killian who served as reporter at the workshop and drafted the overview section with oversight from the committee, and to Morgan Gopnik and Angela Brubaker who produced this volume. It is hoped that the material presented here will help to stimulate new ideas, research, and policy formulation, and perhaps encourage further inquiry into such issues by units of the NRC.

M. Gordon Wolman, Chair

Commission on Geosciences, Environment and Resources

Robert McC. Adams, Chair, 1990-1993

Commission on Behavioral and Social Sciences and Education

Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
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Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
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Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
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ASSIGNING ECONOMIC VALUE TO NATURAL RESOURCES

Suggested Citation:"Front Matter." National Research Council. 1994. Assigning Economic Value to Natural Resources. Washington, DC: The National Academies Press. doi: 10.17226/4844.
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There has been a lot of discussion among policymakers, particularly within the Clinton Administration, about how to make U.S. economic indicators, such as GNP, more accurately reflect the state of the environment. This book explores the major issues and controversies involved in incorporating natural resources and the environment into economic accounts. The first section of the volume, based largely on a three-day workshop of experts in the field, explains the possibilities and pitfalls in so-called "green" accounting. This is followed by a selection of nine individually authored papers, including one by Nobel prize winner Robert Solow, that probe scientific aspects of this issues in greater depth.

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