Managing Without Prices: On the Monetary Valuation of Biodiversity

Environmental managers manage without prices. In resolving day to day conflicts decisions are normally made without appeal to monetary values or any other single common measure. However, this is not how the neoclassical economic theory says it should be. A gap exists between the actual practice of management and the ideal practice offered by economists. Hence, the development of methods for placing monetary values on biodiversity and other environmental goods. This paper examines three arguments for monetary valuation: that it provides a way of arriving at a decision that maximizes well being; that it provides a way of trading off objectives; that it is effective since it speaks in the economic language to which policy makers listen. It shows that none of these arguments is satisfactory. While there may be problems in existing procedures for environmental decision making, these do not include the failure to use monetary values.