Argument structure: claims and evidence

In the 1990s, New York City faced an expensive decision. Much of the water supplied to its millions of residents came from reservoirs in the Catskill Mountains, well over a hundred kilometres to the north, and was naturally filtered as it passed through the forests and soils of the surrounding land. As farming and building in the area increased, however, the quality of the water was put at risk, and the city faced the prospect of building a filtration plant at a cost of several billion dollars. Instead, it chose to spend a much smaller sum protecting the land around its reservoirs: buying property, paying farmers to change their practices and upgrading local sewage systems. The forests, in effect, were hired to do the work of the plant.

For many economists, the story illustrates a simple principle. Forests, wetlands, coral reefs and the insects that pollinate crops provide services of enormous economic value, but because nobody pays for them directly, that value is invisible in ordinary decision-making. A wetland that absorbs floodwater appears on no balance sheet; a mangrove forest that shields a coastline from storms is worth nothing to the developer who wants to clear it for a hotel. If these services were given a price, the argument runs, governments and businesses would have a reason to protect them, and destroying nature would no longer look like a free lunch.

Critics raise two kinds of objection. The first is practical. Calculating the value of a wetland or a species involves so many assumptions that the resulting figures can vary enormously from one study to the next, and a number that could plausibly be ten times larger or smaller offers little guidance. The second objection is more fundamental. To put a price on something, critics argue, is to suggest that it can be exchanged for anything of equal value: that a forest worth a certain amount may be destroyed if the timber or the land is worth more. Some things, they insist, should be protected because they are irreplaceable, not because they are profitable.

Both objections have force, and I do not think either can be dismissed. Valuations are often uncertain, and the language of prices does sit uneasily with the sense that nature matters for its own sake. Yet the alternative to putting a price on nature is not to keep it priceless. Every time a road is built through a forest or a wetland is drained, a decision has been made about value; it is simply that the value of what is lost has been set, implicitly, at zero. A rough estimate, openly debated, seems to me preferable to an invisible assumption that is almost certainly wrong.

The economic argument does, however, carry a real danger, and the New York case itself reveals it. The forests were protected because protecting them was cheaper than building a filtration plant. Had filtration technology become dramatically cheaper, the same logic would have favoured building the plant and allowing development of the land. An argument for protection that rests entirely on cost is only as secure as the figures on which it depends, and those figures can change. Nature that is protected only because it pays may be abandoned as soon as it no longer does.

The sensible conclusion is to treat valuation as a tool rather than a verdict. Prices can reveal costs that would otherwise be ignored, and they can persuade decision-makers who respond to no other kind of argument. But they should sit alongside, not replace, legal protection and the plain recognition that some losses cannot be made good at any price. The forests above New York were valuable because they cleaned the city's water. They would have been worth protecting even if they had not.