CONCERTED ACTION: Environmental Valuation in Europe (EVE)

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Summary of EVE Workshop 3

Ethics, Economics and Environmental Policy

Contributions:

• From the Inside Out?
  • Ronan Palmer
• The Axioms of Rational Choice Theory
  • Paul Anand
• The Ethical Agent - the Humean Model and its Problems
  • David MacNaughton
• Rights and Lexicographic Preferences
  • Clive Spash
• Willingness to Pay / Willingness to Accept
  • Sue Chilton
• The Environment as a 'Commodity'
  • Arild Vatn
• Environmental Goods and Market Boundaries
  • Russell Keat
• Contingent Valuation - a Response to the Critics
  • Ståle Navrud
• Stakeholder Decision Analysis
  • Darren Bhattachary
• Fairness and Social Implementation
  • Mark van Vugt
• Ethics, Economics and Policy: A Response to the Workshop
  • Jonathan Burney

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Workshop Summary:

The aim of the Workshop was to get behind the technical debates in order to explore and assess state of the art issues in both the theory and practice of environmental valuation. Delegates combined a blend of disciplines, theoretical and practical experience. Three themes were chosen as offering the best grounds for exploration: consideration of (i) the agent, (ii) the object and (iii) the process - although there was a lot of spill over between the categories. The method of the Workshop was to use these three themes as means to:

• identify the assumptions determining differences in approach to environmental valuation, by considering methodological (e.g. contingent valuation) as opposed to discursive (e.g. deliberative) approaches;
• expose values that are carried by / implicit in, or obscured / ignored by contrasting evaluative processes;
• reveal the features that make different processes digestible, or indigestible, to different policy bodies.

The subject area dealt with in the Workshop was a very complex one, yet some useful outputs emerged. The discussions covered the theoretical issues, with contributions from economics, political science, social psychology, decision theory, philosophy, theology and policy-making.

The economic model of the agent as 'rational benefit seeker' was identified as being the underlying picture of neo-classical economics in general, and contingent valuation in particular. This also emerged as a broader phenomenon, where concentration on the consumer has become a trend which dominates our culture. Paul Anand argued that there are many examples of occasions where humans fail to reason transitively and that there are many possible reasons why this is the case (e.g. social pressures).

David MacNaughton's paper examined the broadly Humean model of the moral agent that many neo-classical environmental economists typically assume. He questioned the model's basic assumption that values are a non-cognitive matter. Sue Chilton's paper considered different explanations of the well-established discrepancy between willingness to pay and willingness to accept - that minimum willingness to accept is nearly always greater than the maximum willingness to pay - and gave a preliminary report of recent empirical studies that aimed to test those explanations. Lexicographic preferences formed another anomaly, and Clive Spash presented empirical evidence for their association with rights-based motives, which raised questions over the interpretation of CV results. The central point was that there is a gap between the above model and reality; since every model simplifies to a certain extent, the question was asked whether the gaps mattered. If the gap was seen as problematic, four strategies were suggested for 'closing the gap':

• Enrich the model. Many people see possible ways in which the model could take better account of reality and ethical viewpoints, and that the problems with CV are inadequate reason for abandoning it completely.
• Supplement of transform the model, possibly using CV as a part of a broader consultation process. However, the point was raised as to how far this could progress before CV became something else.
• Spash and O'Neill mentioned using external corrections as a possible strategy. While acknowledging the faults of CV, practitioners would ensure sufficient correcting factors elsewhere in the system e.g. an ethical committee.
• The final suggested strategy was to replace the model completely, and look for a new model.

The paper by Arild Vatn considered the complex nature of environmental goods themselves and the problems this raises for any treatment of those goods as commodities. Is treating the environment as if it was a commodity tantamount to treating it as a commodity? Many aspects of the environment are difficult to think of in terms of ownership, due to the complexity or the interrelationships, but the important issue is to separate technical and feasibility factors from those relating to valuation. Russell Keat's paper also raised issues of market boundaries, but in a different sense. He was concerned with the question of which spheres of activity the market is appropriate or inappropriate to. What kinds of decisions may be properly made through the procedure of the market? What kinds of decisions are made by the market or market-like procedures quite inappropriately? More specifically, are there particular features of environmental decisions and goods, which render them inappropriate for market procedures?

Ståle Navrud defended contingent valuation methods by attempting to demarcate spheres in which they can be applied - those where environmental damage costs are low and changes are relatively easily reversed - from spheres in which they do not apply - those marked by high environmental damage costs and irreversibility. Darren Bhattachary outlined the use of a more deliberative method - stakeholder analysis - and reported the results of a recent attempt to combine this with more analytical multi-criteria techniques. In the final part of the workshop the discussion returned to the policy context, Jonathan Burney posed the question of how far different deliberative and economic approaches to policy-making could be incorporated into specific institutional policy making contexts.

Issues that were identified in the Workshop as needing to be addressed included the facts that:

• The real problem (noted by Weber) is no longer ownership in the old-fashioned sense, but appropriation. If you cannot prevent other people from doing something unless they pay you, then you will have all the power you need. Corporations are aware of this.
• The existing economic model was flawed and too much weight was given to it. There are many people actively involved in finding different, and hopefully more satisfactory, models with which to replace it.
• Values can enter anywhere and everywhere in the decision process. There should be no rigidly fixed structure to any methodology, and the almost implicit picture of valuation and decision-making separated into identification of the problem, consideration of the options and examination of the consequences should be much more flexible. This assumption that the process can be split into neat, context-specific steps rather then general ones could lead to a situation where a later decision is taken in order to justify an earlier one.
• The differences between individual and collective decision-making, which may be caused by the different dynamics within a group, are not clearly understood. In an institutional/agency context there may be parameters and constraints operating on the decision-making process. There are advantages and disadvantages to each process, but the picture of how they differ is unclear. The dynamics of motivation are complex, and Mark van Vugt gave an example of a car-pooling experiment in the Netherlands, which failed. It was found that people's behaviour (i.e. not joining the car-pooling scheme) had influenced their attitudes (that the system would fail anyway), which was quite the reverse of the expected model. This was seen as relevant to CV because the process may change the results and willingness to pay will change over time.

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