[Paleopsych] Wiki: Value of Earth

Sat Jul 9 00:08:07 UTC 2005

Value of Earth
http://en.wikipedia.org/wiki/Value_of_Earth

    In [6]economics, value of [7]Earth is the ultimate in [8]ecosystem
    valuation, and important to [9]value of life calculations. It begins
    with the simple problem that if the Earth ceases to support life, and
    human life does not continue elsewhere, all economic activity will
    also cease. There are several ways to estimate the value of Earth:
      * Estimate the [10]value of life for everything that lives on it,
        and assign the Earth, as a necessary component and home for that
        life, the [11]natural capital on which [12]individual capital
        thrives, at least this much value. Since not all life is valued,
        and a very little is overvalued, there is high risk of
        under-estimation. One way to avoid this is to work continent by
        continent to see if there is systematic inflation of the price of
        life on some compared to the others.
      * Estimate the cost of [13]replacing the Earth, which may include
        finding and colonizing another planet, or creating one
        artificially in a compatible orbit. What if the natural capital of
        a nearby planet, e.g. [14]Mars, were to compete? What would be the
        cost of [15]terraforming it to make it as comfortable as Earth? Or
        even barely habitable? An issue is whether to count transport
        costs.
           + As a variation, estimate the cost of a smaller habitat, such
             as [16]Biosphere 2, and multiply its cost by the ratio
             between the population of Earth and of that smaller habitat.
             This however is to rely on below-minimum cost figures, since
             Biosphere 2, although brilliantly ambitious and expensive,
             was a flop. This method yields only a floor value which Earth
             itself would vastly exceed. See below for more details.
           + As another variation, figure out every disaster that might
             occur due to failure of the [17]biosphere, to lesser or
             greater degree, and calculate the price of [18]insurance
             against all of it. The averted insurance payments are
             effectively a yield, and, this is one way to calculate the
             value of what Earth is doing for us, for as long as these
             averted failures do not occur.
      * Calculate the yield of [19]natural capital, as [20]nature's
        services, and use the size and consistency of this yield to
        calculate how much capital there must be. This method was
        pioneered by [21]Robert Costanza and is promoted in [22]Natural
        Capitalism.

    As one might expect, these all produce quite high values for the
    entire Earth, usually at least in the hundreds of quadrillions of
    [23]US dollars. This seems appropriate. However, even with this sum in
    hand, it seems unlikely that even [24]experienced reconstruction
    subcontractors could complete the task of replacing Earth, certainly
    not without using Earth itself as a base. Rent for use of Earth and
    its orbit might then also have to be included, and it would be hard to
    price this without calculating the price of the Earth, again.

    One way around this is to simply declare the Earth [25]priceless or to
    be exactly and only as valuable as all [26]financial capital in
    circulation. This may be equivalent to declaring it [27]worthless
    however, as [28]economics deals very poorly with assets that are too
    valuable to trade actively in markets.

Replacement methods

    Returning to the calculation in terms of the replacement cost of
    Earth's biosystems:

    In Biosphere2 over $240 Million was spent on developing the
    infrastructure to support 8 people for two years. The project failed
    and fresh air had to be pumped in to save the lives of the
    participants. So Earth is worth at least ( $240 M / 8 people ) X 6.5
    Billion people on Earth = 1.95 × 10^17 dollars.

    This represents the minimum value of the Earth using today's
    technology. Because the project failed, the true value must be higher
    than this amount.

    To put this into perspective, assuming the total value of the world's
    [30]GDP is $30 Trillion, that sum divided into $ 1.95 × 10^17 = 6.5
    thousand times the world's current GDP.

    From this we can estimate the cost of cutting a tree or taking a
    single fish from the ocean if there is evidence that that yielded
    resource unit may not be replaced. The probability that the resource
    will be replaced reduces the cost, so a 50% chance that it will be
    replaced implies cutting in half the cost, since two of them can be
    taken, on average, before it isn't replaced by [31]nature's services.

    These estimates can be done using a straight line method, for initial
    estimates, or using an exponential to place greater value on the
    remaining elements of a declining resource.

    Further calculation of the value of one tree, replaced or otherwise, a
    metric ton of fish, of soil carbon, depend on these probabilities. The
    curve for Replaced and Not Replaced biomass will be relatively
    equivalent as long as the total biomass is relatively large. As the
    total biomass in a specific area becomes depleted to the point where
    the entire sustainability of the biomass is threatened, then the
    exponential part of the curve comes into play.

    Ultimately, we are left with the question, how much are we prepared to
    pay in order to avert imminent death as individuals. That sum is
    relatively large. As the resources are depleted to the point where the
    conflict over what remains begins to dominate the risk of taking it,
    it becomes more obvious due to costs of protection and securing
    property.

    So, any calculation based on costs of replacing ecosystems tends to
    lead to a calculation based on costs of protecting ecosystems so that
    their yield can be controlled - but only at the tail end of the
    process, when it is too late to replace them.

    There are implications for costs of [32]national security and
    [33]climate change, both of which may have to be counted as full
    [34]factors of production in such an analysis, if not full [35]styles
    of capital - a factor which if not present in tight parameters
    prevents all gains from all investment in production.

See Also

      * [37]Earth Day
      * [38]World Ocean Day
      * [39]World Water Day

    [41]Categories: [42]Free-market environmentalism | [43]Sustainability

References

    6. http://en.wikipedia.org/wiki/Economics
    7. http://en.wikipedia.org/wiki/Earth
    8. http://en.wikipedia.org/wiki/Ecosystem_valuation
    9. http://en.wikipedia.org/wiki/Value_of_life
   10. http://en.wikipedia.org/wiki/Value_of_life
   11. http://en.wikipedia.org/wiki/Natural_capital
   12. http://en.wikipedia.org/wiki/Individual_capital
   13. http://en.wikipedia.org/wiki/Replacing_the_Earth
   14. http://en.wikipedia.org/wiki/Mars_%28planet%29
   15. http://en.wikipedia.org/wiki/Terraforming
   16. http://en.wikipedia.org/wiki/Biosphere_2
   17. http://en.wikipedia.org/wiki/Biosphere
   18. http://en.wikipedia.org/wiki/Insurance
   19. http://en.wikipedia.org/wiki/Natural_capital
   20. http://en.wikipedia.org/wiki/Nature%27s_services
   21. http://en.wikipedia.org/w/index.php?title=Robert_Costanza&action=edit
   22. http://en.wikipedia.org/wiki/Natural_Capitalism
   23. http://en.wikipedia.org/wiki/US_dollar
   24. http://en.wikipedia.org/wiki/Halliburton
   25. http://en.wikipedia.org/wiki/Priceless
   26. http://en.wikipedia.org/wiki/Financial_capital
   28. http://en.wikipedia.org/wiki/Economics
   30. http://en.wikipedia.org/wiki/Gross_domestic_product
   31. http://en.wikipedia.org/wiki/Nature%27s_services
   32. http://en.wikipedia.org/wiki/National_security
   33. http://en.wikipedia.org/wiki/Climate_change
   34. http://en.wikipedia.org/wiki/Factors_of_production
   35. http://en.wikipedia.org/wiki/Capital_%28economics%29
   37. http://en.wikipedia.org/wiki/Earth_Day
   38. http://en.wikipedia.org/wiki/World_Ocean_Day
   39. http://en.wikipedia.org/wiki/World_Water_Day
   40. http://en.wikipedia.org/wiki/Value_of_Earth
   41. 
http://en.wikipedia.org/w/index.php?title=Special:Categories&article=Value_of_Earth
   42. http://en.wikipedia.org/wiki/Category:Free-market_environmentalism
   43. http://en.wikipedia.org/wiki/Category:Sustainability
   44. http://en.wikipedia.org/wiki/Value_of_Earth
   45. http://en.wikipedia.org/wiki/Talk:Value_of_Earth
   47. http://en.wikipedia.org/w/index.php?title=Value_of_Earth&action=history
   48. 
http://en.wikipedia.org/w/index.php?title=Special:Userlogin&returnto=Value_of_Earth