[Paleopsych] Wiki: Value of Earth
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Value of Earth
In economics, value of Earth is the ultimate in ecosystem
valuation, and important to 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 value of life for everything that lives on it,
and assign the Earth, as a necessary component and home for that
life, the natural capital on which 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 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. Mars, were to compete? What would be the
cost of terraforming it to make it as comfortable as Earth? Or
even barely habitable? An issue is whether to count transport
+ As a variation, estimate the cost of a smaller habitat, such
as 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 biosphere, to lesser or
greater degree, and calculate the price of 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 natural capital, as 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 Robert Costanza and is promoted in Natural
As one might expect, these all produce quite high values for the
entire Earth, usually at least in the hundreds of quadrillions of
US dollars. This seems appropriate. However, even with this sum in
hand, it seems unlikely that even 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 priceless or to
be exactly and only as valuable as all financial capital in
circulation. This may be equivalent to declaring it worthless
however, as economics deals very poorly with assets that are too
valuable to trade actively in markets.
Returning to the calculation in terms of the replacement cost of
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
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 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
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 national security and
climate change, both of which may have to be counted as full
factors of production in such an analysis, if not full styles
of capital - a factor which if not present in tight parameters
prevents all gains from all investment in production.
* Earth Day
* World Ocean Day
* World Water Day
Categories: Free-market environmentalism | Sustainability
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