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Impact of Environmental Functions
It is worth mentioning that the impact of certain environmental functions is local in nature while others can percolate to national and international levels in geographical terms and even to future generation over time. For example, moisture regulation due to a watershed is local in nature. But the benefits of carbon sequestration cross local boundaries as it reduces global warming. Thus forest areas in a country is valuable not only for the country itself but for other countries also. Similarly the benefits of forests as a habitat for genetic resources could be of immense value for future, much beyond the comprehension of current generation. Thus the question of stakeholders to environment comes up here.
Usually it is the local government which pays for the maintenance of forests while its bene1it is shared, although to a limited extent, at the national and international levels. Should not the international organizations pay for the maintenance of forest areas in developing countries? This partly explains (apart from humanitarian reasons) the interest afforestation programmes generates globally and grants/soft-term-loans the developing countries receive from developed countries and international organisations.
Environment is undervalued as we usually take into account those functions of the environment which enter into formal markets such as raw materials. This results in gross under-estimation of the value of environment. We should appreciate that the indirect use values, option values and non-use values, although intangible in nature, are also important Some of the empirical studies (for example, Adger et al. 1995; Furst et al. 2000) have found that indirect use values and non-use values constitute large portions of the total economic value of forests.
eiplain why indifference curve are convex to the origin
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