Aspects of environmental functions, Public Economics

Aspects of Environmental Functions

In the below diagram we present a detailed list of various aspects of environmental functions and values ascribed to these functions. The total economic value of environment arises primarily because of its 'use values' and 'non-use values'. As its name suggests the use values pertain to different uses to which the environment is subjected to. On the other hand, the non-use value relates to the psychological and ethical aspects associated with the environment (for example, protection of endangered species, maintenance of habitat).

The use values are of three types: direct use value, indirect use value and option value. The direct use value of environment is further sub-divided into two groups, viz.,

i) Consumptive or extractive use value (e.g., commercial and domestic goods derived from environment), and

ii) Non-consumptive use value (e.g., recreation, science and education)

Let us explain the distinction between the three categories - direct use, indirect use and option values - with an example, say the value of forests. As we know, forests provide us with timber and other minor forest products (such as seeds, leaves, etc.) which are of direct economic use value - we know the purpose for which these products are used. Thus it is easy to correlate certain environmental functions, which are of direct economic use to economic activities. However, it is difficult to correlate certain environmental functions with economic activities, typically in the case of those pertaining to indirect use values. Here the relationship between environmental function and economic activity is round about. Continuing with the same example of forests, we can say that it helps in maintaining moisture in the surrounding atmosphere which may not be of any direct use to us. The moisture in the environment in turn helps in plant growth and thus agricultural production is higher if moisture is maintained within a particular range.

The third category of use values, that is, option values of environment pertain to the possible use of the resources in future. Environment holds innumerable possibilities in the sense that certain resources may not be useful now but may increase production in future. For example, current research in biotechnology and genetic engineering has combined strains of different species to produce high yielding variety (HYV) seeds which are resistant to pests. Another example could be the use of silicon chips in computer, a technology unknown to us a few decades ago. Thus we do not know the value of certain functions of environment, which only time can unfold.

2261_Aspects of Environmental Functions.png

Diagram:   Total Economic  Value of  Nature

The non-use value of the environment is divided into two categories: bequest value and existence value. Bequest value of the environment relates to the idea that the environment should be passed on to future generations so that they can derive both use and non-use values from it. It is important since many ecological changes taking place due to technological progress and economic development are irreversible. Many species, both animals and plants (for example, indigenous varieties of rice and other crops) have got extinguished from earth in the course of time. It is therefore desirable that biodiversity be maintained on earth. The second category, that is, existence values depict the fact that individuals assign importance to the existence of natural beauty even though it may not be of any economic use to them. The very existence of forests, water streams, sea coasts parks, etc. are important to individuals even though they may never use it in their lifetime. We have presented a list of environmental functions under different categories in Fig. 8.1 which is a modified version of the one suggested by Munasinghe (1 992). You are expected to appreciate the importance of each of these functions and provide concrete examples under each head. We make the observation that the categories mentioned in the diagram are arranged in such a manner that as we move from left to right, the tangibility of the group declines. Thus indirect use value is less tangible in nature than direct use value, while option value is less tangible than indirect use value.




Posted Date: 12/18/2012 4:53:04 AM | Location : United States

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