When deciding whether it is useful to invest resources in a public good, one must compare costs and returns. If the returns outweigh the costs and risks, then we would be better off by allocating resources to the investment. What if such public or private good already exists, such as a part of nature, and we ask ourselves: Is the value of maintenance greater than the cost of upkeep? Or can we do better by developing it into something else?
Think of the Grand Canyon, a US national park that had close to 4.6 million visitors in 2013 . Consider the economic benefits of those visitors and the price of preserving the park in its natural state. What if, instead, we could develop the Grand Canyon to build malls and casinos? Would it bring in more revenue? Many would argue, with reason, that given the uniqueness of the national park, the Grand Canyon in its natural state is a more valuable resource than in any other form.
Value is usually gauged by market prices. Given that the Grand Canyon is not a market good with a price tag, what is its value? Economists have long thought about ways to elicit the value of non-market goods, paving the way for the field of environmental valuation  . Many valuation methods have been used to produce estimates of existence and use value of natural habitats. These estimates often provide robust lower bound measures of worth that are high enough to justify the existence, maintenance or development of new parks, beaches, forests, etc. Economists have found that value can be determined by the prices people are willing to pay to visit a place, or how much they would pay to preserve it (even if they do not intend to visit) and by taking into account how changes in environmental quality affect wildlife, human health and worker productivity .
So, what do economists say about the value of the Salton Sea? Continue reading “The Value of the Sea”