Subject: Business and Management
Topic: ECOSYSTEM PRICING OF GOODS AND SERVICES
Language: English (U.S.)
Pages: 1
Instructions
- Ecosystem Pricing of Goods and Services a. Outline and discuss three main areas of disagreement between the authors (Losey and Vaughan versus Gatto and DeLeo). b. Compare and contrast each view. c. Which side do you agree with? Explain your answer.

Ecosystem Pricing of Goods and Services

John Losey and Mace Vaughan argue that there should be increased conservation efforts for ecosystems. This means that people should pay more to keep these ecosystems alive because they provide great economic benefits for the entire society. However, Marino Gatto and Giulio De Leo contend that a pricing approach to determining the value of nature’s services is wrong as it implies that only economic benefits matter. They believe that a pricing approach ignores ‘non-market’ values (Eaton, 2010).

Losey and Vaughan go through different economic benefits offered by wild insects. These benefits include dung burial, pollination, pest control, nitrogen volatilization, contribution to recreation and commercial fisheries, and forage fouling. By estimating the economic achievements generated by the activities of these wild insects, the authors were able to estimate how much money should be paid back into nature as a result. In short, the authors do not view nature as a ‘free good’ like most traditional economists. Rather, nature is an economic entity that needs to be paid in exchange for its enormous contributions to the economy.

From their economic analysis, the authors estimate that the insect services addressed in the paper would be valued at $60 billion every year. They assert that an annual investment of tens of billions of dollars should be justified to maintain the population of these wild insects. The investment will aid in protecting the insects from various threats including invasion of foreign species and overuse of toxic materials.

On the other hand, Gatto and Giulio argue that most of the methods that economists use to assess the societal value of biodiversity are invariably and indiscriminately based on price. They claim that the use of a pricing system or cost benefit analysis as the exclusive tool in making environmental policies as a setback in environmental regulation and conservation. They claim that the cost-benefit analysis method makes legislators focus on matters that can be measured and quantified and disregard issues that are too large to be assessed with ease. The authors also contend that ‘associated price’ does not necessarily reflect the true value of natural capital, human health, social equity, and environmental services (Eaton, 2010).  

References

Eaton, T.A. (2010).Taking sides: Clashing views on environmental issues. Boston, MA: Mc-Graw Hill.