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Putting a price on nature, literally

Researchers figure out a way to put a price on untapped natural resources with the goal of trying to sustainably manage those assets

February 8, 2016

We know that nature is valuable, but how does this value compare with other assets? Not as lumber or drinking water or a fancy dinner, but as standing forests, healthy aquifers or living organisms — what is the dollar value of this natural capital?

Arizona State University economist and sustainability professor Joshua Abbott can calculate an answer. Abbott — with lead author Eli Fenichel of Yale and colleagues from California State University at Chico, Michigan State University and the National Oceanic and Atmospheric Administration — published findings on such values Feb. 8 in the Proceedings of the National Academy of Sciences. Joshua Abbott Arizona State University economist and sustainability professor Joshua Abbott. Download Full Image

The research team developed an interdisciplinary equation to estimate the current monetary value of natural resources, like groundwater, before it is pumped to the surface and used.

To calculate the value of natural capital, you start with the same economic principles used to value traditional assets, then factor in changes in ecosystems and human behavior that influence the appreciation or depreciation of that natural resource, Abbott explained. The result is a figure that can be compared on a balance sheet with traditional assets like real estate, factory machinery and infrastructure.

“Without an apples-to-apples valuation approach, the value of natural capital cannot be measured against other assets and expenses,” Abbott said. “Our work can help governments and businesses track the sustainable use of natural resources.”

The authors’ quantitative framework enables the valuation of natural capital in a way that is grounded in economic theory, accounts for biophysical and economic feedbacks and can guide interdisciplinary efforts to measure sustainability.

To illustrate their framework, the authors applied it to the value of groundwater in the Kansas High Plains Aquifer. The aquifer is rapidly depleting as farmers use the water to support food production.

Over the decade of 1996 to 2005, according to the authors’ calculations, Kansas lost approximately $110 million per year (2005 USD) of capital value. By depleting groundwater and changing the way they managed the aquifer, Kansas created an annual loss in wealth approximately equal to the state’s 2005 budget surplus.

“Without a calculation like ours, policy makers would lack critical information about how food production impacts our water wealth,” said Abbott.

“Kansas can improve the sustainability of its agricultural system through careful groundwater management, such as policies that truly foster water-efficient agriculture, and investments in other natural and traditional assets to help offset its lost water wealth,” said Yale’s Eli Fenichel.

Globally, groundwater supports 40 percent of the world’s food production. Abbott says the framework they have published would apply to any groundwater supply, not just the Kansas aquifer. It can also be applied to other natural resources.

Previously, the authors calculated the value of fish in the water as compared to fish sold at market.

The authors’ framework can help policy makers develop better measures of local, regional or even national sustainability — a need expressed by prominent agencies such as the World Bank and United Nations Environment Programme. 

“Sustainability is ultimately about making sure that the portfolio of assets we give future generations — including natural capital, but also our knowledge and physical infrastructure — is at least as valuable as the one we inherited,” Abbott said. “Our research helps us do a better job of bringing nature into the balance sheet of society, so that policy makers and business leaders can do a better job of evaluating trade-offs.”  

Associate Director, Media Relations & Strategic Communications


ASU researcher explains the importance of independents in the NH primary

February 8, 2016

The New Hampshire primary can be difficult to predict because independent voters — who make up nearly half of registered voters there — can participate in either party’s primary, giving them the ability to sway either nomination. Arizona State University’s Dave Daugherty, associate director of the Morrison Institute for Public Policy, researches the independent voter phenomenon.

Question: Why are independent voters so important in New Hampshire? A man poses for a portrait. Arizona State University’s Dave Daugherty, associate director of the Morrison Institute for Public Policy. Download Full Image

Answer: Independent voters are a growing part of the electorate and important to every state. New Hampshire has a tradition of independent voters — currently 44 percent of registered voters there — so they are always a critical part of the electorate, particularly during the presidential primary. Because of that, turnout among independents in New Hampshire may be higher than in other states, like Arizona, and they may wield greater influence.

Q: Is there any one unifying trait that connects all independent voters?

A: Unaffiliated voters do not hold together philosophically — they are not a “party.” Some individuals choose to be independents because they believe the organized parties have become too moderate. Others choose to be independent because neither party comes close enough to reflecting their personal political philosophy to suit them. They are a hodgepodge of individuals who, for a wide variety of reasons, do not identify with any of the organized political parties.

Q: Why have the percentages of independent voters grown nationally, and does that explanation apply to Arizona, too?

A: During the past decade (perhaps longer) the two major political parties have become less flexible in their positions on numerous issues. Candidates are “required” to take the party position on most or all these issues to be nominated and elected. However, many voters have mixed positions on the issues. For these voters, neither political party reflects their personal political philosophy. As a result, they can’t, or won’t, attach themselves to either political party and instead become independents.

Q: Are many of these voters truly independent, or do they still tend to vote for the party they left?

A: In Arizona some independents are independent in name only and behave almost exactly — in their political philosophy and voting behavior — as either Democrats or Republicans. Our research indicates about 12 percent of independents are actually Republicans and about 14 percent are really Democrats. The remainder is independents with a mixed set of beliefs that don’t reflect the political philosophy of either party. However, many of these voters won’t necessarily share the same mixed set of beliefs.

Q: How much effort should candidates devote to independent voters compared with voters in their party? Are independent voters harder to reach and convince?

A: Candidates need to be careful when pursuing independent voters. In Arizona, for example, there appears to be an emerging group among independents that is fiscally conservative yet socially liberal. There is enough of this group of independents that they are worth pursuing. However, to appeal to these voters, the candidate will alienate both left-wing Democrats and right-wing Republicans. “Appealing to the base,” that tried-and-true political strategy, means having little appeal to most independents, other than those who are actually Democrats or Republicans calling themselves independents. And not all independents are moderates — although some are. But taking moderate positions on issues will cost the candidate votes among their base. In this environment of extremism, a candidate must pursue independents at their potential peril.

For more: The Arizona Independent Voter Study identifies the voting patterns of the state’s unaffiliated voters and is the result of a survey of 2,000 registered voters in the state. Find it here.

Media relations specialist, Media Relations and Strategic Communications