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economic valuation — English
The determination of the economical or fiscal value of a non-economical, natural entity such as a rhinoceros or a national park, or even a non-tactile item such as a wilderness experience. A certain value is ascribed to the entity, and that value is determined by the normal market forces of supply and demand. In the case of elephant tusks, rhino horns, and a number of other wildlife products the normal market forces do not apply, because the sale of these items is illegal. The value that is ascribed to these illegal items is determined by the supply and demand in the illegal sector of the global economy. A live rhinoceros or an elephant can be sold and its price will depend on how much the buyer is prepared to pay (the willingness to pay principle [WTP]) and the seller is willing to accept (the principle of willingness to accept [WTA]). The actual value of the rhino is much higher because it includes its ability to breed, the value it adds to the destination image of the reserve (see “destination image”) and all the money made from the visitors who are attracted to the reserve by the rhino. Valuations are usually made on the basis of the profit that the buyer, the seller, or the landlord can make, and the satisfaction the tenant or paying guest can get. In the environmental field, economic valuation is an extremely difficult process. How is one to determine what the value of the Kruger National Park, the Okavango Delta, or the Cradle of Humankind World Heritage Site really is? In short, it cannot be done. Consequently, economic valuation in the environmental field, applies to small items and services, tourist accommodation, cuisine, and hospitality and services offered in a natural environment. However, the environment itself is not assigned a fiscal value (unless the land is sold and a short-term selling price – not a value – is temporarily assigned to a demarcated area [see “demarcation”]). To determine the “cost” of environmental damage is even more difficult, but it has to be done because our environmental laws provide for rehabilitation costs and punitive fines to be assigned to the guilty party. We know how much it would cost to get a professional service provider to remove illegally dumped rubbish or hazardous waste, but we cannot put a price on the actual environmental degradation caused by the illegal action. Punitive fines are allocated in an attempt to compensate for the environmental damage, but thus far fines in South Africa have been far too low to be to effective deterrents. In Canada, the USA, Australia and Western Europe the punitive fines are so high that they serve their purpose and developers try to avoid environmental damage. But accidents do happen. To cover them, developers and construction companies take out expensive insurance coverage. When we think of all the damage done over the ages by all the wars (including the two nuclear bombs dropped on Japan in 1945), the Three Mile Island nuclear plant accident, the Exxon Valdez oil spillage in Alaska, the Deep Water oilrig spillage in the Gulf of Mexico, the Chernobyl nuclear disaster, the devastation of the Niger Delta by powerful oil companies, the Bhopal poison gas leakage, and so forth ad infinitum, we realize that all fines paid now are far too little and far too late. Could we ever quantify all the damage in financial terms? Of course not.
