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The Price of God at Coronation Hill

Valuing the env.

When I worked at the Resource Assessment Commission in the early 1990s we were asked to conduct a contingent valuation study of the environmental value of Coronation Hill in Kakadu National Park. Although the proposed gold mine was small, the dispute over whether it should go ahead was fierce not least because the site works, with their cyanide, diesel, dust and traffic, would have been adjacent to the headwaters of the South Alligator River.

The mining industry had supported the Hawke Government’s proposal to establish the Commission as a neutral umpire that would gather all of the facts, believing that the facts would expose the environmentalists’ claims as emotional nonsense. And so it welcomed the Commission’s inquiry into the proposed mine.

Working out the value of Coronation Hill as a mine was easy; but what was the value of the environmental damage that the mine would cause? We were asked to put a dollar value on it using the latest and sexiest “nonmarket valuation method”, the contingent valuation (CV) method.

We wanted the study to be bulletproof so we hired the best expert from the United States to advise us (he did most of his work for industry) and spent a small fortune hiring a survey company to administer thousands of face-to-face questionnaires across the nation. After having the situation carefully explained, with the costs and benefits of the mine illustrated with before-and-after artists’ impressions, the respondents were asked:

“How much would you be willing to pay to protect the environmental values of Coronation Hill?”

The “willingness-to-pay” question is the heart of a contingent valuation study. The purpose is to convert fuzzy personal attitudes into hard economic data. Adding up people’s willingness to pay, elicited through the “hypothetical market”, gives a national dollar value for the environment that can be compared with the net economic value of the mine.

It’s fair to say that most conservation groups were suspicious of this kind of marketization of the environment, although the savvier ones guessed that the results would work in their favour. Business interests supported the application of hard-nosed economic methods – how could they do otherwise? – but prepared themselves to attack the survey in case the numbers did turn not out as they hoped.

Sure enough, when the results came in it was obvious that Australians valued protection of the Coronation Hill environment much more highly than the worth of the mine. Industry attacked the survey (into which it had had input and effectively signed off on) as a shoddy piece of work. There are good hard facts and there are bad hard facts, it seems.

The trade-off

Although forced by the situation to give an answer, it was pretty clear that many respondents were disconcerted when asked how much they would be willing to pay to protect Coronation Hill because they had never thought of the environment in market terms. Like me, many had the intuition that there is something perverse about posing such a question because it converts one kind of value into another that cannot legitimately be measured on the same scale.

Two other aspects of the survey drove home this point.

A few respondents replied that they would be willing to pay an unlimited amount of money to protect Coronation Hill. For them digging up the hill would be a moral crime. This was statistically awkward, for it only takes one person to express a willingness to pay an infinite amount to give an “average” of infinity. So we did what all good analysts do in this situation – we excluded the “outliers”.

The other crucial aspect of the situation I have not mentioned is that Coronation Hill is a sacred site for the traditional owners, the Jawoyn people. Guratba, as they know it, has “spiritual values” that would be destroyed by the mine. For completeness, our contingent valuation survey should have asked the relevant Aboriginal people a question like:

“How much would you be willing to pay to protect the spiritual values of Guratba?”

Merely posing the question exposes the absurdity of the belief that all values can be converted into dollar values. To ask it of the Jawoyn people would have been to insult them, for the implication of it is that their spirituality is so shallow that they would be willing to sell it if the price were right.

Market colonization

Which brings me to the contemporary point of this story. For many years a handful of environmentalists have been making headlines with studies that purport to demonstrate the enormous economic value of “ecosystem services”.

Robert Costanza has been at the forefront of this work. He was among those who in 1997 estimated the global value of ecosystem services at US$33 trillion/yr, a figure that by 2011 had risen to $125 trillion/yr. These numbers were uniformly regarded as big.

Writing today in The Conversation with Paul Sutton, Costanza argues that putting dollar values on ecosystem services is one way to persuade people that “our values have to change”. But putting dollar values on the environment does not show how our value system has to change; instead, it validates and reinforces the dominant value system of the market.

For some three decades neo-liberals have been working diligently to spread the value system that applies in private markets to the rest of society, indeed, to all areas of life. Their aim is to turn citizens into consumers, consistent with Mrs Thatcher’s declaration “There is no such thing as society”.

So market thinking has been colonizing universities, sporting events, artistic endeavor, schools, and the “worth” of children. Even marriages have been assessed as a calculable transaction between two utility maximizing agents in which love is defined as “a nonmarketed household commodity” (Gary Becker won a Nobel Prize for that gem of economic thinking).

Some environmentalists have swallowed this ideology, believing it is the best way to influence corporate and government decision-makers. Yet they have been “putting a price on the environment” for a couple of decades now without any noticeable impact.

The reason, of course, is that the dominant corporate system adopts a market worldview when it serves as a means of promoting its influence and profits, but drops it for a different stance when such a view threatens its wealth and power.

Only neoliberal zealots believe that their ideas have the power to change the world; others recognise that the powerful adopt ideas when it is convenient to do so. Most environmentalists have grasped this; they realize they must challenge the power base of the environmental wreckers.

The problem is not, as Costanza and Sutton argue, the “blind spot” in our accounting system; it is the accounting system itself, and the structure of power that the accounting system serves (as I argued here).

As the mining industry reaction to the contingent valuation survey demonstrated, business is all in favour of hard-nosed market-based methods – until they don’t suit its interests. Environmental economists would do well to heed this history because it might disabuse them of the view that an epiphany will befall the powers-that-be if it can be shown, with all due rigour, that the natural world has a high dollar value.

So what happened at Coronation Hill? As it turned out, no one other than a few economic wonks took the numerical results of the CV study seriously, even though it was the Rolls Royce of CV studies. Yet the survey results demonstrated beyond any doubt that a large majority of Australians were opposed to the mine, many of them strongly. They valued it in other ways. This fact was instrumental, I believe, in Prime Minister Hawke’s decision to ban the mine.

The mining industry went berserk and seethed over the loss for many years. It was the decisive dispute that forced the industry to accept that it did not have a divine right to dig up whatever it liked. And it was the values that could not be measured by the market that triumphed.

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