Saturday, February 9, 2013

The economic value of natural resources

Ecuador has a lot of oil sitting beneath its beautiful and bio-diverse Yasuni National Park. If the Economist is right, it will soon need to tap that wealth. But the government has cultivated a 'green' image and doesn't want to touch the oil (although it expoits it elsewhere and even has loans from China that will be repaid in future oil production). It has proposed that it would be prepared to leave at least this oil in the ground, and maintain the Yasuni if the international community compensate half of the oil value that it would forego. The idea is that the trees an environment have both an intrinsic value by existing and provide a valuable service for the whole world; absorbing CO2. I have already contributed to the environment bonds

This week, one of my favourite podcasts, Planet Money, have an excellent episode on the Yasuni Park and the difficulties in how to compensate countries for maintaining their environments when it would be more profitable for them to destroy them. We need to find a better way to price nature and decide who should pay for it.

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