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Tue 01 Feb 2005

Costly comparisons

Category : articles

Euston Quah writes to the forum page (The Straits Times, 31 January 2005) to champion 'techniques such as cost-benefit analysis, valuation of non-market environmental goods and impact analysis as a means to place a monetary value on the environment where affected by development projects.'

Essentially he suggests quantifying environmental goods in order to attempt meaningful comparisons for decision making, i.e an index, whose unit, in this case, happens to be dollars.

I am wary since many indices, which are enticing in their usefulness in comparisions. But these often propagate ills from in-built biases. Economic valuation is particularly dangerous as the respectability of a seemingly objective method, can mask an inadequacy or an incomprehensive grasp of enviromental and societal value.

Just like IQ tests.

Furthermore, quantification of many non-economic aspects is difficult and highly subjective, assuming these are even identified in the first place.

For example, a tsunami protection system in the Indian Ocean, costing millions of dollars, is now considered extremely cheap. Priot to 26 Dec 2004, it would have been considered an unneccessary expense. Holistic ecological principles meanwhile that suggest sustainable development, are ignored and their economic value resisted or questioned.

Mr Budak argues in a similar but more detailed manner, and ends by asking:

"... should such an approach be universally prescribed for all facets of life as well? Whether to marry, to have children, to pursue a hobby, embrace a faith, honour our history and leave a legacy? Should we seek to assign a price to everything, and in doing, forget the value of it all?"

Read the original forum page letter and Mr Budak's response at The Annotated Budak [pdf].

Posted at 12:05AM SGT by N. Sivasothi | permalink | email |