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GUEST SPEAKER:
Morning, governor.

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As you're well aware, how
best to prevent or compensate

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for wetland destruction is a
crucial and contentious debate

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here in Oregon at the moment.

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However, a local watershed
advocacy group currently

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recommends new methodology
for calculating

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the value of these wetlands.

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I'm eager to share
what I see are the pros

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and cons to this method.

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First of all, I'll
explain a little bit

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about how it compares
to our current tactics

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that we're using.

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Then I'll discuss
some major critiques.

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And then I'll conclude and
wrap up with my thoughts

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and recommendations.

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So the current system
we have right now,

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we require three
acres of wetlands

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to be created for every
acre that's destroyed.

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People have complained that
this really hinders development

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and that there's little
room for creating

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these new wetlands right now.

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Landowners,
particularly farmers,

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have started a system
of mitigation banking,

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where they turn acres of
their land into wetlands

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and then sell these
acres to developers

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who use it as
compensatory wetlands,

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or essentially wetlands credit.

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The main problem
with this system

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is that it's unclear whether
these new wetlands are really

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functioning how they should be.

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Wetlands execute a number
of ecosystem services

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like water storage, carbon
sequestration, water

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filtration, services
that are particularly

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beneficial for humans as well.

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So it'd be a better approach
to look specifically

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at these services to recognize
what we would have to replace.

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So this new system
would require adding up

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the total value of what these
ecosystems' services are

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worth to humans
in monetary terms.

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As they aren't currently
bought and sold on the market,

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this evaluation process
can be challenging.

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But a mixture of different
processes can be used.

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We can use market
goods as a proxy.

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For example, flood barriers can
cost up to around $15 billion,

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while coral reefs do
this naturally for free.

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So it provides a comparison.

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We can look at
revealed preferences,

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like seeing people, if
they travel to x place

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to see nature, it gives
a sense of their value,

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but also using
hypothetical markets

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like measuring people's
willingness to pay.

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Using this process, Robert
Costanza and his team

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calculated that
ecosystem services

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are worth $142.7 trillion
annually in 2014 US dollars,

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which is a profound
number to really show

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how these ecosystems, or
services are of value.

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Of course, there are many
critiques and arguments

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for why this is not a
really applicable process.

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Critiques specifically to
the framework of method,

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first of all, include that
the economic assumptions

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are usually inappropriate.

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It assumes everyone
is always trying

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to maximize a personal
utility function

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and assumes that goods
are substitutable,

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which is not always the case.

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Also, there's an issue
with discounting.

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It's problematic to assume
that ecosystems in the future

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have diminished value.

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People also identify that
people's ability to evaluate

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is flawed.

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People don't necessarily have
a complete understanding,

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like what a particular
soil microorganism will do.

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People are also asked
to put a price on things

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that aren't normally
priced, and so it

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makes it a challenge to judge.

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Essentially, valuation
methods and market schemes

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are not ideologically neutral.

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It's said they're
culturally construed,

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so therefore, there's a risk
of having high subjectivity.

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Zooming out in terms of these
critiques, the quantification

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of nature, people will say, in
the first place is problematic.

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Valuing nature is arguably
a personal and social value

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at the level of morals.

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And so therefore,
no amount of money

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can be effectively compared.

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Others will also argue
that commodification

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induces competition, which
can be counterproductive.

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It basically undermines
the moral incentives

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of conservation by making it
about self-interest instead.

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Despite these critiques and
these arguments against it,

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I would still recommend it,
though, as a valuable exercise.

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Although the process itself
clearly has some flaws,

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by spelling out all the
different assumptions

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we make, we can perhaps not
reduce the subjectivity,

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but can at least be
transparent about the thinking

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that we're implying.

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Also in terms of the
moral implications,

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currently with the
system that we have,

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we're already using markets
for ecosystem services

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with the mitigation
banking procedure.

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The Army Corps of Engineers
has cut the cost $45,000

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to replace a acre of wetland.

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So in a way, we're already
quantifying these wetlands.

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Instead, we would just
be valuing the services

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that they provide.

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Furthermore, I'd argue that we
should focus on the outcomes

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regardless of the different,
differing ethical philosophies.

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Economic arguments tend
to be more salient.

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They fit with the ideological
and institutional structures

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in place, and thus have
shown remarkable success

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in political recognition
and spurring policy

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around ecosystem conservation.

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Currently, without valuing
ecosystems in this way,

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in formal policy evaluations
like cost-benefit analysis,

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we are effectively assigning
them a value of zero.

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So instead, by illustrating
the immense value to humans,

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the critical need to
preserve these services

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becomes much more salient both
land owners and developers.

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Although Marc Sagoff
shows how the back story

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or political rationale
has been misportrayed,

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the parable of
how New York chose

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to restore the
Catskills Watersheds

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illustrates this value.

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Restoring, restoration
cost them $1 billion,

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whereas a new filtration
plant, on the other hand,

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cost up to $6 billion, which
shows the great efficiency

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in natural ecosystem services.

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The greater lesson,
however, indicates

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that we should be seeking to
preserve rather than always

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restore.

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This can save ourself
money in the long run.

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As this methodology
makes this message clear,

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I see great utility in using
an ecosystem services approach.

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Although money is not
the end-all be-all

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and shouldn't be,
putting it in these terms

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creates great political
agency for conserving

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the ecosystems depend on.