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Valuation of Ecosystem Goods and Services Part 2: Implications of Unpredictable Novel Change

21 Pages Posted: 5 Apr 2007 Last revised: 20 Feb 2008

Ralph Winkler

University of Bern - Department of Economics; University of Bern - Oeschger Centre for Climate Change Research

Abstract

This is the second part of a two-part paper which offers a new approach to the valuation of ecosystem goods and services. In the first part a simple pre-industrial model was introduced to show how the interdependencies between the three subsystems, society, economy and nature, influence values, and how values change over time.

In this second part the assumption of perfect foresight is dropped. I argue that due to novelty and complexity ex ante unpredictable change occurs within the three subsystems society, economy and nature. Again the simple pre-industrial model, which was introduced in part 1, serves as a simple paradigm to show how unpredictable novel change limits the possibility to derive accurate estimates of values.

Keywords: Complexity, Dynamic optimization, Ecosystem goods and services, Environmental valuation, Ignorance, Novel change

JEL Classification: Q57, D81, C61

Suggested Citation

Winkler, Ralph, Valuation of Ecosystem Goods and Services Part 2: Implications of Unpredictable Novel Change. Ecological Economics, Vol. 59, No. 1, pp. 94-105, 2006. Available at SSRN: https://ssrn.com/abstract=978439

Ralph Winkler (Contact Author)

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, 3001
Switzerland
+41 31 631 4508 (Phone)

HOME PAGE: http://www.ralph-winkler.de

University of Bern - Oeschger Centre for Climate Change Research ( email )

Zähringerstrasse 25
Bern, 3012
Switzerland

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