5. Values, evaluation and the frontiers of monetization

The debates about the role and limits of monetary valuation techniques in such domains as human health, education and environmental quality and, more spherically, for estimating the ‘‘impacts’’ of activities in the economic sphere on social and environmental systems have been ongoing since its precursors more than a century ago. The role of the concept of a Monetization Frontierwhich we introduce here is to signal thresholds or limits beyond which assessing trade-offs, choices or the consequences of choices on the basis of monetary measures alone is of questionable pertinence. These limits or thresholds may exist for two main reasons: either the estimation is scientifically very difficult (due to uncertainties, complexities, non-linearities, etc.), or the implication of a trade-off is deemed morally inappropriate.

This concept of a Monetization Frontier (or, more exactly, a set of frontiers) functions as a demarcation line separating phenomena attributed to the economic sphere from phenomena attributed to, respectively, the environmental and social spheres. In the language of the four capitals, it allows the demarcation between distinct zones of wealth and communities of interest considered as non-substitutable and complementary:

In the case of natural capital we identify, on one side of the Monetization Frontier, resources and assets that are valued within the conventional logic of the economic sphere, that is, from the point of view of their potential conversion into commercially priced goods and services (trees into wood products, for example); and, on the other side, assets that are valued from the point of view of their permanent roles in the bio/natural sphere as in situ services as sites, scenery, scientific interest and ecological life-support in complement to economic sphere activity.

In the case of social capital we may consider, on one side, the potential of societal assets as factors of production for economic wealth creation; but, on the other side, we designate the contours of the social sphere by specifying the classes of community spanning (present humanity, future humanity and non-human communities) meriting to be sustained.

The demarcations between economic and, respectively, natural and social capitals are thus directly correlated with the two main axes along which a ‘‘frontier of monetization’’ maybe identified, as suggested in Fig. 3:

Fig. 3 – The Monetization Frontier

The first relates to physical complexity and, prima facie with reference to the environmental sphere, concerns matters of scale and aggregation. Physical and ecological systems have an autonomy and existence in large measure independent of human actions. Although vulnerable to modification under human influence, they are partly exogenous and pre-existing. This has as one corollary, in particular where the physical and temporal scales of the systems under scrutiny are very large (e.g., climate and marine ecosystems, irreversible genetic and toxic chemical transformations), the scientific uncertainties about system dynamics, process interdependencies and (hence) what may come to pass ‘‘in the longer term’’ are inevitably high. The definition of opportunity costs, required for relative as monetary valuation estimates, becomes difficult and some­ times arbitrary.

The second relates to ethical appropriateness and, with primary reference to the social sphere, concerns the kinds of value involved. All technology choice, land use, infrastruc ture investment and territorial governance (etc.) decisions have ethical components. These are seen, in some cases, in questions of present-day fairness (as in north–south redistribution) and in the equity issues relating to future generations (the opportunities afforded to them and to the dangers and burdens we have imposed), and also in debates about the moral acceptability and social justifica- tions for intervening in the genetic integrity of organisms, destroying habitats of endangered species (and so on). Where cultural or ethical convictions are fundamental, and where the values of nature in question involve notions of respect (for self and for others), of justice and honour, cultural identity (and so on), then assessment problems take the form more of arbitration between different principles, forms of life, forms of community (etc.) to sustain or respect, than of a comparison of monetary values as in economic optimisation.

This didactic concept of a Monetization Frontier allows us to approach questions of policy evaluation and of the ‘‘social demand’’ for sustainability expressed as principles of respect for economic, environmental and social/cultural values, in a rigorous way with a multiple criteria perspective integrating systems function and ethical commitment aspects. Private and public policy, investment and stewardship decisions respond to the various demands made by actors from the social and the economic spheres, towards the political sphere:

• claims about what should be respected and sustained (in the economic, social and environmental spheres),
• accompanied by propositions of reasons why these things should be respected and sustained.

Proposals for environmental protection or the maintenance of ‘‘critical natural capital’’ will often be justified by systems-type arguments of the need for these environmental functions as a pre-condition for economic (and social) sustainability. But they will also, very often, be justified in terms of ethical or environmentalist attitudes that affirm a duty or desire for respect of the existence of the environmental features in question, and/or of the forms of community (human and otherwise) supported by these environments. In other words, the ethical appropriateness considerations (signalled along the horizontal axis of Fig. ), which relate to moral and cultural determinants of the pertinence of monetary valuations, are as much pertinent for the environ- mental as for the social sphere.