What it means when we say we value something

When we say we value something, it usually means we’d rather not lose it, or lose the access to it or the ability to experience it.  Or perhaps we gain something from being able to use it, and we lose something if we lose the use of it.  And the more difficult it would be to restore it or replace it, the higher the value we would place on it, perhaps.  This multiplicity of perspectives gives rise to a variety of ways of “placing a value on it”.  For example, a monetary value we ascribe to an object might represent:
·         The original cost of producing it, if we made it ourselves – including amounts for our time and effort as well as all the raw materials, energy and other inputs to the processes used (historic cost)
·         The amount we paid for it if we bought it rather than making it ourselves (purchase cost)
·         The cost of replacing it if it is lost or destroyed (replacement cost)
·         The cost of alternative means of satisfying the same need or desire that it fulfils (a substitution value)
·         The money that could be obtained by preparing it for sale and then selling it (realisable value)
·         The price at which it can be bought or sold in its current state in a perfect market (market value)
·         The amount we could claim from an insurance company if it was lost in an incident covered by insurance (insured value)
·         The total of all the future discounted cash in-flows and out-flows generated by the expected future use of the object until it reaches the end of its useful life (the Net Present Value, or economic value)

Of course, in most circumstances, for a specific object, all of the above approaches would result in a different value being ascribed.  The method we use therefore becomes very context-dependent.

In a sustainability context, the most concerning disjoint between such valuations would occur when someone owning or controlling a part of the Natural Capital places the wrong kind of value on it.  For example, rainforest that has taken millennia to evolve and achieve a balanced and healthy ecosystem state should be valued at replacement cost, which is very high because of the immense amount of time and effort that would be required to replicate the patient construction of the ecosystem by nature.  The realisable value or market value might be much lower because there is much less effort and time required to cut down the trees and sell the wood to someone than there is to grow a healthy ecosystem.  Therefore, the method of valuation chosen very much depends on the purpose for which it is being done.  There is a big difference between approaches appropriate for valuing something for the purposes of maintaining it within healthy ecosystems, within a sustainable custodianship role and approaches for valuing something for the purposes of serving market objectives or generation of business profits. Valuing such assets at replacement cost, but only while they remain in their natural state, and valuing them at a substitution cost if they are removed from that ecosystem (eg by being cut down and converted into raw materials) is necessary.

This prevents the Tragedy of the Commons, by ensuring that as essential natural assets become scarcer, they become more and more highly valued for the purposes of conservation, and less and less valuable for the purposes of being converted for alternative use outside the ecosystem.   That duality of perspectives on the same object is a necessary step in order to reconcile the need for conservation alongside the need for sustainable harvesting and use of resources in sustainable ways for humanity to co-exist successfully with natural ecosystems in perpetuity.  

An important part of this consideration is clearly the question of who owns or controls assets, which is linked to who is allowed to own or control them.  The Global Commons (eg the air we breathe, the water we drink, the basic food that sustains us, the ecosystems that provide some of these, and so on), because of their essential role in maintaining sustainability of life on Earth, cannot be allowed to be owned or controlled by interests that would breach sustainability limits. 

​The global custodian could legitimately fine anyone who converted such assets (eg by cutting them down for wood) by charging them the difference between the replacement cost and the substitution cost (as described above).  A proviso on this is that there exists the means to apply the revenue from such fines to undertake that patient replacement activity, while what remains of the assets of that type is sufficient to maintain ecosystems within sustainable ranges.  The success of this approach depends on adequate prevention, detection and policing of acts giving rise to such fines.  Part of the deterrence would be the size of the fines resulting from the above methods of calculation.