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Speaker says economic choices
have environmental impact

The environment is important to people and they are willing to pay a lot to make sure that it stays clean, according to Kerry Smith, a well known analyst of the economics of environmental risks.

"These choices are consistent with economics and can be understood by (the) public. It's about important economic choices that have consequences in the environment," said Smith, who presented a lecture November 13 at the Thomas J. Dodd Research Center.

The lecture, Pricing What is Priceless: Ecologists versus Economists, was the third in the Nature and The Environment, The Edwin Way Teale Lecture Series. Smith began by criticizing Robert Costanza, an environmental economist from the University of Maryland, who kicked off the lecture series in September. Costanza put a monetary value on the environment, estimating the value of the ecosystem as $33 trillion, whereas the gross national product of the world is $18 trillion. Smith said that Costanza's work had many faults and was not a correct evaluation of the environment.

"Value is defined as the want for something plus the ability to pay," he explained. "You cannot pay more than you have."

Smith also made a reference to another study, which poked fun at Costanza's hypothesis by estimating the value of air.

"Assume there was no air, that would have to be substituted with scuba tanks," Smith said. "If you calculate the cost of the tanks and oxygen refilling, it would be $12.5 trillion dollars. This is obviously ludicrous, but so is (this method) of valuing the earth."

In a study conducted in 1993 by Smith, a panel of Nobel Laureates and distinguished social scientists found that the residents of California were willing to pay hundreds of millions of dollars on the cleanup of PCBs and DDT along the Los Angeles coast line. In the study, residents were given a choice of each paying a small one-time fee to enact a program that would clean up the DDT and PCBs in the area. The clean-up would take five years and protect two species of birds and two species of fish. The residents were also told that the area would clean itself up naturally in 50 years. The study concluded that residents were willing to pay the one-time fee of $10 to have the area cleaned up.

"If you explain to people what is important in the ecosystem, they will make informed choices (in policy making)," Smith said.

Currently, Smith is conducting research on how households are dealing with the health risks caused by pollution. His research is funded by the Environmental Protection Agency.

Kathy Segerson, an economics professor, who introduced Smith, said that everyone can benefit from the work he has done.

"Valuing (the environment) is difficult. You can't buy it in a store, like food and shelter," Segerson said.

Smith is the Arts and Sciences Professor of Environmental Economics at Duke University. He also served as president of the Southern Economic Association and the Association of Environmental and Resources Economics. He has written numerous articles and books, and is completing his latest book, The Economics of Environmental Risk. He has also been the associate editor of several journals including Land Economics, Environmental Development Economics, The Journal of Risk and Uncertainty and Risk Analysis.

The lecture series is co-sponsored by the departments of ecology and evolutionary biology, economics, English, philosophy, and political science, the Dodd Center, the College of Liberal Arts and Sciences, the Graduate School, the environmental engineering program, the Center for Conservation and Biodiversity, and the Museum of Natural History.

Eileen Labenski