COMMENSURATION AND THEORIES OF VALUE IN ECOLOGICAL ECONOMICS

Without a theory of value (price) in ecological economics, the valuati on of ecosystem and economic resources cannot be rigorously defended. At the crux of the matter is the 'valuation' or 'mixed units' problem of commensurating biophysical inputs/outputs which are different. This paper critically reviews candidate theories of value which have emerg ed in the ecological economics literature for dealing with this proble m. First of all, the Neo-Ricardian approach, using Sraffa-type systems is discussed. In particular, Judson's assertion that the Sraffa syste m is suitable for ecological economics is questioned, as it is based o n 'circular flow', generation of a 'surplus' and 'exchange values'. No ne of these ideas are consistent with a biophysical characterisation o f an economic system, which is paramount in ecological economics. A mo re fruitful avenue for establishing a biophysical theory of value base d on ecological and thermodynamic principles, is to extend Patterson's quality equivalent methodology (QEM) to explicitly include mass flows in addition to energy. At this point a model close to Costanza and Ha nnon's biosphere model of price determination emerges. The extended QE M model however, has a number of important advantages over the Costanz a-Hannon model because it has a more generalised formulation and is no t reliant on necessarily using solar energy as the numeraire. The pape r concludes with a discussion of some outstanding issues that need to be resolved before a biophysical theory of value can be properly estab lished in ecological economics. (C) 1998 Elsevier Science B.V. All rig hts reserved.