Can you put a price on nature? 23:07

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$45 upfront payment equivalent to $15 per month. New customers on first three-month plan only. Taxes and fees extra. Speeds lower above 40 gigabytes. See details. How much is a wild bat worth? Bats are good. Bats are friendly. Bats eat pests. But can we actually put a dollar number on that goodness and friendliness and pest eating? This is a question that Amy Ando started asking herself a few years ago at a conference because there were some people there telling her about something called white nose syndrome.

The fungus grows on the faces of bats while they're hibernating. It's called white-nose syndrome because they end up with fuzzy white stuff on their noses. It seems to irritate the bats, upsetting their natural hibernation rhythms. This is highly fatal to bats and has been decimating bat populations. We have seen populations of bats in eastern colonies decline, in some cases, to 100%. It is a wildlife wipeout.

Literally millions and millions of bats in the last two decades have died.

Now, there are potentially some solutions here, like ways to keep bats from getting this fungal infection and dying. But those interventions are expensive. Stuff like monitoring caves or protecting bat habitats. People trudging through bat caves full of guano. Even developing vaccines. You wouldn't want to do this unless it was a very important thing to do. These are real costs, both dollar values and, you know, human labor. So...

Is it worth doing? - This of course is a really hard question to answer.

But it's exactly the kind of question that Amy Andoh answers for a living, because she's an environmental economist. A lot of people think that those two words are opposites, because economic activity is often the thing that damages the environment. But the way she sees it, using economics to study the environment is actually key to protecting it. Like, if we want to safeguard the natural world... We need to be able to quantify the benefits that we get out of it. We can't just wave our hands and say, "Oh, well, nature."

This is Unexplainable. I'm Benji Jones. And today on the show, what is a bat worth? I'm here to talk about the economy. What, like it's hard? You may be wondering, who got all this money? Nobody knows. The money's not here. Well, your money's in Joe's house and Mrs. Maitland's house and a hundred others. It's just money. It's made up. It doesn't exist. It's not real. It's not a lie, if you believe it. How the hell do you put a price on a bat?

Like, I'm really curious. Well, there's a couple of different things you can do. After that conference, Amy wound up doing a whole research paper on the value of bats. And she started by thinking through the value of a bat's labor. Not to put a price on the bat, but to put a price on its work. Hmm.

So I'm thinking about Richard's scary books and, you know, all the little animals out there doing their jobs. Squirrels planting the trees. Yes, yes. And they all have jobs and they're all wearing their cute little outfits. And bats are out there doing pest control. So they are really helpful to farmers in that they eat insects that are pests to crops, that damage crops.

Basically, bats are doing free labor on farms all across America. But Amy still had to figure out how to actually put a price on that work. So if you're not an economist and somebody says, oh no, bats are dying, the inclination is to say, well, it's going to wipe out two-thirds of the crop and it's going to be really a huge impact. The thing is that people are very adaptable.

And so if a service that nature was providing goes away or is reduced, we're not just going to sit around and do nothing. Farmers are going to say, well, okay, I've got more pests, so I'm going to have to use more pesticide. So Amy thought, okay, maybe one way to get the value of bats is to just figure out how much it would cost to replace them.

But she couldn't know on every single farm exactly what each bat contributes. We can't see them going around catching bugs, and we can't measure the bugs. We can't ask the bats how many bugs they ate. It's also not really practical to try and call up every farmer and ask, like, what interventions have you used, and how much did they cost? What we have to do is we have to say to ourselves, how would...

this manifest in things we can observe, which is markets. - And that's how Amy chose to look at the price of land.

Basically, if you're a farmer and you're thinking about a piece of land that you might rent to grow crops on, you have to do a lot of math. You're going to think to yourself, well, how profitable is it going to be? What's the price of my inputs? You know, what's the weather like these days? Farmer stuff. Farmer stuff. How much am I likely to have to spend on pesticides? And all of that goes into your calculation of farmland profitability and your demand for farmland.

So if bats are doing free labor on the land, they're eating up all these bugs, that might make the land more valuable, like more expensive to rent. On the flip side, if the bats disappear, you should then see the price of land go down.

Or at least that was Amy's hypothesis. So she and her colleagues pulled up a bunch of maps. First, for example, they pulled out the USDA data on how many acres were farmed county by county across the U.S. And also the average cropland rental rates. This gave them a sense of how the price of land changed over time. But they also needed to know, what are the bats up to? Which counties had white-nose syndrome in each year?

This year, there was no white nose syndrome. When you look later and you see, okay, now this area has white nose syndrome, what impact did that have on acres planted and the price of land?

Finally, after a lot of data crunching, these researchers had clear numbers showing how white-nose syndrome had affected the price of land across the U.S. We found that losing bats in a county caused land rental rates to fall by almost $3 an acre. And there were also spillover effects. The neighboring counties also experienced some effects.

Which makes sense because bats fly. Bats fly. Yeah. When Amy and her colleagues tallied everything up, they came up with a pretty big price tag. The bottom line is that the cost to society of white nose syndrome in total was between $420 and $500 million a year. Half a billion dollars a year. Yeah.

The best hope for stopping white-nose syndrome is probably a vaccine or a fungicide, but still years away. In hard-hit Pennsylvania, though, scientists are hoping to slow the fungus by changing the temperature of bat caves. Bat houses are being sprayed with a naturally occurring bacteria that inhibits the deadly fungus.

Suddenly spending $2 million to fight off white-nose syndrome or sending people into guano-infested caves just doesn't seem like such a big trade-off anymore. White-nose prevention on the way.

And eating bugs is just one example of a way that bats are useful to our economy. Like some might be eating mosquitoes that carry diseases. Others are, I don't know, pooping because poop is actually really rich in nutrients and that's valuable as a fertilizer. So here we captured the value of one use value, as we call it. Use value, like literally how useful bats are to our economy in dollars.

But there's also this whole other way economists might measure the value of animals or nature. Some people, and I will include myself here, value bats and biodiversity in general for other reasons. We see value in just having bats around, whether or not we actually benefit from them directly. Bats are cool. Bats are cute. Bats are really interesting. You know, you have summer nights and you have them flying around up above making their little clicky bat noises.

Amy says that economists also try to measure this. They try to figure out exactly how much an animal or a plant or like an ecosystem is worth to us spiritually and emotionally. Like how much we value biodiversity just for the sake of having a rich and complex world around us.

And they call this non-use value. And we see people donating money to save species that they will never interact with on an individual basis. It's not affecting any market. It's just out there. And we might just want to save it just because it is.

And while Amy hasn't measured non-use values for bats yet, she says that researchers can actually put concrete numbers on this too. It's just trickier. You can't just look at market data. The whole point of non-use values is that they exist distinct and not interacting with any markets. So we use this approach because we have to have a fancy name for it called stated preference.

Which is just a way of saying, yeah, tell me what it's worth. Essentially, they just ask a bunch of people, like, what is a wetland worth to you or an animal or this park? Except not so directly. ♪

We don't just march up to people and say, "What's this whale worth to you? It's a nice whale you got there. Shame if anything happened to it." We don't do that. Sounds like a threat. Exactly, yeah. But they do try to figure out how much someone would be willing to pay to save something. This is actually a technical term, their willingness to pay for nature.

Amy has done research on how much people value grasslands. Like how much they're willing to pay to have grasslands around. It's a way to capture the value that somebody has for a thing. Economists also try to capture value by looking at something that they call willingness to accept. Like, I live in a world with polar bears and monarch butterflies. If either of those species were to go extinct...

What amount of money would we have to give you to compensate you for loss? And you can imagine that that number is often much higher. What you would have to give people to compensate them for its disappearance would be vast. All these calculations that Amy is talking about, like all the studies about use values and non-use values and willingness to pay for nature or to accept the loss of it, they might sound kind of theoretical.

But these kinds of studies aren't just academics musing in obscure journals. Research like this actually plays a very important role in how we make environmental policy, especially in the U.S. After the break, why it matters that we get it right and whether that's even possible.

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One reason that we have environmental economists doing the work that Amy Andoh does, measuring the value of a ferret or a stretch of desert, is because of a big policy shift in the 1980s. Members of the Congress, the President of the United States.

In 1981, Ronald Reagan stood in front of Congress and gave a speech to wild applause. Thank you very much. He basically explained to the crowd that he's cracking down on regulations and regulatory agencies. And finally, just yesterday, I signed an executive order that for the first time provides for effective and coordinated management of the regulatory process.

That executive order and another one from Bill Clinton a few years later, they made it so that a lot of regulations passed in the U.S. have to go through a cost-benefit analysis. So now, if you want to pass regulations to protect some grasslands, say, you often need to do a study showing how the benefits compare to the costs. And you can find project after project measuring things like the benefits that trees bring to a city or the use and non-use values of wetlands.

And these numbers show up in pretty big fights. The misery in the Gulf of Mexico continues. Who'll pay for the cleanup? Like after the Deepwater Horizon oil spill in 2010, the government asked scientists to try and figure out how much people valued the natural resources that BP's oil had destroyed. BP will have to pay billions for the oil spill in the Gulf.

The point is that studies that put dollar values on the natural world, they're powerful tools. They help hold companies accountable. They give people more of a reason to save bats and other animals. They really defend biodiversity's interest in the real world.

Unfortunately, though, they also have some real-world problems. Yeah, yeah. So let me take a pause to think about that and try to organize my thoughts a little bit. This very thoughtful person is Nathan Chan. He's an environmental economist like Amy, and he actually wrote a paper with her about what can go wrong when you try to put a number on nature.

The first problem they found is that when you ask someone to tell you about how much they value something, like how much they're willing to pay for it, their answer often depends on just how much money they have.

So if someone has $10 million, they could hypothetically pay up to $10 million for the thing that they care about. Whereas if I'm less wealthy and I only have $10,000, then my willingness to pay for the benefits that I get are capped at $10,000. And the problem is that if you're using these techniques to decide where to build something like a polluting power plant, you might accidentally say,

"Oh, this rich neighborhood thinks their green space is really valuable, and this poorer neighborhood thinks their green space is actually less valuable," according to this analysis, so we should therefore build in the poorer neighborhood. It might be better to call it willingness and ability to pay. The other thing is that in the U.S., race and class are really tightly linked to one another. And so the same study might conclude that we should build that power plant in a black or brown neighborhood.

And Nathan says the value that people ascribe to a green space or a park isn't only about how rich they are, it's also about how welcome they might feel there. Let's say I was in Central Park and I was being made to feel unsafe by going there, then

I might not go there as often and it might look like I'm not valuing Central Park, but what we're actually learning from people's decisions isn't that they're not valuing it. It's actually being caused by the constraints that they're being put under or the kind of social environment that they're in. And so what that would mean is that we might grossly underestimate the valuation of green spaces for Black folks in a scenario like that.

He says economists might measure the value of a park or whatever by tallying up how much time people spend in it. But if black and brown people use that park less because of racism, that would again skew these kinds of assessments. And then people haven't only critiqued these sorts of economic assessments,

They've also questioned the fundamental premise of environmental economics. One of the things we point out on the paper is, you know, like, sometimes even thinking about the monetary value of this might be distracting us from what really matters. They basically asked whether we should even be putting a dollar number on nature in the first place. Like, are there circumstances where that's just not appropriate?

One of the maybe more clear-cut examples, I think, is if we're talking about lands that have sacred or historical meanings to certain groups of people, that might be a place where, you know, if we work really hard to say this is worth X million dollars, that's kind of distracting from the broader point that this has kind of deeper kind of heritage significance to people.

So like there are some things that we do for spiritual or historical or even like moral reasons. We don't say, hey, you shouldn't murder people because we have calculated the precise economic value that people bring to society or the amount that someone would pay to keep them on earth. Like that's ridiculous. We just know that murder is bad.

And similarly, maybe we should just say, hey, destroying the environment is also bad, and you really should not need a dollar number to know that. I think that's one definite limitation and one place where we as economists need to be a little humble with what our estimates can do and what types of questions they can and should be answering in the policy sphere. Actually, I started my career saying I would never do this kind of research at all, ever.

I wasn't going to do valuation. And I've interacted especially with a lot of biologists who feel like as soon as we put dollar values on things, we're distracting from the more important argument of moral certitude and this is absolutely a thing we have to do. Over time, I think...

Nature just gets attacked and attacked and attacked. For Amy, economics can be a really strong defense against those kinds of attacks. Some people you can convince with moral stories and art and photographs and experiences. Other people need to see the dollar values. A couple years ago, I worked with a whole team of ecologists and we wrote a paper estimating...

the benefits to the world of preventing the next pandemic by doing things to protect forests and protect species that would make crossover of something like COVID-19 from nature into people less likely.

The paper found that if governments invested $22 billion a year on stuff like protecting tropical rainforests and preventing wildlife trafficking, they could potentially bring the risk of another pandemic like way down.

And yes, $22 billion, it sounds like a lot of money, until you realize that by some estimates, the cost of the COVID pandemic was $14 trillion in the U.S. alone. It's a huge amount of money, and that speaks to governments, and it helps convince people to do something. This paper has been cited hundreds of times. It was, for example, in a report on wildlife risks that was pulled together for Congress last year.

If people like Amy and Nathan don't do this work, then when important people like policymakers weigh the costs and benefits of a project, nature's value might come up as zero. This is the first episode in a whole series we're doing on economic unexplainables.

Next week, we'll look at how much we can actually do to control inflation. It's like the Fed is treated like the Wizard of Oz behind the curtain, that they're in charge of the economy and they do all these things. It's like, no, the Fed chair is not in charge of the economy. In many ways, he's watching it roll along like the rest of us. So that is next episode. But this episode was produced by me, Bird Pinkerton, and reported by Benji and me together.

It was edited by the wonderful Marianne McCune with help from Jorge Just. Meredith Hodnot has been spearheading this series. Manding Nguyen helped me pull this episode together, as did Noam Hassenfeld, and Noam also did the music. Christian Ayala did the mixing and the sound design. Melissa Hirsch did our fact-checking. And we are grateful always to Brian Resnick for co-founding the show.

I also want to say a special extra thanks to Nathan Chan and to Amy Ando for their generosity in responding to follow-up emails.

If you have questions about this episode or thoughts, please send them to us. We are at unexplainable at vox.com. You can support this show and all of Vox's journalism by joining our membership program today. Go to vox.com slash members to sign up. Or you can also support the show by leaving us a nice rating or a review. It means a lot. Unexplainable is part of the Vox Media Podcast Network.

And we will be back next week.