Valuing Natural Resources: The Economics of Natural Resource Damage Assessment.

• Author: Mijares, John

This book is based on a 1988 Resources for the Future Workshop in Washington DC on this specific subject. The chapters are revisions of papers presented in the conference. The editors do not waste time in classifying the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and its reauthorizing amendments, the Superfund Amendments and Reauthorizing Act of 1986 (SARA) to be "among the most dramatic pieces of legislation on assessment of natural resource damages." Paul Portney of Resources for the Future compared the magnitude and practicality of this subject to that of antitrust debates.

This compilation of papers is supposed to be an introduction or basic textbook on damage assessment on natural resources, but at the same time it sufficiently covers the state of the art in this specific aspect of welfare/public economics, implying a relatively young or untapped field.

The editors, Raymond J. Kopp and V. Kerry Smith note that before natural resource damages appeared on the boardroom agendas of private firms, little interest in the economics of the environment in general and in the valuation of its services in particular, had been expressed. Thus, at least on the surface, it appears there are tremendous incentives for research and analysis.

Kopp and Smith mention that limited resources on hand is the main issue in determining quality and quantity of procedural assessments. Because natural and environmental resources are not exchanged in organized markets, the economist should identify: the services provided, how the quality and quantity of every service flow had been affected, as well as the time period scope. All types of resources are discussed especially pure public services that should be treated as quasi-fixed goods entering preferences at levels outside the individual's control. The relative importance of the incident or event is also recognized as an important factor.

It is mentioned that the Superfund considers two types of liability for past and current releases of hazardous substances. The first is associated with cleaning up old and abandoned hazardous waste sites, and the second with residual liability arising after cleanup. The meaning of damage is also clarified. It depends on the existence of irreplaceable characteristics from the owner's viewpoint. Only when commodities have unique aspects will restoration of the original be required. This subjectivity is bothering. The agency or party that...