Look beyond market value in preserving green spaces

Euston Quah Nicolas Neo The Straits Times AsiaOne 17 Jun 15;

Singapore's founding fathers took a pragmatic approach that focused on economic growth to improve employment and raise income levels, in order to survive. However, with economic success and increased industrialisation, the living environment is inevitably affected, with a decline in green spaces.

Yet, economic growth and the environment are equally important to any society.

To this end, environmental groups in Singapore should be applauded for their efforts in preserving our green landscape. However, their approach in dealing with environmental degradation leaves room for improvement. The Bukit Brown cemetery issue is a prime example.

Despite being armed with a petition of 100,000 signatures, they failed to prevent the Government from redeveloping the land for road and housing. Indeed, the petition may not represent the feelings of the majority of Singaporeans on the issue.

Bukit Brown cemetery is on its way to being a new section of an expressway. The flora and fauna, and the historical heritage site that once occupied the area will soon be gone. In many such situations, land redevelopment is often irreversible. However, other solutions are possible.

Sustainability and market principles

The Government has stepped up its contributions towards environmental sustainability. Its land use plan includes expansion of regional park infrastructure and improving accessibility with park connectors. But Singapore's population growth suggests that more green spaces will have to be sacrificed to residential areas.

According to Singapore's Master Plan, the land supply for park and nature reserves is projected to increase from 5,700ha in 2010 to 7,250ha in 2030. However, on closer inspection, the projected land use increase in housing, commerce and industry combined far outstrips that of park and nature reserves.

This means that in 2030, there will be proportionally less space devoted to park and nature reserves than now.

Land use planning should abide by some market principles. The problem, however, is that land for residential, commercial or industrial purposes can be easily valued based on people's willingness to pay for such use, whereas green spaces are hard to quantify in monetary terms.

Unlike private property, where one buyer can pay to exert the right to use the space, green spaces are public goods - non-rival and non-excludable. This means anyone can use the space and one person's use of it does not deny another enjoyment of it. A public park can't exclude anyone, and can be enjoyed by many at the same time.

The lack of monetary value on green spaces in no way diminishes their worth to people. It simply suggests that the market mechanism and reliance on price is not adequate to help establish if land should be kept as a nature area, or redeveloped.

Alternatives to market-based valuation

One of the pillars of social progress is to improve standards of living. The key to this is the use of valuation to compare competing land uses by incorporating society's preferences. Therefore, government monitoring and intervention are required and this could come in four forms.

First, the government could engage in more cost-benefit analysis (CBA) on proposed projects.

Second, a formal environment impact assessment (EIA) could be introduced with inputs from green experts. The EIA and CBA can be merged, since many methodologies have become standards of assessments and valuation.

Third, there is another complementary approach which requires valuation. To put a value on green spaces and other green goods, the government should establish mechanisms and a coordinating agency to collect and solicit monetary values based on the intensity of people's preferences.

As preferences reflect demand, such demand will determine use-value. Eliciting people's willingness to pay for green goods either by charging a user or admission fee - or in the case of destruction of one use in preference of another use, soliciting people's compensation for the loss - could be undertaken.

Then, there are non-use values, including people who reserve the option to use such goods in future, as well as people who believe the existence of such goods is essential for a society.

Non-market valuation techniques are now better refined and widely used in public policy in many advanced Western countries. Adapting these methodologies for the Singapore context could be explored. Fourth, the use of damage schedules to prioritise different types of non-material and material goods can help rank different choices in land usage. Such damage schedules allow people to prioritise by ranking their preferences for government- provided goods which include green goods, educational services, health goods and transport. This lets people signal how much they value one over another, and allows governments to allocate their budgets accordingly.

These solutions are not without limitations. Formal valuation studies may delay projects and raise costs. Smaller firms may have insufficient funds to engage in EIA. Also, there is the issue of whether EIA and CBA can be manipulated.

The dichotomy of economic growth and the environment has been a growing concern to Singapore. Cost-benefit analysis would be incomplete and erroneous if no attempt is made to measure the quantity and value of green goods. It is appropriate to include such non-market valuation in assessing public goods, so that better informed choices can be made.


Putting a more human face to valuing green spaces
Ezra Ho THE STRAITS TIMES AsiaOne 26 Jun 15;

In their commentary last week, "Look beyond market value in preserving green spaces" (ST, June 15), writers Euston Quah and Nicolas Neo proposed several non-market valuation methods to help the authorities in making decisions about conserving green spaces.

Professor Quah, who is president of the Economic Society of Singapore and head of economics at Nanyang Technological University, and research assistant Mr Neo said that while land use planning should abide by some market principles, green spaces are hard to quantify in monetary terms.

Although I broadly share the writers' sentiments about the need for more diverse ways of incorporating society's preferences into environmental decision-making, their suggestions are limited by the flawed and depoliticised language of economics. The term "preferences" here does not reflect social complexity.

Underpinning their proposed valuation methods is the ability to discover and incorporate people's "preferences" for green goods into policy analysis. "Preference" is assumed to be a given existing within people, waiting to be elicited by prices as "demand". The problem with this view is that society is portrayed in a static, reductionistic way.

However, from a social sciences and humanities perspective that takes an interpretive approach - focusing on the role of meaning in shaping human behaviour and human social life - human choices and values are formed in, and transformed by, diverse socio-political interactions and cultural norms.

Human choices and action are subjective and emergent outcomes, mediated by a diverse range of meanings, values, norms, framings and politics.

Thus, a single good could be assigned multiple, conflicting "values" by an individual, depending on the context.

Consequently, such social complexity cannot be reduced into a single, abstract, calculable all-encompassing figure known as "preference"; a point apparently lost on most economists infected with maths and physics envy.

As one academic acknowledges, "virtually all cost-benefit analysts continue to ignore the implications of the possibility of endogenous preferences (that is, generated from within a person) in their work".

Beyond pedantic academic debates, the more important point here is that Prof Quah and Mr Neo's suggestions obscure what is an inherently political issue of resource allocation and distribution.

According to them, competing land-use decisions can be resolved by surveying discrete pieces of "values" from the world "out there", subject to abstract and supposedly value-neutral calculations to produce the most "efficient" outcomes.

By emphasising expert technique, they gloss over the political nature of conserving green spaces.

As in the Bukit Brown example they highlight - some civic groups have opposed the cemetery's redevelopment for roads and housing - and other similar incidents, land-use conflicts are often a clash of values, meanings and power relations, guided by very different interpretations of social justice and equity.

Yet, it is precisely during this deliberative process that diverse viewpoints and perspectives can be articulated to foster public debate and promote social learning between competing camps.

Rather than resorting to abstract and technocratic decision-making, engaging in open and transparent debates over underlying interests and values better promotes public participation and safeguards the public interest.

Similarly, although Prof Quah and Mr Neo recommend introducing Environmental Impact Assessments (EIA), they limit their description of the technique to its formalised and expert-driven roles.

As much as "standards of assessments and valuation" are important, EIAs should also be valued as an avenue for public participation, promoting "openness, transparency and public accountability" in environmental decisions, as former Nominated Member of Parliament Faizah Jamal has pointed out.

My intent is not to bash economics. All social sciences (including economics) are based on abstract models with varying degrees of simplifications to promote explanation. What is dangerous, however, is when one discipline and its partial theoretical perspectives become dominant.

Economists need to show more disciplinary humility and reflexivity about their theoretical paradigms and assumptions, venturing across disciplinary divides to achieve a more expansive understanding of society.

Simultaneously, scholars and practitioners of the - comparatively marginalised - interpretive social sciences and humanities need to stop pulling their punches, and start engaging in policy and research conversations traditionally dominated by positivist social sciences (which emphasise empirical data and methodology).

In a time of complex socio-economic, political and environmental challenges, a commitment to reflexive and pluralistic knowledge is crucial for promoting a sustainable and just society.