Environmental Ethics

Volume 18, Issue 1, Spring 1996

The Problem of Valuation in Neoclassical Environmental Economics

In this paper I argue that the criterion of valuation in neoclassical economics is flawed because it is not an invariant measure of value. It is invariant only when unrealistically restrictive conditions are imposed on the class of admissible utility functions, which in fact makes it a special case. The only sensible alternative is to turn to classical value theory based on real sacrifices or opportunity costs.