the Clean Air and Clean Water Acts. 

 Business interests have taken the oppo- 

 site position, that environmental re- 

 sources are non-essential luxuries that 

 can be sacrificed (at no cost) when 

 necessary to stimulate economic growth. 

 What is needed is the general recogni- 

 tion that neither extreme is accurate. 



Economists term the process of 

 calculating the hidden social costs of 

 an activity "shadow pricing." Shadow 

 prices are those that would prevail if 

 private and social costs coincided 

 exactly. Since current Western economic 

 theory takes preferences as given, 

 economists are most comfortable calcu- 

 lating shadow prices by asking people 

 (directly or indirectly) to reveal their 

 preferences for environmental goods and 

 services (Batie and Shabman 1979). This 

 approach does not work, however, if 

 people are not aware of the consequences 

 to their own welfare of the alternative 

 allocations of environmental resources. 

 Just as a child is unaware of the social 

 implications of its behavior and must be 

 instructed, most people are unaware of 

 the larger social-ecological implica- 

 tions of resource-use decisions. Their 

 uninformed preferences therefore cannot 

 be taken too seriously as measures of 

 the true shadow price. 



One approach to this problem is to 

 educate people about the workings of the 



environment on their behalf, so that 

 their preferences will better reflect 

 the real situation. An alternative ap- 

 proach involves the creation of explicit 

 mathematical models of the physical 

 interdependence between ecological and 

 economic systems (Odum 1978; Costanza 

 1980; Costanza and Neill 1981a, 1981b). 

 These models can incorporate the best 

 available information on the implica- 

 tions of resource use decisions. The 

 model results can be communicated to the 

 public in the form of taxes and subsi- 

 dies based on the calculated shadow 

 prices, or they may be used to set 

 standards for regulations. 



As shown in the accompanying tech- 

 nical report, a major portion of this 

 characterization study was devoted to 

 developing data in the form of quanti- 

 fied flow diagrams and input-output 

 tables for the three levels of organi- 

 zation of the MDPR. This laborious task 

 was necessary to provide information on 

 the workings of the MDPR environment, 

 and the means to calculate the func- 

 tional value of each habitat, hydrologic 

 unit, and the entire MDPR. The collec- 

 tion and documentation of a suitable 

 data base have been completed (Costanza 

 et al. 1983). It should be noted, how- 

 ever, that, at present, analysis of the 

 data and calculation of environmental 

 impacts and values are incomplete. 



