development process. The correct procedure would be to consider the differential 

 in lot prices due to location relative to the wetlands and wetlands waterfront 

 footage as a wetland preservation benefit. This was the procedure used by Ostro 

 and Thibodeau (see [58]) in their paper on the Charles River wetlands near 

 Boston. 



59. Bunbridge, P.R. 1982. Valuation of tidal wetlands, saltmarshes, tidal 

 swamps, swamp forest. Pages 43-64 in C.H. Soysa, D.L. Sien, and W.L. 

 Collier, eds. Man, land, and sea: coastal resource use and management in 

 Asia and the Pacific. The Agricultural Development Council, Bangkok. 



The article is really a critique of natural resource economics, and does 

 not focus very closely on wetland resources. The author argues that the economic 

 valuation approaches he discusses do not adequately address fundamental 

 particularities of the wetlands preservations issue. These valuation approaches 

 include the market externalities approach, the option value approach, the 

 existence value approach, and the ecosystem life support or energy theory of 

 value. Bunbridge cites various authors who believe that these concepts all are 

 mere window dressing, and that the substantive part of formal economic analysis 

 deals almost entirely with the allocation of privately owned goods and services 

 through the price system. 



The concept of an "externality" is fundamental to Bundbridge's discussion. 

 An externality exists if Mr. A's purchase of and use of a good affects Mr. B's 

 level of welfare. This situation could arise in a variety of ways. Mr. A might 

 purchase a noisy power lawnmower that shatters the peace and quiet of Mr. B's 

 Sunday mornings (externalities in consumption). Mr. A and Mr. B might both be 

 businessmen located in the same shopping mall. Mr. A's sale might attract people 

 to the mall who spend money at Mr. B's, in which case Mr. B's level of profit 

 is affected by the volume of business done by Mr. A (nonpecuniary externality 

 in production). Clearly, mild externalities in exchange economies are the rule 

 rather than the exception. However, the study of the efficient allocation of 

 resources in the complete absence of all externalities can be interpreted as a 

 paradigm about a tendency of the market allocation of goods and resources to be 

 tolerably efficient as long as every dollar competes with every other dollar in 

 the budgets of individual consumers. This is a point of view that is heavily 

 criticized by Pope and Gosselink ([9]). It can also be interpreted as a 

 description of how difficult it will be to achieve reasonable economic efficiency 

 and distributional equity for goods and services that exhibit truly sizeable 

 externalities with or without the use of the market mechanism. Unfortunately, 

 this point-of-view is not raised in this article, nor is it considered by Pope 

 and Gosselink ([8]). 



However, the article is balanced, if almost completely negative, in its 

 assessment of the various modifications of conventional economic analysis that 

 have been attempted in order to impute large preservation benefits to natural 

 resources such as wetlands. The criticism of the work of Gosselink, Odum, and 

 Pope ([9]) and Pope and Gosselink ([8]) on ecosystem life support functions 

 performed by wetlands is just as even-handed as the criticism of the more 

 conventional theories. 



47 



