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Howard T. Odum

and Eugene P. Odum

Valuation is one mechanism by which humans
organize occupancy and use of large-scale ecosys-
tems and regions, such as watersheds, estuaries,
cities, states, nations, and ultimately the whole
earth (the global perspective). When human valua-
tions do not measure the real contributions of
natural ecosystems, as is currently the case, ecosys-
tems are not protected, and the larger systems
produce less when the natural ecosystems are lost to
development. Ecologists working on small-scale
studies are concerned with the loss of their study
areas and biodiversity. Ecologists working at large
scales, and society in general, have to be concerned
that poor valuation is delaying the organization of a
sustainable pattern of environment and people.
Ecosystems of the world are threatened because
market prices are used to evaluate them. As Figure 1
shows, money is only paid to people for their
contributions, and not to ecosystems. In fact, mar-
ket values are inverse to contributions. When soils,
wood, and other environmental products are abun-
dant, they contribute the most, but market value is
small.When environmental products are scarce, the
market value is high. Economic valuation, as cur-
rently practiced, can never be used appropriately to
evaluate environmental capital, its contributions, or
its impacts.
Efforts by economists and others have been made
in the last two decades to ‘‘internalize the externali-
ties’’ or to modify market valuation to give more
consideration to ecosystems. What is needed is the
reverse: to ‘‘externalize the internalities’’ to put the
contributions of the economy on the same basis as
the work of the environment. We suggest that thebestway to do this is to use one kind of energy as the
common denominator.
As reviewed by Martinez-Alier (1987), beginning
in the middle of the last century investigators have
attempted to evaluate environmental products with
energy. These attempts failed because different kinds
of energies were considered equal. A calorie of
sunlight, wind, coal, hydrogen, plants, animals, and
people was considered equal, though they definitely
are not equal. The early evaluations ignored the
natural energy hierarchy of the universe in which
many joules of one kind must be degraded to
generate a few joules of another. Ecologists are
familiar with the food chain example of energy
hierarchy and know that a joule of a whale involves
more prior work than a joule of phytoplankton.
Also, until recently, mainline economists ignored
any suggestions for including nature’s goods and
services in economic valuation, even suggestions
from members of their own profession, such as
Kenneth Boulding’s (1962) plea for a ‘‘reconstruc-
tion of economics’’ in the 1960s. The time had not
yet come for reforms.
Starting in 1967, a method of valuation was
developed based on the total amount of energy of
one kind used directly and indirectly (and by all
pathways) necessary to make something. For ex-
ample, everything in an ecosystemcan be expressed
in the solar energy used to make each item by
various direct and indirect pathways. Thus, fish
have higher values per joule than phytoplankton.
The first of these valuations were of agroecosys-
tems and marshes (HT Odum 1967, 1971; EP Odum
and HT Odum 1972; Gosselink and others 1974). In
1975, the concept now called ‘‘transformity,’’ which
measures the quality of energy and its location in