Reprint:Justifying social values of nature: Economic reasoning beyond self-interested preferences

Ecosystem Services 22 (2016) 228–237

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Ecosystem Services journal homepage: www.elsevier.com/locate/ecoser

Reprint:Justifying social values of nature: Economic reasoning beyond self-interested preferences Bernd Hansjürgens n, Christoph Schröter-Schlaack, Augustin Berghöfer, Nele Lienhoop Helmholtz Center for Environmental Research – UFZ, Department Economics, Permoserstr. 15, 04318 Leipzig, Germany

art ic l e i nf o

a b s t r a c t

Article history: Received 16 December 2015 Received in revised form 4 November 2016 Accepted 5 November 2016

Demonstrating that conservation is not only beneficial for nature but also for human well-being is as much desirable as it is challenging. Undoubtedly, using economic numbers hold some great promises, there is, however, a considerable number of critical reflections on using economic thinking to promote nature conservation. A recent aspect within these critics is that economic theory has failed on appreciating the multiple values (not only ‘individual’, but also ‘shared’ and ‘social’ values) of nature. Against this background, we will firstly show that the total economic value-concept covers a broad range of value dimension and that preferences of self-interested rational individuals may well cover also social or group values, although unclear to what degree. Secondly, we will highlight that economic theories on ‘merit goods’ developed by Richard A. Musgrave or the constitutional economics approach related to James M. Buchanan and others provide an as yet neglected but useful strand of arguments for the existence of values beyond individual preferences and that discourse ethics calls for deliberation to disclose those value dimensions. We will thirdly demonstrate how economic valuation methods could be improved by integrating deliberative elements in order to capture social value components in valuation exercises. As methods strongly shape valuation outcomes, it is a question of the practical purpose and of the ethical context of the valuation exercise that should determine which approach to choose. & 2016 Published by Elsevier B.V.

Keywords: Economic values Social values Aggregated preferences Merit goods Constitutional Political Economy Discourse ethics Deliberative valuation

1. Introduction Economic arguments are used to push environmental problems up on the political agenda. What the Stern-report (Stern, 2007) did for climate change served as a role-model for the TEEB initiative aimed at biodiversity conservation and the sustainable use of ecosystem services (Ring et al., 2010; TEEB, 2010a). Demonstrating that conservation is not only beneficial for nature but also for human well-being is as much desirable as it is challenging. Undoubtedly, using economic numbers hold some great promises. These include: to examine and communicate environmental problems in terms that are more relevant and better understandable to society; to reduce the relative ‘invisibility’ of natural assets in public and business calculations; and thereby to mainstream outside the environmental sector the importance of nature and its ecosystem services. Using economics, however, is also a much contested way of relating to nature. There is a considerable number of critical reflections on using economic thinking to promote nature conservation, both from within science as well as from societal groups. Objections range from n

Corresponding author. E-mail address: [email protected].(B. Hansjürgens)

http://dx.doi.org/10.1016/j.ecoser.2016.12.002 2212-0416/& 2016 Published by Elsevier B.V.

– a critique on the assumptions of neo-classical economic theory (based on, e.g., the idea of homo oeconomicus, a utility maximising individual with fixed preferences and a prosaic relationship with nature) (Doak et al., 2014; Fisher and Brown, 2014; Redford and Adams, 2009), to – the scope and capability of economic valuation methods to capture the manifold value dimensions inherent to nature (O'Neill and Spash, 2000; Vatn, 2009; Chan et al., 2012; Neuteleers and Engelen, 2015), to – basic criticism that “nature has no economic value”, and economic value has no “testable, defensible, non-circular meaning or content” (Sagoff, 2008, 242), because it measures scarcity, but does not put any value of nature, to – doubts about the usefulness of economic valuation for decision making in policy (Laurans et al., 2013; Waite et al., 2015), as well as – doubts about the appropriateness of incentive measures to stimulate a more sustainable behaviour (Vatn, 2010; Falk and Szech, 2013; Laurans and Mermet, 2014; Laurans et al., 2013; Rode et al., 2015). A special issue of concern within these critiques is the narrow scope that (especially neo-classical) economists tend to have on the concept of value (Spangenberg and Settele, 2016). By

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anchoring value on aggregated preferences of self-interested rational individuals and expressing value in terms of economic welfare, social and relational (Chan et al., 2016) values (those describing societal well-being beyond self-interested preferences) and individual value components that are not based on rational preferences and thus inaccessible for monetary valuation will remain blind spots. In particular, economic valuation is deemed to fail to adequately consider needs of future generations, since these needs are estimated by projecting and extrapolating future preferences out of today's non-sustainable contexts (Norgaard, 2010). Another critique found valuation methodologies to conflate benefits and values and thus fail to adequately capture the diversity of values that can be associated with a benefit (Chan et al., 2012). Economic valuation seems to fall short on its own aspiration: to broaden the scope of values taken into account beyond private gains and costs when deciding upon allocation and distribution of scarce resources. There is hence a growing need to widen the view of a narrow economics perspective: to move beyond a sole focus on individual self-interested preferences, to detect the nature of social values and to explore ways for capturing those values. In the UK, a consultation process among stakeholders and experts was organised to select and discuss 28 questions for future research on ecosystem services out of 800 proposals. Among the selected questions figured: ‘Can people simultaneously possess and express ‘individual’ values, ‘social’ values, and ‘shared social’ values, and if so, how do they relate to each other and how can they be defined, identified, measured, aggregated and used in decision making? ’(Valuing Nature Network, 2012). There are recently published guidelines that try to integrate economic, socio-cultural and ecological valuation approaches (VIBSE, 2014). The UK National Ecosystem Assessment group has published a report in its follow-on phase particularly on shared, plural and cultural values of ecosystems (Kenter et al., 2015). Nevertheless, also in such elaborated analysis the economic theory on public goods and the role of the state to act to protect social values is marginal (Kenter et al., 2015). It seems that economic theory has failed on a key question in the ecosystem service community: how to appreciate multiple values (not only ‘individual’, but also ‘shared’ and ‘social’ values) of nature in a more differentiated manner (and without drowning in (methodological) complexity). While we do not attempt to answer this question, we believe that, yes, economic theory (in combination with political philosophy) can make important contributions to a broader recognition of social values within the ecosystem service framework. Our broader intension in this article is, therefore, to shed some light on whether (and how far) economic values of nature and ecosystem services do also include social values, and whether we can identify strands in economics theory that go beyond the traditional economic mainstream and that can be exploited for addressing social values. In this sense we seek to ‘protect’ economic valuation against criticism, especially if the criticism refers to approaches that are beyond neoclassical economics. Against this background, the aim of the paper is threefold: – We will firstly show that the economic framework of values (the Total Economic Value – TEV-framework) covers a broad range of value dimension (broader than many non-economists assume) and that preferences of self-interested rational individuals may well cover also ‘social or ‘group’ or ‘relational’ values, although unclear to what degree (see Section 3). – Secondly, we will highlight that economic theories on ‘the role of the state’ provide an as yet neglected but useful strand of arguments for the existence of values beyond individual preferences. These theories are expressed in the notion of ‘merit goods’ developed by Richard A. Musgrave or the constitutional

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economics approach related to James M. Buchanan and others. Closely related to the constitutional economics approach, discourse ethics by German philosopher Jürgen Habermas calls for deliberation to disclose those value dimensions (see Section 4). – With the concepts of merit goods, constitutional economics and discourse ethics we want to strengthen both understanding and reasoning for social values (beyond narrow self-interested values). We will thus thirdly demonstrate how economic valuation methods could be improved by integrating deliberative elements in order to capture social value components in valuation exercises (see Section 5). Before addressing these issues we briefly refer to the notion of social values in environmental evaluation (Section 2).

2. Approaching social values in environmental valuation The definition of social values is ambiguous, as are the names expressing these types of value. Sometimes the term’social values’ is used; sometimes authors speak of’community values’ or’shared values’. In addition, when using the term’social value’ the underlying value concepts attributed to this kind of values might differ. According to Kenter et al. (2015) values can be seen as (i) universal principles or normative beliefs which are shared culturally –’transcendental values’, (ii) they can reflect more individual opinions of worth about something –’contextual values’ (this may also include shared or social values attached to certain places or species that are rooted in deontological ethics), (iii) or they can be regarded as expressions of preferences in terms of metrics such as monetary value estimate or an index rating –’value indicators’. As this article focusses on the role (and limits) an economic perspective can take for addressing and characterising social values, such values may be most usefully characterised by contrasting them with personal values or interests. This distinction is analogous to that made by Vatn (2009) who distinguishes between’I-rationality’ and’We-rationality’. According to this perspective economic valuation does not elicit’self-regarding’ preferences only, but may also cover ‘other-regarding’ benefits as well (Kenter et al., 2015). In preference formation, Vatn (2005, 2009) developed this notion to emphasise that besides pursuing personal advantages individuals can decide and act according to wider societal concerns depending on the decision-context. In fact, given that a human being cannot survive on its own for long under the living conditions most ecosystems provide, egoistic preferences have been questioned as a suitable basis for decision making affecting the environment (Vatn, 2009). The point here is that ‘Werationality’ is guiding us to’social values’, even though this term is being used in widely different ways. For sharpening the meaning of the term’social value’ it is useful to further distinguish three semantic dimensions of value, namely to separate the (i) object of value from (ii) the value itself and (iii) its provider, as presented in Table 1:


The object of value refers to the concrete benefit. In the environmental context, an individual benefit could be the food Table 1 Semantic dimensions of value in environmental valuation (source: own). Dimensions of value Object of value Value type

Individuals (individual benefit) Personal values/interests

Provider of value

Individual

Community (collective benefit) Social/shared/relational values Group

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crop a farmer grows on his field and sells to consumers, whereas the collective benefit is the food security for society as a whole, or certain regulating services of farming practices such as landscape beauty or maintaining cultural landscapes. Individual benefits accrue in the form of privately owned provisioning ecosystem services, but also as private enjoyment of more widely available benefits. Collective benefits describe those aspects which are appreciated as a community or group of beneficiaries. In fact, farmers’ activities serve both. Similarly, a mangrove belt ensuring coastal protection delivers both individual benefits, e.g. in terms of personal safety from natural hazards, as well as collective benefits, e.g. in terms of safety to the public in general and resulting quality of communal life. The value type distinguishes between a personal value/interest, i.e. the opinion of worth a person has for something from a consumer stance, as opposed to a social value, i.e. the opinion of worth a person has from a citizen stance (cf. Vatn's expression of ‘I-rationality’ and’We-rationality’). The consumer stance precludes other-regarding behaviour, unless it contributes increasing his/her personal well-being. In contrast, the citizen stance values the communal or societal well-being even if no direct personal benefits can be expected (Chan et al., 2016). The provider or articulator of value can be a person expressing a value, or a group. Groups can express the same value because it is culturally shared, or jointly attributed to something of worth by means of deliberation and consensus.

Across these three dimensions different combinations are possible. Thus, groups can share social values – e.g. an interest in the common good, from a citizen perspective; they can share a personal value/interest – e.g. collectively attributing high importance to personally owning a car. Likewise, organic food can be the object of personal values/interests (e.g. because a person believes it tastes better or is healthier), or the object of a social value (e.g. because a person believes “it is the right thing to do”, as organic agriculture contributes to maintaining animals’ well-being or healthy ecosystems). While different combinations exist, social values should not be considered in isolation from the objects of such values, or the processes for providing or articulating them. Social value formation seems to benefit from methods which promote collective reasoning rather than from eliciting individual preferences (see Section 5 below). And arguably the management of collective benefits, such as regulatory ecosystem services, is in better hands if subject to joint reasoning. Gatzweiler and Volkmann (2007) explore the implications of such value distinctions for biodiversity conservation. They argue that concerns for efficiency which are associated with maximising utility under a given preference structure, as for example expressed in an extended economic cost-benefit-analysis, are inappropriate for dealing with the complexity and uncertainty involved in biodiversity and its conservation. Instead, they consider a “democracy paradigm” a more appropriate approach, which emphasizes the exchange of arguments amongst citizens, as for example evident in planning processes drawing on multi-criteriaanalysis. Such exchange promotes understanding other views and the formation of values and preferences which are often initially uncertain (see Section 5). The above distinctions may help us appraising the ability of the economic approach to address social values in environmental valuation. We now turn to the core of the economic framework, the concept of Total Economic Value (TEV), and ask whether and to what extent social values are captured by this concept.

3. Economic valuation and the TEV-framework Economic valuation is based on the assumption that only humans can articulate values and thus all values of an ecosystem good or service originate in peoples preferences (see, e.g., Spangenberg and Settele, 2016,). People have preferences for ecosystem goods and service because they are means to satisfy needs (Pascual et al., 2010), i.e. ecosystem services contribute to economic welfare (Bateman et al., 2011). People's preferences may be translated into economic value if the good or service in question is scarce (but see the criticism of Sagoff (2005; 2008, 240 that values do not reflect preferences at all). Scarcity does not only relate to absolute scarcity, e.g. the limited global potential to produce food due to limited availability of arable land, but also to relative scarcity, i.e. tradeoffs among different services from the same plot of land (e.g. food production on agricultural land vs. carbon storage in forests) or among ecosystem services and other goods and benefits (e.g. carbon storage in forests vs. space for housing or traffic). Economists thus attempt to measure value in terms of what people are prepared to give up in order to obtain the good or service in question (Mace et al., 2011). Grounded in the theory of rational choice (see e.g. Becker, 1976) such willingness to pay is restricted to ‘self-regarding’ preferences only, i.e., that willingness to pay would be the amount that must be taken away from a person's income to keep his/her own well-being constant (see e.g. Barbier et al., 2009; Goulder and Kennedy, 2011; Davidson, 2013). This makes clear that the economic value of an ecosystem good or service is a context-dependent attribution of worth by an individual. Moreover, it points to the fact that the good or service in question must be substitutable by another good or service (or money) to be sensibly valued in economic terms. This substitutability assumption typically holds for marginal changes at best. The value of something so important that it can’t be traded off, e.g. all of the world's ecosystems as Costanza et al. (1997) did in their well-known but much refuted study, cannot be expressed in economic terms. Or as philosopher Kant (2012) has put it in 1785: “In the kingdom of ends everything has either a price or a dignity. What has a price can be replaced by something else as its equivalent; what on the other hand is above all price and therefore admits of no equivalent has a dignity.” An economic perspective on values (if one agrees that such an economic value does exist at all) is thus instrumental, anthropocentric, context dependent, marginal and utilitarian, and does not include intrinsic values that are inherent to nature, independent of human judgement, such as non-human species’ inherent rights to exist (Díaz et al., 2015; Chan et al., 2016). Nevertheless, economic valuation can encompass a range of different value categories, from direct and indirect use values to non-use values. These different value categories are organised in the TEV framework (see Fig. 1). The TEV framework should not be understood as an accounting scheme to aggregate different value categories into just one, i.e. the ‘total’ economic value. It is rather a heuristic to consider different value dimensions and to acknowledge the fact that individuals hold values for a good or service because of very different motives. In particular the non-use categories of bequest and existence values are of special interest in the context of social values since they do not derive from personal use of the good or service in question and may therefore be seen as ‘other-regarding values’ as Kenter et al. (2015) have put it. Existence value is derived from the pure pleasure in something's existence, unrelated to whether the person concerned will ever be able to benefit directly or indirectly from it while for bequest value the motive is the desire to pass something on to one's descendants (OECD, 1995). Such satisfaction of knowing that others or nature benefit(s) has been given many

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Fig. 1. The total economic value framework. Source OECD (1995): 27; Pascual et al., (2010): p. 195.

names in economics that Davidson (2013) has collected, such as ‘vicarious use value’ (Randall and Stoll, 1983; Turner et al., 2003) or ‘warm glow’ (Andreoni, 1989; Becker, 1974; Kahneman and Knetsch, 1992). For valuation purposes these value categories by definition still only cover strictly personal benefits of today's people. For example, bequest value does not derive from tomorrow's peoples benefits of an ecosystem good or service, e.g. to still enjoy a species threatened today, but from the good feeling (‘warm glow’) of today's people of doing the right thing. If non-use values would also cover ‘other-regarding values’ valuation results would be flawed by double counting (i.a. Milgrom, 1993). Many arguments put forward against economic valuation can be traced back to different understandings of ‘values’ by non-economists and laymen, on the one hand, and economists, on the other (Meinard et al., 2016; Hansjürgens et al., 2016). For example, in economics, experiencing the beauty of nature is regarded as an instrumental value, while in philosophy it is often considered to be a “self-serving, non-instrumental encounter with nature” (Krebs, 1999: 44). From an economic perspective altruistic values, although not at all related to self-serving motives, can nevertheless be characterised as a means-to-an-end scenario, if human well-being increases if other humans are better-off (but see Nida-Rümelin (2011) and Natural Capital Germany (2012)). Similarly, intrinsic and inherent values of nature are elements of the economic understanding of values, while non-economists see them as different categories of values (Meinard et al., 2016, 70). Value formation, however, remains by large a black box in the economic discipline. It can be well assumed that preferences are influenced by non-personal or ‘other-regarding’ benefits. Indeed, many authors argue, that people's willingness to pay may also directly reflect benefits to other people (other-regarding values) or nature (so called intrinsic value) instead of benefits only to themselves (Davidson, 2013). Spash (2000) demonstrates that contingent valuation studies cover a broad array of arguments, including non-economic motives for willingness to pay. Thus, when using an individualistic monetary valuation approach, it is likely that also social values beyond self-interested preferences are captured, however it remains unclear to what degree (see also Kenter et al. (2015)).

Are other valuation approaches therefore per se more suitable for describing social values? In our view, this depends on the concrete situation. Just like bio-physical methods that quantify benefits, or anthropological approaches that qualitatively describe benefits, monetary valuation can (at least to a certain degree) articulate the importance of nature's benefits to society by means of a value metric that can be more or less adequate for a given decision situation or cultural context (Hansjürgens et al., 2016). No valuation approach is able to determine all kinds of values in a single value metric that is meaningful for all situations. However, as the TEV framework illustrates, the array of values potentially captured by economic valuation methods is broader than often assumed by non-economists. So instead of arguing about whether there is something like the TEV, we deem it more relevant to shift the focus of analysis towards scope and situationspecific appropriateness of different valuation methods, including economic valuation approaches (see also Section 5). Understanding how different valuation methods deal with the process of preference formation and elicitation is crucial for interpretation of valuation results and thus for method selection based on the information relevant for decision-making (Lienhoop et al., 2015).

4. Economic and deliberative reasoning about social values: merit goods, Constitutional Political Economy and discourse ethics While the concept of TEV addresses social values implicitly or at the margin at best, there are economic approaches that explicitly address the notion of social values. These approaches transcend the individualistic perspective and explicitly foresee an active role for state action in fields. Although these approaches have yet not been connected with environmental economics or ecological economics – and are therefore not related to values and valuation, they can be seen as fruitful ingredients for enriching the discussions about social values. In this section we present two of these concepts, namely the concept of ‘merit goods’ by Richard A. Musgrave and the constitutional economics perspective as developed by James M. Buchanan and others.

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4.1. Merit goods: the state defines what is good for his citizens The concept of or’merit goods (also’communal wants’ or’merit wants’) has its origins in and was pushed forward by the works of Musgrave (1987; 1996/1997, pp. 145), one of the most influential and well-known scholars in the field of Public Finance. Musgrave was not only among the founders of the theory of public goods,1 but he laid also the basic principles of modern public finance (Musgrave, 1959), by defining – as he called it – an Allocation, Distribution, and Stabilization Branch of the state, which are de facto economic arguments for the reasoning of state activities. In his attempt to define the scope of the public sector (in contrast to the private sector), Musgrave noticed that there are state activities that cannot be traced back to economic reasoning (Andel, 1984). Empirically important fields of state activities like free education, publicly furnished school luncheons, subsidized low-cost housing (Musgrave, 1959, p. 13) could thus not be based on existing concepts of economic reasoning of state activities, like the theory of public goods. “There remains an uneasy feeling that something is missing” (Musgrave, 1996/1997, p. 187). Especially in the field of primary education in the first half of the 20th century many parents in rural areas preferred to let their children support the family income by working on the farm, instead of sending them to school. Thus, it was seen as a necessary task of the state to foster education in primary schools. This state task, however, violated citizen's (at least farmer's) preferences. We do not have to go into detail here – whether merit goods are by character a private or a public good, whether Musgrave's attempts to sub-ordinate these arguments under his distribution branch are satisfactory (Head, 1966; Andel, 1984; Musgrave, 1987), or whether Musgrave's normative position of the role of the state can be uphold, when positive analyses of rent-seeking behaviour or governance failure come into play –, the point here is that actions by the state to foster these merit goods are not based on aggregate individual preferences. Sending children to school (instead of letting them work on the families’ farms) was at that time – in most cases – against the preferences of the affected parents. The idea that state activities should be based on aggregated individual preferences is violated. The concept of merit goods is highly controversial in public finance. As the economic approach to individual behaviour is primarily focusing on individual preferences, many (probably most) economists do not follow Musgrave's concept of merit goods. Nevertheless, we can learn from this concept that there is economic reasoning that goes beyond individual preferences and that seek to capture values we would classify as social values. It should be emphasized here that these concepts that shed light on the question why a public sector is needed represent certain values about the role of the state that are rooted in the economics traditions of the English speaking world, on the one hand, and of the German speaking world, on the other. Musgrave, as a native German who emigrated to the U.S. in the early 1930s was fully aware of both traditions. The’individualistic’ economic concept of values is closely related to the English liberalism, where the state receives his only identity – and reasoning – from the preferences of self-interested individuals. Guided by an invisible 1 The theory of public goods as it is taught nowadays in economics is based on Paul Samuelson's contribution of 1954 (Samuelson, 1954). It has to be noted, however, that its origins stemmed from Musgrave's article “The voluntary exchange theory of public finance” (Musgrave, 1939), where all elements of the theory of public goods were laid, however, without the formal rigidness of Samuelson's contribution. It was obviously the time at Harvard in the early 1940s, when Musgrave and Samuelson jointly developed these ideas. “My initial paper on the Wicksell-Lindahl model…, I like to think, helped to bring the problem to Paul Samuelson's attention, then a fellow graduate student at Harvard” (Musgrave, 1996/ 1997, p. 149).

hand, the market is the primary mechanism by which a desirable outcome can be achieved (Musgrave, 1996/1997, p. 145). As already John Stuart Mill stated: “Laissez-faire should be the general practice: every departure from it, unless required by some important great good, is a certain evil” (Mill, 1848, p. 314). State activities were mainly directed towards protection against attacks from abroad and against harm that people experience from others. This tradition of the role of the state can be traced back to the liberal Enlightenment of the English philosophers John Locke and David Hume who laid the foundations of the English individualistic liberal model already in the late 18th century. In the German speaking tradition of public finance this was totally different: there were (up to the 1960s and early 1970s when the English individualistic perspective of economics entered the German-speaking universities) strong traditions stating that the state is something superior. The perspective on the state as a higher entity was emphasized by German philosophers and culminated in Hegel's romantic view of the state, focusing on the state as a’whole’, rather than its (citizens) parts. “With state and community having their own needs, the distinction between private and public … was outweighed by the more philosophic one between communal and private wants” … The happiness (’Glückseligkeit’) of society as a whole was the larger goal” (Musgrave, 1996/1997, p. 150). The state was treated like a’special entity’ who has own interests which have primarily to be taken into account whereas those of its individual members have to be sub-ordinated under the state's interests. “In contrast to the English tradition, with the state a plumber to correct for market failure, there emerges a tendency to give it a mystical and even glorified role” (Musgrave, 1996/1997, p. 151, with reference to Neumark (1961, p. 87)). Based on a more organic view of the state, a clear distinction was drawn between individual or personal and collective or communal wants (’Gemeinschaftsbedürfnisse’). “The latter comprise individual wants which are satisfied by collective institutions as well as truly collective wants which must relate to the goals of the community as such” (Musgrave, 1996/1997, p. 152). This perspective can clearly be identified in a quote by Adolph Wagner, one of the so-called “German Katheder socialists” of the late 19th century (those who laid the basis for social policy in Germany). He stated that, while communal wants arise out of the social coexistence of individuals, nevertheless communal wants may claim priority over individual wants. Even though the community does not exist for its own purpose but to meet that of its individual members, its living, needing, feeling, thinking, human individuals, the community nevertheless exists for them not as isolated atoms but persons combined in a whole, so the community appears as the higher, more important and lasting, at least as compared with the single individual” (Wagner, 1895, p. 830; quoted and translated by Musgrave (1996, p. 156)). In these perspectives on the role of the state one can clearly recognize certain social (or’communal’) values that go beyond individualistic values. It also becomes obvious that the environmental economics concept of TEV – with its strong focus on individualistic values – has its roots in the English speaking role model of the state. Furthermore, these considerations also give an excellent example of the cultural embedment of values, as is mentioned, e.g., in the TEEB studies ‘The Economics of Ecosystems and Biodiversity’ (see, e.g., Brondizio et al., 2010). While the aforementioned considerations regarding the social values of nature are derived from empirical considerations – Musgrave's observations of state activities in certain fields which could not be explained by the theory of fiscal policy –, there is also a normative economic concept which can be associated with social values that go beyond individual self-interest: the definition of rules and norms in constitutional economics.

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4.2. Rules and norms: interest-free values behind the veil of uncertainty 4.2.1. Defining interest-free rules on the constitutional level The field of constitutional economics is a relatively new field in economics. It emerged in the 1970s, with close relationships to other disciplines like political science, law, or philosophy (see Buchanan (1991)). While its ideas are based on empirical observations, it has a normative character. The starting point is the observation that human behaviour is determined by the institutional frames in which decisions are embedded, i.e. the behaviour is restricted by formal and informal institutions. These institutions are the’rules of the game’ that shape human action and determine the outcomes of political and economic processes. The individual decisions about economic activities, resource use, or political processes are based on these institutions; they can be characterised as’choices within rules’. While the economic approach, especially since the neoclassical approach came up in the 19th century, focuses on studying human decisions in such a setting, the question of how the’rules of the game’ determine human behaviour is neglected by mainstream economics. Here, with reference to Adam Smith and other scholars of classical economics, the constitutional economics perspective steps in by focusing on the questions how the’choices of rules’ do affect the’choices within rules’. The constitutional economics perspective thus builds upon the observations of behavioural outcomes on the post-constitutional level, where daily decisions are framed by existing rules. However, the impetus for possible changes of the outcomes of daily decision-making in order to come to more desirable outcomes is not seen on the post-constitutional, but on the constitutional level. The central focus is therefore to develop rules that lead to’better’ societal results (Buchanan, 1991). A typical question of this field is, for example, how political behaviour can be steered in such a way that politicians follow public interests instead of their self-interests (Buchanan, 1993). The normative criterion for justifying such solutions is not the efficiency criterion, like in traditional (neoclassical) economics, but the criterion of unanimity: Only those rules should be accepted which pass the unanimity criterion. This criterion can be traced back to the works of Wicksell (1896) at the end of the 19th century. It was James Buchanan who spread the ideas of Knut Wicksell into the English speaking world, after Wicksell came into his mind in the late 1940s (Buchanan, 1992; see also Hansjürgens (1998)). With respect to the underlying values of decision-making the important point here is that decisions on the constitutional are made by individuals – in this respect the constitutional economics perspective still rests upon individual choices – however, these decisions should not (!) reflect the self-oriented interests of individuals but their knowledge about’good’ rules. Here it is recognized that decisions, while typically resting upon preferences, consist of a’self-interest component’ and a’theory component’ (Vanberg and Buchanan, 1991). While the self-interest component describes the utility an individual derives from certain rules, the theory component makes explicit that always (inherent) knowledge about the functioning of rules is required in order to define them properly. In order to develop rules on the constitutional level that turn out to be’good rules’ (i.e. widely accepted and longlasting) on the post-constitutional level, these rules should rather serve the interests of the general public, instead of the self-interests of specific individuals or groups. In other words: It would be perfect to rest such decisions behind a’veil of uncertainty’ where the individual on the constitutional level is not quite sure what his position in society on the post-constitutional level would be. More precisely: it would be desirable if the’veil of uncertainty’ would be’thick’ with respect to the individual's knowledge of her own

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position, but’thin’ with respect to her theory knowledge (Vanberg and Buchanan, 1991). This would considerably facilitate the development of desirable rules within societies. The underlying values of such constitutional rules should thus follow’social’ interests rather than self-interests. The question of what’social’ here means is not quite obvious. However, as Buchanan and others pointed out these rules should be designed in such a way that they follow the generality principle: they should support broadly the interests of a vast majority of citizens without giving politicians the chance to exploit minorities (e.g. Buchanan, 1993; Buchanan and Congleton, 1998). To our interpretation this clearly indicates the choice of deliberative methods for defining societal preferences with the ultimate goal to follow the unanimity principle in decision-making (see below). 4.2.2. How to develop consent-building ‘Rules of the Game’: Habermas’ discourse ethics With respect to processes to determine rules on the constitutional level, the constitutional economics perspective can be connected with theories that focus on fair and consent-building dialogues. An important milestone in this respect can be seen in the hermeneutics of Hans Georg Gadamer, and the discourse ethics as developed by Jürgen Habermas. Vanberg and Buchanan (1991) explicitly refer to Habermas when talking about procedures for defining such rules of the game. Gadamer criticizes the widespread positivism in 20th century science, arguing that truth is beyond the objective result of a method. Rather it is an event of understanding, something that ‘happens’ (Gadamer, 1986; Barthold, n.d.). In other words, we cannot distance us from truth and make judgements about it using a set of clear cut criteria. According to Gadamer, there is a more fundamental happening of truth that cannot be subjected to such methodological applications. Gadamer provides a philosophical foundation for the idea that truth is intersubjective. There is my truth and your truth, and by means of dialogue, a joint truth in terms of a shared understanding of what is true can be developed. Habermas’ discourse ethics resonates with this idea, focusing on normative truth: How should we arrive at moral principles (in our context: at ‘social’ or ‘shared’ or ‘relational’ values)? How do we define what is ethically valid? In pluralistic societies normative truths are not provided by a moral authority, but they can be developed with communicative rationality, i.e. by means of joint reasoning (Habermas, 1983). Something is right (in the normative sense), if individuals achieve a mutual understanding about this claim by means of exchange of argument and consent on argument. If normative truths (and thus social values) are intersubjective (rather than abstract, objective or universal), then dialogue is needed to submit the arguments which serve to justify a claim to normative truth, to a joint reflection. When does an argument support a claim? For Habermas, it is insufficient to be logically coherent. Rather, the strength of an argument depends on the richness or diversity of information, aspects and doubts which have been considered. The exchange of arguments by means of dialogue serves to reflect on their strengths. Furthermore, such public deliberation is associated with a ‚transcendental quality‘: Decisions happen not by aggregating individual preferences; rather, each participant begins with individual interests, and through the deliberation transcends these interests to adopt other-regarding perspectives, and develop ideas about the common good (Kapoor, 2002; Habermas, 1983). Although Habermas does not explicitly refer to the constitutional economic approach by Buchanan, it is quite obvious that these ideas are closely related to the above mentioned theory about interest-component and theory-component in constitutional choices.

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Dialogue should therefore not be misunderstood as being of instrumental value alone, i.e. as useful for identifying an acceptable norm. Habermas postulates as a constitutive principle: A (moral) rule is only valid if all those affected by the rule agree (or could agree) in a dialogue about it (Habermas, 1983). This process-related principle (‘Verfahrensethik’) is made more robust by means of a second, substantive principle: The consequences of abiding by that rule need to be acceptable to all. The constitutive principle attributes fundamental importance to communicative exchange when it comes to justifying ethics and for structuring political decision making (Habermas, 1996). This is further explored in writings on deliberative democracy (Habermas, 1983; Dryzek, 1990; Kapoor, 2002). Discourse ethics stipulates the concrete requirements for such joint reasoning, and a Habermasian ‘ideal speech situation’ can be described as:


being inclusive: All stakeholders are allowed to participate, and no relevant information is omitted.


being coercion free: All participants are bound by the same rights







and rules, and can freely engage in the arguments (without being dominated or feeling intimidated by other participants) – in the words of Habermas: “The coercion-free coercion of the better argument”. being open: Each participant can initiate, continue, and question the discussion on any relevant topic, including the deliberative procedures. But participants pursue no further (strategic) interest – we can also say: no narrow self-interest – beyond clarifying the issue to be discussed. being clear: Further discourse-related conditions refer for example to the absence of (logical) contradictions in a participant's contribution, and to the absence of semantic miss-understandings (all use and understand the same linguistic expressions).

These conditions are hardly found in empirical evidence but can be understood as a critical stance from which to evaluate processes of (semi-)public debate. They are particularly relevant if consensus-building is the ultimate goal – for example in the case of determining social values. Discourse ethics for an un-coerced exchange of arguments in a deliberative process – which may even have the above-mentioned‚ transcendental quality of fostering other-regarding perspectives – appears very conducive for rule setting at the constitutional level (Vanberg, Buchanan, 1991). It provides important procedural orientation beyond the veil of uncertainty and goes beyond the hope that sufficiently enlightened individuals will be entrusted with the task.

Nonetheless, it remains unresolved whether Buchanan's call for’social interests‘ guiding constitutional rule making, and the Habermasian hope for a’rational consensus‘ beyond a mere agreement of individual interests, can be turned operational in real world settings. The following section presents some concrete instruments which attempt this in the context of valuing ecosystem services.

5. Approaches to develop and elucidate social values There are valuation methods within the economic valuation disciplines that show a close relationship to the above mentioned theories, in particular the constitutional economics strand developed by Buchanan and others, and Habermas’ discourse ethics. In the past ten years, economists have developed deliberative approaches to economic valuation called Deliberative Monetary Valuation (DMV) (Spash, 2007; MacMillan et al., 2002). This new approach to valuation can be viewed as a hybrid between standard stated preference approaches (originating from environmental economics) such as Contingent Valuation and Choice Experiments conducted in the form of personal interviews or web-based questionnaires and deliberative institutions (originating from political science) that closely relate to communicative rationality and the theory of deliberative democracy envisaged by Habermas. DMV comprises two distinct methods, namely Valuation Workshops and Market Stall. The Market Stall approach involves a group meeting lasting approximately two hours with up to 12 participants, with a follow-up telephone call after a week to obtain respondents’ final WTP or choices. During the meeting a moderator conveys relevant information on the environmental issue at stake, the hypothetical market and the payment vehicle using verbal communication and an extensive information folder that is handed out to each participant. Participants are then encouraged to ask questions and discuss the issue with other group members pinpointing arguments for and against the environmental issue. At the end of the meeting participants express their WTP or their choices individually and anonymously. During the subsequent week-long interval participants are asked to think about the environmental issue and discuss it with their family and friends. They are also encouraged to use the opportunity to gather additional information. Following this further thought, respondents have the opportunity to re-adjust their WTP or choices. Valuation Workshops are similar to Market Stall, but they omit the additional time to think given to respondents after the group meeting (MacMillan et al., 2002; Lienhoop and Völker, 2016). Table 2 shows how DMV is located between the two opposing methodological avenues of stated preferences (economic method)

Table 2 Stated preferences, deliberative monetary valuation and deliberative institutions.Source: Adapted from Niemeyer and Spash (2001). Stated preferences

DMV

Deliberative Institutions

Methods

Contingent Valuation Choice Experiments

Market Stall Valuation Workshops

Goal Outcome

Outcome Individual WTP: Focus on numbers

Rationality assumptions

Economic rationality: Self-interested consumer Pre-defined preferences

Process Individual WTP: Focus on numbers and arguments No clear rationality: Leans towards economics, but borrows from deliberative democracy: Socially constructed values Non-myopic thinking Relies on aggregated individual welfare, but promotes consideration of aspects beyond selfinterest.

Citizens’ Juries Consensus Conferences Focus groups Outcome & process Shared understanding: Focus on diverse views and arguments Communicative rationality: Reflexive citizen Socially constructed values

Theory

Myopic thinking Economic welfare: Social welfare¼ aggregated individual welfare

Non-myopic thinking Theory of deliberative democracy: Citizen represents society, no need for aggregation

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and deliberative institutions (political science method). While deliberative institutions, such as Citizens’ Juries, Focus groups or Consensus conferences are ideal settings for the consideration of social values, DMV becomes relevant (1) when money terms are required in a certain decision process (Kenter et al., 2015) and (2) when the decision context requires the elicitation of I-rationality as to allow for aggregation of individually held values. Although DMV is based on economic rationality assumptions rather than the theory of deliberative democracy and communicative rationality, it includes important elements of the latter theory: Discussion with other members of the general public as well as time to think help respondents to learn about their preferences regarding the environmental change at stake. This aspect is highly relevant for valuation in the context of biodiversity or nature conservation where environmental changes are often so complex or unfamiliar to participants that they do not hold well-elaborated initial preferences for them. At the same time the exposure to different views, interests and needs from people within the group makes participants aware of a wide range of aspects that might influence their preferences, including aspects that go beyond their personal needs. While DMV asks respondents to state their preferences in the form of WTP and choices individually and thus leads to a focus on personal needs, the reflection of social values can be prompted by the facilitator of such group meetings (Lienhoop et al., 2015). The consideration of social values in DMV differs from Habermas in a sense that it should rely on I-rationality. Thus, social values are taken into account as long as it increases a person's personal welfare and not in an attempt to reach a mutual consensus.

6. Concluding remarks ‘Social values’ describe a set of diverse interpretations of the values of a group of citizens or a community (Kenter et al., 2015). Such social values are highly relevant in societal decisions about environmental and resource use issues. In contrast, economic approaches are very often referred to as being based on pre-formulated individual preferences with the underlying assumption that social values are neglected or at least not explicitly addressed. By focussing on the justification of social values on the basis of economic reasoning in this paper, we see ourselves in the tradition of New Institutional Economics and Political Ecology literature on valuation. We seek to open avenues to use economic valuation approaches fruitfully for decision-making in public policy. This could build bridges to those who see diverse (sometimes competing, often complementing) valuation approaches as a chance rather than a problem. Those, however, who totally reject the economic valuation perspective on nature, based on reasoning provided e.g. by Sagoff (2008) and others, will probably not agree with the line of our arguments. Against this background this paper serves two purposes: on the one hand we want to emphasise that economic approaches – at least to a certain degree – also address social values. This can be traced back to the TEV which comprises various value dimensions (or categories) for which individuals express values from a citizenstance rather than a consumer-stance, such as the category of ‘existence value’ or ‘altruistic value’. Individual preferences may include all benefits people derive from environmental use, which also includes those values individuals attribute in terms of ‘Werationality’. In this understanding economic valuation can reflect individual value expressions which include social values. The distinction between individual and social values is important in this perspective, to ensure that social values are not neglected in interpretations of economic valuation results. A distinction between individual and social values is usually not provided by

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economists. However, there are also economic arguments justifying social values that go beyond the individualistic perspective underlying many TEV applications. These concepts, which are less frequently addressed in the environmental economics and/or ecological economics fields, can be derived from the public finance and constitutional economics literature. One idea is the concept of merit goods that has been put forward by public finance economist Richard Musgrave. These goods are justified by the’superior knowledge’ of the state who’overrules individual choices for the sake of a’higher’ purpose, which serves the public interests. While this concept is highly controversial in economics, because it deviates from the idea of citizen's sovereignty, the constitutional economics concept developed by James Buchanan and others still rests on the idea of self-determined and independent citizens with well-defined preferences. However, these citizens do not only decide on the’post-constitutional’ level, where daily decisions about private and public issues are on the agenda (’choices within rules’), but also on a constitutional level, where the’rules of the game’ are designed. At this particular point social values come in: from a constitutional economics perspective such’rules of the game’ should be characterised by decisions where individuals’ self-interests step back and the common interests dominate. The constitutional economics concept can also be supported by deliberation procedures that are based on principles as developed by philosopher Jürgen Habermans. These often disregarded economic approaches hence justify the notion of social values and can contribute to their full consideration. This paper also allows for some conclusions with regard to the choice and application of valuation methods, which could also be used for the IPBES valuation process. From the character of social values it can be derived that deliberative methods of preference formation may be superior to’traditional’ environmental economic valuation methods, such as stated preference methods. Beyond that, quantitative, qualitative and monetary value descriptions have in common, that they capture a time- and place-bound appreciation of nature's importance to society. Also, two methods can be correctly applied, and technically equally plausible, yet lead to different valuation results, without the one being per se less valid/robust than the other. From this follows that methods strongly shape valuation outcomes and the pursuit of an allcomprehensive and ‘objective’ methodology for describing nature's importance may be futile. Especially, if results are intended to inform decision-making, it is above all a question of the practical purpose and of the contextspecific situation of the valuation exercise that should determine which methods to choose (Lienhoop et al., 2015). In this respect, it is decisive to invest time and resources in a scoping phase with stakeholders where the policy issue to be addressed is examined, and the role a valuation study could play in response is clarified prior to any consideration of method choice (Berghöfer et al., 2015). The TEEB representatives, e.g., propose a stepwise approach both for valuating ES and for selecting and implementing economic instruments (TEEB, 2010a,b; Rode et al., 2016). In the end, it is not for scientists to decide which values should play a prominent role in addressing an environmental policy issue, and which value expression or value metric would be most adequate in bringing these values into full consideration.

Acknowledgement We would like to thank an anonymous referee for excellent and very helpful comments.

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