Economics is often referred to as ``the dismal science.'' Non-economists might think that the epithet derives from the ``dismal'' record of economists in providing advice to governments, but actually it refers to the ``dismal'' assumption underlying all economic arguments:12 Resources are limited. There is no such thing as a free lunch. We cannot do everything we want to do. Every decision involves tradeoffs. If we decide to set aside land to protect an endangered sand flea, we can't build a shopping mall or housing development. If we spend time, effort, and money on preventing the extinction of that sand flea, we have fewer resources to devote to protecting the California gnatcatcher. The questions that face us are not like ``Would it be worthwhile to prevent extinction of the California gnatcatcher?'' They are like ``Do the 'benefits' of preventing extinction of the California gnatcatcher outweigh the `costs'?''
I put ``benefits'' and ``costs'' in quotation marks to emphasize that economists do not - let me repeat that - DO NOT count only monetary benefits and costs. As we've seen in our recent discussion of statistical decision theory, what economists are really interested in is maximizing utility. It is often convenient to express that utility in terms of dollars, but you could choose any metric you like as your measure of utility and the same economic principles will apply. Economists typically choose to measure utility in terms of dollars (a) because we're familiar with that in our everyday lives, so it's easy to relate to everyday choices and (b) because there are (relatively) efficient markets for many goods and services that provide objective, measurable ``values'' that can be plugged in directly as a metric of utility. I think it's fair to say that every economist recognizes that there are many valuable things in the world that do not have price tags attached to them. The challenge for an economic approach to biodiversity conservation is that we have to find a way to measure those values on the same scale as things that do have a price tag. That means finding ways to put a price tag on nature.