The Price System: Surfonomics
Do you think of the environment differently when you give it a price?
Take a wave…
For just one community like Mavericks off Half Moon Bay, California, the surfing industry is valued at $23.9 million a year. Meanwhile, spending approximately $6.3 billion annually on gear and travel, in the US, close to 2.5 million people surf at least once a year. In addition, local real estate values inflate near big waves and add tax dollars to municipal coffers.
It turns out that to preserve a wave, it helps to know its price.
Home of 30-foot waves, the Puerto Rican community of Rincon had its surf break threatened by a shoreline condo project. Opponents of the project cited the “price” of the wave by showing how much money it was worth in local revenue. Comparing apples to apples–the price of the wave and the dollars the new real estate would generate–got the project canceled.
In this TEDx video, economist Jason Scorse describes how and why “surfonomics” quantifies natural resource values.
As economists, we can say that prices convey information to buyers and sellers. After hearing a price, we might know more about that item’s popularity, its quality, and what we need to sacrifice if we buy it. Meanwhile, through prices, producers gain insight about the cost of production and profits.
Isn’t it ironic that priceless natural resources appear to have more value when they are given a price?
Sources and resources: More detail about “surfonomics” is in this Fortune blog and this Washington Post article. Here also, Middlebury’s Monterey Institute describes Dr. Scorse’s work while during 2010, econlife considered similar ideas.