Value of Earth - Methods of Estimation

Methods of Estimation

There are several ways to estimate the value of Earth:

• Estimate the value of life for everything that lives on it, and assign the Earth, as a necessary component and home for that life, the natural capital on which individual capital thrives, at least this much value. Since not all life is valued, and a very little is overvalued, there is high risk of under-estimation. One way to avoid this is to work continent by continent to see if there is systematic inflation of the price of life on some compared to the others.
• Estimate the cost of replacing the Earth, which may include finding and colonizing another planet, or creating one artificially in a compatible orbit. What if the natural capital of a nearby planet, e.g. Mars, were to compete? What would be the cost of terraforming it to make it as comfortable as Earth? Or even barely habitable? An issue is whether to count transport costs.
  • As a variation, estimate the cost of a smaller habitat, such as Biosphere 2, and multiply its cost by the ratio between the population of Earth and of that smaller habitat. This however is to rely on below-minimum cost figures, since Biosphere 2, although brilliantly ambitious and expensive, was a flop. This method yields only a floor value which Earth itself would vastly exceed. See below for more details.
  • As another variation, figure out every disaster that might occur due to failure of the biosphere, to lesser or greater degree, and calculate the price of insurance against all of it. The averted insurance payments are effectively a yield, and, this is one way to calculate the value of what Earth is doing for us, for as long as these averted failures do not occur.
• Calculate the yield of natural capital and use the size and consistency of this yield to calculate how much capital there must be. This method was pioneered by Robert Costanza and is promoted in Natural Capitalism: Creating the Next Industrial Revolution.

As one might expect, these all produce quite high values for the entire Earth, usually at least in the hundreds of quadrillions of US dollars. This seems appropriate. However, even with this sum in hand, it seems unlikely that even experienced reconstruction subcontractors could complete the task of replacing Earth, certainly not without using Earth itself as a base. Rent for use of Earth and its orbit might then also have to be included, and it would be hard to price this without calculating the price of the Earth, again.

One way around this is to simply declare the Earth priceless or to be exactly and only as valuable as all financial capital in circulation. This may be equivalent to declaring it worthless, however, as neo-classical economics deals very poorly with assets that are too valuable to trade actively in markets.