According to Marxist labour theory of value, nature has no value [1]. It simply creates the natural basis for social production; Nature is taken as a source of natural resources and materials to be exploited for production. This is the pure utilitarian or rather 'cornucopian' concept of nature.
Neoclassical economics, which emerged in the late 19th century, treated the use of nature as part of the allocation of scarce resources and paid no special attention to nature as a public good. Substantiation of such access was based on the assertion that the use of nature creates no special problem because, with the growing scarcity of natural resources, their price is growing as well and this stimulates the search for cheaper substitutes. It wasn't until the tough environmental problems in the 1950s and 1960s, and the oil crises in the 1970s, that economic theory recognized the neoclassical view of nature was oversimplified and needed to be revised. Currently, the neoclassical approach is being criticized as "couched in a mechanical, reductionist worldview where everything is merely the sum of its parts and all values reduce to simple pleasure or pain. It is premised on exogenous, independent utility functions, private ownership of everything valuable, an efficient but static property rights structure, and a system of perfectly competitive markets." (J.A. Swaney, 1987)
In contemporary environmental economics four main functions of the natural environment are identified (D.W. Pearce, 1976):
Pearce's key point is that the life-support function cannot be made to fit into the neoclassical framework because it is not produced and because it is indivisible both sectorally and temporally. J.A. Swaney adds, that "it can only be analyzed and understood as an evolving natural system that cannot be priced or otherwise allocated by the economy. For the other three functions of the natural environment, an efficient property rights structure can be designed, although high transaction costs, poor information, the free rider problem, nonrivalry in consumption, and fugitive resources present major practical problems. But for the life-support system, an efficient property rights structure is conceptually (as well as practically) untenable." (J.A. Swaney, 1987) It should be stressed that just because the 'life-support' function does not fit into the neoclassical frameowrk, it does not necessarily follow that this function is outside the realm of economic treatment and evaluation.
Man is an integral part of the biosphere which constitutes our only life-support system in an otherwise hostile cosmic environment. By threatening its integrity and functioning, we are not only seriously affecting the quality of human and other life, but we may even be threatening the very existence of life on earth. The degradation and 'overuse' of nature results, in part at least, from the fact that it is treated as a free resource when, in fact, it serves economic functions that have positive value.
In a more detailed ranking of environmental functions (goods and services), 37 functions are identified (under four main headings) by R.S. de Groot (1992), covering a wide range of ecological, social, cultural, scientific and economic values: