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Mutually Compatible, Yet Different: A Theoretical Framework for Impact Monetization


First published in SSRN


In a world of finite resources, choices and tradeoffs are a constant feature of economic and social life; we decide in which projects or organizations to invest, how to focus time and expertise, and which products we purchase. Whether conscious or not, we are constantly making choices using a variety of data-points and sources that indicate value, including the price relative to some benchmark of fair value, the costs of not acting, and our own values and preferences. While this is fine when it comes to impacts that directly affect ourselves, this is fine. However, when it comes to environmental and social impacts experienced by others, the challenge is clearer; since there is not an observable market price we use our own preferences and values as a proxy for the values that others place on impacts. It should be immediately clear how this can result in a fundamental power imbalance between those who own and control resources and make resource allocation decisions and those who most prominently experience the social and environmental impacts of these decisions. We assert that making valuations transparent and informed by those experiencing impacts will be more inclusive and lead to decisions that are more likely to increase positive net impact.


Numerous efforts are underway to make these implicit valuations more transparent and informed by an understanding of the value of impacts from the perspective of those experiencing the impact. We believe that making these valuations transparent requires a common measure; otherwise it is extremely difficult for non-experts to assess the decisions being made, though mainstreaming of such assessment is critical toward moving us to a more sustainable and fair economic paradigm. Monetary value is the most commonly understood measurement globally and thus is the best unit for translating impact into intuitive measures. In this paper, we propose a theoretical explanation for how the underlying monetization values from the various efforts and approaches that are being developed can differ and yet still be theoretically sound and co-exist.




Suggested Citation:

Nicholls, Jeremy and Zochowski, Thaddeus, Mutually Compatible, Yet Different: A Theoretical Framework for Reconciling Different Impact Monetization Methodologies and Frameworks (October 20, 2020). Available at SSRN: https://ssrn.com/abstract=3715451 or http://dx.doi.org/10.2139/ssrn.3715451

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