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Ian

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6

How would you price the earth?

Hi, how would you structure your framework for this question:

How would you price the earth?

Hi, how would you structure your framework for this question:

How would you price the earth?

6 answers

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Hi there,

Henning's answer is clever, but is not an answer I would expect a (strategy consulting) interviewer to be happy with (sorry Henning!). They want you to do a market sizing here.

As such, the clear clarifying question here would be: "Is it safe to assume this is the price/value of earth to humans?" To which, the answer would surely be yes.

Then, you need to state that price = WTP = value. Value = everything that the earth can provide.

Method 1

So, you'll want to split up the earth by its major producing parts. This would be Land (surface), Water, and Materials (below surface land).

Estimate the value of agriculture (trees, crops, etc.), fishing, and materials (common earth metals like iron and copper as well as rare earth metals such as Lithium. Don't forget oil, gas, and coal!).

And voila.

Method 2

Estimate the world's GDP (you should know the US's, know that China is close to the same, then use the law of 80/20 to calculate the rest). Look at global growth rates. Use NPV calculation to determine NPV of Economic production of the earth.

Hi there,

Henning's answer is clever, but is not an answer I would expect a (strategy consulting) interviewer to be happy with (sorry Henning!). They want you to do a market sizing here.

As such, the clear clarifying question here would be: "Is it safe to assume this is the price/value of earth to humans?" To which, the answer would surely be yes.

Then, you need to state that price = WTP = value. Value = everything that the earth can provide.

Method 1

So, you'll want to split up the earth by its major producing parts. This would be Land (surface), Water, and Materials (below surface land).

Estimate the value of agriculture (trees, crops, etc.), fishing, and materials (common earth metals like iron and copper as well as rare earth metals such as Lithium. Don't forget oil, gas, and coal!).

And voila.

Method 2

Estimate the world's GDP (you should know the US's, know that China is close to the same, then use the law of 80/20 to calculate the rest). Look at global growth rates. Use NPV calculation to determine NPV of Economic production of the earth.

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Easy answer: Close to zero.

If we assume that a buyer needs to be a higher-level civilization that has mastered faster-than-light star travel (so they can actually make use of this), we can also infer that all the assets on our plant (meaning the production capacity) does not have any value to them. They are so far advanced, that they would lough about our technology.

Therefore, the value of the earth is simply the value of it's parts, meaning the material value. So now we need to value the sum of all materials on earth. Our planet consists of mainly oxygen, silicon, iron, and a few others. Those elements are abundant in the universe, so basically worthless.

Two more potential sources of value:

  • Real estate (a spot close to the sun), but science finds more and more plants in similar proximity to their stars, so also 0.
  • Value of the combined fauna & flora. This is a tough one - but unless we assume that the aliens have some romantic fascination with living organisms on our planet, these would also not be of great value to anyone from the outside.

So: Nobody would pay a dime for this shitball ;)

Easy answer: Close to zero.

If we assume that a buyer needs to be a higher-level civilization that has mastered faster-than-light star travel (so they can actually make use of this), we can also infer that all the assets on our plant (meaning the production capacity) does not have any value to them. They are so far advanced, that they would lough about our technology.

Therefore, the value of the earth is simply the value of it's parts, meaning the material value. So now we need to value the sum of all materials on earth. Our planet consists of mainly oxygen, silicon, iron, and a few others. Those elements are abundant in the universe, so basically worthless.

Two more potential sources of value:

  • Real estate (a spot close to the sun), but science finds more and more plants in similar proximity to their stars, so also 0.
  • Value of the combined fauna & flora. This is a tough one - but unless we assume that the aliens have some romantic fascination with living organisms on our planet, these would also not be of great value to anyone from the outside.

So: Nobody would pay a dime for this shitball ;)

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Irrelevant & meaningless question in my view...I hope this wasnt asked in an Consulting interview?!

Love Henning's reply :). Any higher civilisation would think twice before even considering what to pay for Earth given humans have wiped out 70% of species in last 50 yrs- https://livingplanet.panda.org/en-gb/

There wont be anything left to price if we carry on the way we are.

And sorry this is not the answer to your question anyway :)

Irrelevant & meaningless question in my view...I hope this wasnt asked in an Consulting interview?!

Love Henning's reply :). Any higher civilisation would think twice before even considering what to pay for Earth given humans have wiped out 70% of species in last 50 yrs- https://livingplanet.panda.org/en-gb/

There wont be anything left to price if we carry on the way we are.

And sorry this is not the answer to your question anyway :)

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Hello!

I have seen weird and complex pricing quesitons -lately, how would you price this dinasour?-, but nothing like this. Is way too complex for consulting interviews, wouln´t loose too much time on it.

Hope it helps!

Cheers,

Clara

Hello!

I have seen weird and complex pricing quesitons -lately, how would you price this dinasour?-, but nothing like this. Is way too complex for consulting interviews, wouln´t loose too much time on it.

Hope it helps!

Cheers,

Clara

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Strange question indeed! Despite the fact that it is impossible and pointless to do, you can use Ian's answer is a scientific one and Henning's as more realistic. I would also vote for GPD Method, seems to be more applicable.

Strange question indeed! Despite the fact that it is impossible and pointless to do, you can use Ian's answer is a scientific one and Henning's as more realistic. I would also vote for GPD Method, seems to be more applicable.

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