Where economics meets the sacred: the economic importance of forests and nature conservation to the peoples of Lugu Lake South-western China J. STUDLEY Email: johnfstudley@gmail.com Summary This paper outlines a participatory method for understanding the spiritual dimension of natural resource care against the wider context of indigenous forest values and indigenous economies. It is predicated on the elicitation and scaling of indigenous forest values and is. illustrated with data collected from four ethnic groups who live in the Lugu Lake Nature Reserve. A set of 13 forest values is recognized by most of the respondents, and there are scaling differences between ethnic groups and concordance with similar studies. Commercial values ranked ninth out of thirteen values and intrinsic values ranked second out of thirteen forest values. The methodology is based on the constant sum scaling of forest values resulting in a percentage, ratio scales and a rank order, and is easy to replicate. It has application for Natural Sacred Sites, Nature Reserves and for ethno-forestry programmes. The author concludes by offering some policy recommendations. Keywords: ethno-economics, reciprocity, ethno-forestry, topophilia, China INTRODUCTION The world’s indigenous people not only exhibit “bonds of affection" (Seeland 1993: 356, 358) or “topophilia” (Tuan 1974) for the natural world but explicit environmental protection is embedded in their worldviews and values, because they hold the natural world as sacred. Values in most indigenous cultures are based on restoring harmony in and between the human, non-human and spiritual world. Being articulated as behavioural expectations, customs, taboos and rites, values are often explicitly exemplified in myth, story and legend. Indigenous people have a holistic integrated worldview, and they recognise the connection between the human and non-human world and the spiritual world which contrasts with the Cartesian worldview. The ‘desouling of science’ by The Royal Society (Sprat 1667) and the “desouling of nature” (Banuri and Marglin 1993: 19) have been accompanied for the past 300 years by materialistic, mechanistic and anthropocentric paradigms that led to a compartmentalised worldview with divisions between the human and the natural world and the human and the spiritual world (Collins 2003, Merchant 1980, Prigogine and Stengers 1984) For indigenous people their values do not mean that animals or plants cannot be taken or used for food or clothing, but they understand that the taking of life represents loss of a fellow being’s life existing on its own terms, with intrinsic value “because it has been created by a divine being” (Laverty & Sterling 2004). Indigenous peoples often negotiate the taking of life with divinities or spirits. Often an intermediary like a shaman is used to ensure balance and reciprocity (Reichel 1992). Holding the natural world as sacred means that the overwhelming majority of indigenous peoples respect and protect biodiversity on at least some of their lands, especially their sacred natural sites (Verschuuren et al 2010). It is not uncommon to discover categories of natural resource care among indigenous people from sacred and untouched to unmanaged and overexploited (Studley 2005). For example, typically a Tibetan would protect the locale of his local divinity (yul-