to Introduction Non-Market Valuation
Readings
Garrod, G. and Willis, K.G. (1999) Economic Valuation of the Environment. Edward Elgar, London. Chapter 1. Tietenburg, T. (2003) Environmental and Natural Resource Economics 6th edn. Addison Wesley. Boston.Chapter 3. Russell, C.S. (2001) Applying Economics to the Environment. Oxford University Press,New York. Chapter 6.
Notion of placing a value on nature
"knowing the price of everything but the value of nothing." Value and prices are separate ideas.
The argument against..
The notion that cars, houses and bus rides have prices. Putting a price on the environment destroys the notion that it has value - rather it becomes a chattel that can be sold off. How much would you willing to pay to forego your freedom or health?
Bounds of valuation
Marginality
within ecological bounds motivator of human behaviour missing link in the assessment of damage and benefits of resource use actions.
Representation of future generations
Discounting a matter of balance and time.
Limitations
Market bias
" All the environmental problems we face in Australia are a result of markets." " Economics does not care about the environmental consequences."
If markets are to blame then Russia, pre - perestroika, should have no or few environmental problems as they have only recently been opened up to markets. Economics is not some abstract object, rather a title for the system homo sapiens have created. 60 70% of environmental economics is concerned with accounting for non-market environmental goods and services.
Bias against the future
Discount rates are often used to demonstrate that resources consumed now is a preferred alternative to long term sustainability. Discount rates were designed to account for increases in prices through the time frame of a development project such as the construction of a Dam with a relative short (<20 year) life. They were not designed to account for either intergenerational equity issues or resources with infinite lives.
It would be like arguing that a sledge hammer did not work when applied to fixing my car, it simply left big holes. When dealing with long term resource problems a social discount rate should be used. The question then becomes what discount rate is socially acceptable given the consequences of its application. Such rates could and where be appropriate negative.
Problem of ignorance
lack of data/ knowledge of ecological consequences
esp. intergenerational and long term consequences lack of real implementation of the precautionary principle
Time frames of policy decision making not adequate.
Components of human values: Total Economic Value
Use values
Market based water, fish and timber harvest Use based recreational, air quality
Option values
Option to consume at a latter date Intergenerational equity
Non-use values
Spiritual values
Recognition of rights of other species, religious standings
Existence values
Knowledge of existence without direct experience.
Expansion and emergence of economic values for traditionally unvalued goods and services
Emergence of the notion of efficiency in resource allocation
Recognition that markets cannot
efficiently allocate public goods resources with perverse externalities Resources with poorly defined property rights
Recognition of public goods
Non-rivalry Non-consumability
Environmental Valuation Methods
Preferences
Revealed Preferences
Market values Direct use values Hedonic markets Direct use values through surrogate markets Travel cost methods Direct use values -through observed actions
Stated Preferences
Contingent valuation Non-use values dependent on instrument Choice experiments Non-use values dependent on instrument
Recognition of Non-market valuation methods Groundi...