EEP101_lecture12n13 - EEP 101/ECON 125 Lecture 11:...

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EEP 101/ECON 125 Lecture 11: Valuation of Environmental Benefits Professor David Zilberman UC Berkeley
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Outline Types of Benefits Concepts in Benefits Measurement Uncertainty, Expected Benefits, and Risk Aversion Methodologies for Benefits Valuation
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Use Benefits Use Benefits refer to the utility arising from direct or indirect physical use of a resource including commercial use, recreational use, and aesthetic use. There are two subcategories of use benefits: Consumptive Use Benefits are private benefits that are derived from resource consumption and contribute to resource depletion. Examples are farming, forestry, fishing, grazing, hunting, mining. Nonconsumptive Use Benefits are generally public good benefits that do not contribute to resource depletion. Examples are swimming, boating, hiking, camping, viewing wildlife, observing scenic forests, mountains, rivers, waterfalls, etc.
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Nonuse Benefits Nonuse benefits refer to utility that is derived from environmental resources without physical interaction with the resource. There are several subcategories: Option Value Benefits arise in situations where depleting a resource is an irreversible action. For example, when large areas of rainforest are slashed and burned, unknown/undiscovered species of plants, insects, and animals may become extinct. Some of these plants, for example, may hold important medicinal value that we will now never know about. It is derived from maintaining the option to utilize future, unknown benefits by avoiding or delaying irreversible actions. Vicarious Consumption Benefits refers to utility derived from the consumption of environmental resources by other individuals. That is, you may derive utility when your friends visit Manhattan from their enjoyment of Tuttle Creek Lake, since this makes you feel like a good host.
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Nonuse Benefits Continued Stewardship Benefits are moral benefits that we derive from knowing that we are doing our parts as stewards of the worlds’ resources. There are two types of Stewardship Benefits: Bequest Benefits refer to utility derived from passing an environmental resource on to children and/or future generations. Existence Value, or Inherent Benefits refer to utility derived from the knowledge of the mere existence of environmental resources.
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Concepts in Benefits Measurement Willingness To Pay (WTP) is the maximum amount of money an individual would give up in exchange for all the benefits associated with an environmental resource. It is the valuation placed on an environmental good
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This note was uploaded on 03/18/2010 for the course ECON C125 taught by Professor Zelberman during the Spring '09 term at University of California, Berkeley.

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EEP101_lecture12n13 - EEP 101/ECON 125 Lecture 11:...

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