L10. Valuation of Natural Resources

L10. Valuation of Natural Resources - The Valuation of...

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Unformatted text preview: The Valuation of Natural Resources n How can one measure the benefits and costs from natural resources? n Examples where valuation is important n Purchase of shoreline to convert to a beach. n Wildlife agency wants to devote resources to preserve the bald eagle. n Regulate river flow to provide better habitat for species of fish downstream. n Logging company is asked to avoid large clear cuts to control water run-off. n Establishing a new national park. n Housing development on wetlands is displacing migratory waterfowl. All call for valuation of resources, or services from resource use Measuring Benefits n Types of Benefits q Active resource values, also called use values n Result from direct contact with the resource. Further divided into q Consumptive: extractive use – mining, hunting, fishing q Non-consumptive values: non-extractive use – ecotourism, camping, etc q Passive natural resource values, also called nonuse values n Value places on resource independent of their actual use of the resource. Motives q Option value: may wish to utilize this resource sometime in the future q Existence value: preserve even though will never visit in the future q Bequest and gift value: to ensure that future generations will be able to enjoy the resource Active use benefits n Benefits obtained when people actually use the resource in question q Can be further subdivided into those with market values and those with non-market values n Direct Market Price analysis q Particularly useful for extractive resources: timber, mining, and sometimes fisheries. q Use current market price for resource and evaluate the value of project q Benefits: Assuming no externalities exist § Participants reveal values through market q Can also be used for non-extractive resources: whale watching revenues can be used to ascertain value of saving the whales, paid beach visitation could be used to value beach restoration project etc....
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This note was uploaded on 11/18/2011 for the course ECON 374 taught by Professor Sumeetgulati during the Winter '11 term at UBC.

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L10. Valuation of Natural Resources - The Valuation of...

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