This document discusses various techniques for valuing environmental assets and services that are not traded in markets. It begins by defining environmental valuation and explaining concepts like total economic value and willingness to pay. It then describes several techniques in detail: hedonic pricing, travel cost method, contingent valuation method, production factor method, and averting behavior method. As an example, it summarizes a case study valuing the non-use benefits of maintaining a wetland in Greece using contingent valuation surveys.
Important conceptual concerns, economic foundations of environmental valuation, scarcity, useful approaches for different environmental problems, and cautions.
John Dixon
Methods used to place values when markets are weak or missing: non-use values, contingent valuation, hedonic pricing, issues and limitations.
Morteza Rahmatian
Important conceptual concerns, economic foundations of environmental valuation, scarcity, useful approaches for different environmental problems, and cautions.
John Dixon
Methods used to place values when markets are weak or missing: non-use values, contingent valuation, hedonic pricing, issues and limitations.
Morteza Rahmatian
Since pollution is an externality firms will not undertake to control their pollution. The answer is in government regulations. Coase argues that in perfect competition with laissez faire, govt regulation is not needed. Instead bargaining between the polluters and their victims can lead to an optimal situation. But this pre supposes equality in bargaining, and does not take note of ecological consequences of pollution.
The PPT describes how the Economy and Environment interacted with each other. The environment and the economy are very closely related. The environment provides the resources for production and consumption in the economy and receives the waste from these activities.
TRAGEDY OF COMMON IN THAT THE PEOPLE ARE HOW USE NATURAL RESOURCES HOW CARELESS ABOUT THAT AND HOW ITS EFFECT ON FUTURE, ENVIRONMENT NATURE , HUMAN AND LIVING SYSTEM
010 hotelling optimum exhaustion of a non renewable resourcePrabha Panth
In 1931, Hotelling showed how the rules that apply to the optimum extraction of a non renewable resource differ from that of a produced product, in perfect competition. Here the mine owner has to weigh the present price with the expected future price, if he wishes to conserve the resource.
Market failure to take note of environmental impacts of economic activity. Why environmental effects are not included in perfect markets. Concept of public goods, externalities. Role of government.
Monitoring is an activity undertaken to provide specific information on the characteristics and functioning of environmental and social variables in space and time. Environmental monitoring compares impacts predicted in environmental impact assessment with those which actually occur during and after implementation, in order to assess whether the impact prediction process performs satisfactorily. In Kenya communities are encouraged take a leading role and responsibility to monitor project activities at all stages to ensure that the measures stipulated in the environmental management plan are adequate to mitigate adverse impacts or are attaining or fulfilling the anticipated benefits from the project
Monitoring is therefore undertaken after the project has begun to check the initial EIA predictions and determine whether further action is needed to abate or avoid pollution or environmental harm. It can also be done for purposes of conducting research or identifying patterns or trends which reflect the state of the environment. It can also be described measurement of the quality of the environment and each of its components, activities or natural and anthropogenic inputs which may affect the quality of the environment and the effects of such activities.
All monitoring strategies and programmes have reasons and justifications. The aim is to actually establish the current state of or trends in certain environmental parameters. In all cases the results of a monitoring process will be reviewed, analyzed statistically and published. The design of a monitoring program must therefore have regard to the final use of the data before monitoring actually starts.
The frequency of monitoring will vary from project to project. This depends on the nature of the project and severity of the environmental impacts.
The relationship between the environment and the economy can be depicted by means of the “Material Balance Model” The model was developed by Allen Kneese and R.V Ayres. The model visualizes the total economic process as a physically balanced flow between inputs and outputs.
An efficient allocation of resources that adequately accounts for natural capital. Traditional economics (including environmental economics - defined as the application of traditional economics to environmental problems) has focused on a third of these problems (efficient allocation) and therefore has not fully addressed the issue of sustainable development.
Since pollution is an externality firms will not undertake to control their pollution. The answer is in government regulations. Coase argues that in perfect competition with laissez faire, govt regulation is not needed. Instead bargaining between the polluters and their victims can lead to an optimal situation. But this pre supposes equality in bargaining, and does not take note of ecological consequences of pollution.
The PPT describes how the Economy and Environment interacted with each other. The environment and the economy are very closely related. The environment provides the resources for production and consumption in the economy and receives the waste from these activities.
TRAGEDY OF COMMON IN THAT THE PEOPLE ARE HOW USE NATURAL RESOURCES HOW CARELESS ABOUT THAT AND HOW ITS EFFECT ON FUTURE, ENVIRONMENT NATURE , HUMAN AND LIVING SYSTEM
010 hotelling optimum exhaustion of a non renewable resourcePrabha Panth
In 1931, Hotelling showed how the rules that apply to the optimum extraction of a non renewable resource differ from that of a produced product, in perfect competition. Here the mine owner has to weigh the present price with the expected future price, if he wishes to conserve the resource.
Market failure to take note of environmental impacts of economic activity. Why environmental effects are not included in perfect markets. Concept of public goods, externalities. Role of government.
Monitoring is an activity undertaken to provide specific information on the characteristics and functioning of environmental and social variables in space and time. Environmental monitoring compares impacts predicted in environmental impact assessment with those which actually occur during and after implementation, in order to assess whether the impact prediction process performs satisfactorily. In Kenya communities are encouraged take a leading role and responsibility to monitor project activities at all stages to ensure that the measures stipulated in the environmental management plan are adequate to mitigate adverse impacts or are attaining or fulfilling the anticipated benefits from the project
Monitoring is therefore undertaken after the project has begun to check the initial EIA predictions and determine whether further action is needed to abate or avoid pollution or environmental harm. It can also be done for purposes of conducting research or identifying patterns or trends which reflect the state of the environment. It can also be described measurement of the quality of the environment and each of its components, activities or natural and anthropogenic inputs which may affect the quality of the environment and the effects of such activities.
All monitoring strategies and programmes have reasons and justifications. The aim is to actually establish the current state of or trends in certain environmental parameters. In all cases the results of a monitoring process will be reviewed, analyzed statistically and published. The design of a monitoring program must therefore have regard to the final use of the data before monitoring actually starts.
The frequency of monitoring will vary from project to project. This depends on the nature of the project and severity of the environmental impacts.
The relationship between the environment and the economy can be depicted by means of the “Material Balance Model” The model was developed by Allen Kneese and R.V Ayres. The model visualizes the total economic process as a physically balanced flow between inputs and outputs.
An efficient allocation of resources that adequately accounts for natural capital. Traditional economics (including environmental economics - defined as the application of traditional economics to environmental problems) has focused on a third of these problems (efficient allocation) and therefore has not fully addressed the issue of sustainable development.
Un security council protocols in papua new guineaBILU KASANDA
This presentation research is done as part of the major assignment on the UN Security Councils and its protocols. PNG do adopt some of its measures from UN since independence in 1975
Report from the focused learning discussion on economic valuation at the 4th GEF Biennial International Waters Conference.
Hamid Ghaffarzadeh
Project Director
Caspian Environment Programme
Non Market Valuation In Another Projectguest3fa8a2
If you need this file just see http://www.komitmenku.wordpress.com and see the requirement.
Jika anda tertarik tentang ini silahkan kunjungi http://www.komitmenku.wordpress.com dan lihat persyaratannya.
Methods of economic valuation - with a focus on marine ecosystemsIwl Pcu
Rolf Willmann
FAO Fisheries and Aquaculture Department
Presentation at the 2nd Targeted Workshop for GEF IW Projects in Africa on Economic Valuation in November 2012 in Addis Ababa.
June 21, 2010
IFPRI Policy Seminar
Washington, DC
Economics Beyond Markets: Choice Experiments In Developing Countries
Jeff Bennett
Ekin Birol
Derek Byerlee
Tourism’s Contribution to Biodiversity Conservation ron mader
Tourism’s Contribution to Biodiversity Conservation is a presentation by Ron Mader for COP11. We review what's new from Planeta.com and TAPAS and preview upcoming events including Responsible Tourism Week and the World Parks Congress.
Related
http://planeta.wikispaces.com/cop11
http://planeta.wikispaces.com/tapas
http://planeta.wikispaces.com/biodiversity
Ecosystem services are the benefits that people obtain from ecosystems. They are indispensable to the well-being of all living organisms, everywhere in the world. They include provisioning, regulating, and cultural services that directly affect people, and supporting services needed to maintain the other services (Anon., 2005). From the availability of adequate food and water, to disease regulation of vectors, pests, and pathogens, human well-being depends on these services and conditions from the natural environment. Ecosystem services depend on ecosystem conditions, and if these are impacted via pressures, consequently ecosystem services will be as well (Daily G, 1997). Human use of all ecosystem services is growing rapidly. Approximately 60% of the ecosystem services (including 70% of regulating and cultural services) are being degraded or used unsustainably. Certain changes place the sustained delivery of ecosystem services at risk. Human activity is impairing and destroying ecosystem services. Services by the ecosystem are facing some serious threats from urbanization, climate change and introduction of invasive species and pathogens which have come into existence through human activities (Anon., 1997). Ecosystem evaluation is a tool used in determining the impact of human activities on an environmental system, by assigning an economic value to an ecosystem or its ecosystem services. Ecosystem values are measures of how important ecosystem services are to people – what they are worth. Economists classify ecosystem values into several types. The two main categories are use values and non-use, or passive use values. Whereas use values are based on actual use of the environment, non-use values are values that are not associated with actual use, or even an option to use, an ecosystem or its services (Brookshire, et al.,1983). There are several methods of valuation of environmental assets, goods and amenities, services and functions like market price method, productivity method, hedonic pricing method, travel cost method and contingent valuation method.
Healthy ecosystems provide a variety of such critical goods and services. Created by the interactions of living organisms with their environment, these “ecosystem services” provide both the conditions and processes that sustain human life. The awareness of ecosystem services’ importance in human life styles started more than 2500 years ago. Economists have developed different ways to measure the economic value of the nature, all of which required extrapolation or assumptions.
Ignorance, Institutions and Market Failure are the main reasons to the under-protected status of Ecosystem Services. The environment provides critically important services. Some of these are captured by markets, but many are not. They are positive externalities that are therefore regarded by the beneficiaries as free. As a result, many ecosystem services tend to be both under-conserved and undervalued. If beneficiaries had to pay for explicit service provision, however, governments would think differently about their policies and property owners would think very differently about sustainable land management practices. In basic economic terms, payments for ecosystem services (PES) seek to “get the incentives right” by capturing the positive externalities, by providing accurate signals to both service providers and users that reflect the real social benefits that ecosystem services deliver.
Voluntary agreements between buyers and sellers of ecosystem services for cash or other rewards creating markets for ecosystem services which provide incentives and finance to land and resource managers and thereby strengthening conservation and livelihoods are called as PES.
Wide range of potential buyers and sellers are available depending on the ecosystem service. When the market fails to reward on-site ecosystem service providers, or to compensate them for their costs (e.g. changing land use) charge off-site users for the benefits they enjoy (e.g. clean water) PES create a market for natural resources making conservation a more profitable land-use proposition. Information, technical barriers, policy and regulation and institutional barriers are the major challenges in implementing PES.
Creating economic incentives that encourage PES schemes, including environmental taxes and subsidies, transferable discharge permits and environmental labelling, developing specific PES projects with farmers, foresters and/or fisher folks in their region, or their watershed and providing incentives for the private sector to engage in PES schemes are some recommendations for a better PES system.
Watershed Conference - "The value nature vs the nature of value" - 2006Steve McKinney
The historical perspective of what today is considered the modern study of environmental economics begins with problems proposed by Garret Hardin in his famous essay "The Tragedy of the Commons" in 1968. Many scientists, engineers, and economists have proposed methods of assessing the value of the natural environment since this time. This presentation will discuss many of these methods with specific focus on application of substitute cost method and its potential for application in stormwater management and mitigation.
Economic approaches to incorporating biodiversity & ecosystem services values...leonardo_mazza
This presentation was given as part of a webinar on the different approaches to incorporate the economic value of nature into decision-making and more specifically in revised National Biodiversity Strategies and Action Plans (NBSAPs). This module focuses on the role of Monetary assessments and introduced participants to the different approaches and methodologies that exist to assess the montary values of biodiversity and ecosystem services.
Measuring the Economic Value of Chemicals on Ecological System and Human Heal...OECD Environment
Background presentation 2
OECD Workshop on SocioEconomic Impact Assessment of Chemicals Management, Helsinki, 7 July 2016
Measuring the Economic Value of Chemicals on Ecological System and Human Health, by Anna Alberini, University of Maryland
EMERGY ANALYSIS METHODOLOGY AND INDICATORS
In emergy analysis various forms of energy can be expressed as coal, oil or another given fuel, and these can be compared and assessed (Finn, 1980) . This is, somewhat impossible as regards the materials, services or labour necessary for the energy production process. Yet, each of the input quantities required in the energy production process has its own energy value, which has been typically consumed in the production or in ensuring economic resources created by the production process, and this value should be taken into account in assessing the energy production process. While availing emergy calculations, therefore mentioned input values can be calculated in comparable unit, and with their help it is possible to determine the total emergy necessary for the production process.The production process uses two environmental resources: • R – renewable natural resources, which in turn are divided into two categories: - Renewable R1, which include solar energy, wind energy and rain; - Renewable R2, which are related to local ecosystem-provided resources such as renewable energy resources (biomass), as well as water and air in process-cooling equipment. Air is also availed in combustion processes. • N – non-renewable natural resources, including coal, gas, oil products or groundwater if used faster than its regeneration rate. Input F contains economy-ensured services related with the development and typical operation of the production process, services, technical equipment, remuneration, etc. Total Y emergy is attributed to the process end product (output) and is labeled Y. The production byproduct (pollutant) flow is labeled with W, and it penetrates the environment. Availing the examined flows, the following indicators are defined for each production process (company).
2. Environmental Valuation
It refers to the assignment of money values to non-marketed
assets, goods and services, where the money values have a
particular and precise meaning.
Non-marketed goods and services refer to those which may
not be directly bought and sold in the market place.
Examples are scenic views, coral reefs, mountain vistas,
biodiversity.
Accident prevention would be an example of a service which
is sometimes marketed (purchase of safety equipment) and
sometimes not (good driving behavior).
If a good or service contributes positively to human
wellbeing, it has economic value.
3. An individual’s wellbeing is determined by whether or not it
satisfies that individual’s preferences.
Preferences are revealed in many ways, but the context of
interest is the market.
Environmental values are measured in money terms through
the concept of individuals willingness to pay (WTP) or
willingness to accept (WTA) compensation for alterations in
environmental conditions.
WTP measured by the maximum amount of money that that
person would be willing to pay in return for receiving the
benefit.
WTA is measured by the minimum amount of money that
that person would be willing to accept as compensation for
incurring the cost.
4. Total economic value (TEV), which explicitly recognizes that
the economic value of a good or service is composed of
different parts—some of which are tangible and directly used;
some of which are intangible or very remote. Diagram shows TEV
Total Economic Value = Total User Value + Total Non-useValue
6. Hedonic pricing Method
• The hedonic pricing method infers the value of
environmental features from the prices of traded goods.
• It is applicable in those cases where the prices of a good is
directly influenced by environmental factors.
• Example is the housing market, where the value of two
comparable properties or apartments will differ depending on
the environmental amenities in the vicinity of each site.
• Hazardous waste site leads to a measurable drop in the
property price (compared to equivalent houses in other
locations),
• This difference in prices gives an indication of the external
cost of the waste site.
7. Hedonic pricing can also be applied to the valuation of
external benefits.
HPM has a very large data requirement because both primary
data (characteristics of the surroundings) and secondary data
(market transactions) need to be collected.
The value of a house or wage depends on many factors: there
are social factors, such as employment opportunities, taxes
and accessibility.
Data need to be gathered for all these factors.
This makes HPM less suited for application in a decision
support tool.
8. Travel Cost Method
The travel cost method is well suited for placing a value on
natural resources, amenities, natural parks, hunting, fishing,
and wildlife watching sites, and cultural heritage sites.
It is based on the concept that if people travel to a site, then
their willingness to pay for visiting this site must be at least
as large as the travel cost incurred.
The travel cost is comprised of the out−of−pocket
expenditures incurred to travel to and at the site, plus the
opportunity cost of time.
It is also useful for estimating time costs and their impact on
the choice of transport mode.
The problem with this method is that it does not take into
account multi-purpose travel (i.e. that individuals will visit
multiple sites on a single trip).
9. Contingent Valuation Method
The contingent valuation method is a direct approach using a
hypothetical market.
CVM is a survey method in which respondents are asked how
much they are willing to pay for the use or conservation of
natural goods.
It is the only environmental valuation technique that takes
into account non-use values .
However, using this method can lead to potential biases
(values can be under or over estimated).
There are also high costs involved as it is expensive to
interview people individually.
10. Essential elements of the survey are:
description of the natural good that is to be valued : includes
identifying all valuable attributes of the good
description of the payment vehicle: how the money will be
paid
description of the hypothetical market : include an
identification of who will provide and who will pay for the
nature improvement
It is said to be an appropriate economic valuation method for
environmental goods that have no indirect effects on other
goods.
It is therefore suited for the valuation of amenities or but not for
the valuation of natural processes, such as climate regulation .
11. Production Factor Method(PFM)
PFM is based on the fact that many natural resources,
processes and qualities are used as production factors.
Improvement of natural quality may lead to a reduction of
production costs for the sector making use of the relevant
quality.
The PFM tries to value natural qualities by valuing their
impacts on production costs.
The PFM has been applied to value the effects of water
quality on agriculture, fishery and industry and the effects of
air quality on buildings, crops and livestock.
The method is meant to determine the value of changes in
natural qualities on the economic production system.
12. The method consists of two steps:
First, the relation between a dose of pollution and an effect
on production (the response) is determined.
Secondly, the response must be translated into economic
terms. This is can be done by means of the previously
described valuation methods (de Boer et al., 1997) and
consequently the PFM is not really a separate valuation
method.
The valuation part of PFM is mostly done by simply multiplying
the quantity change by the market price.
It would, however, be better to investigate all economic effects,
such as changes in demand and supply and in prices.
PFM can only produce cost-based estimates of the value of the
production capacity of nature
13. Averting Behavior Method(ABM)
ABM is especially suited for valuing natural qualities.
This is done by looking at expenditures made to avert or
mitigate negative effects from the reduction of a natural
quality.
ABM relies on the assumption that people perceive the
negative effects of environmental deterioration on their
welfare and that they are able to adapt their behavior to avert
or reduce these effects.
This means, that people experience the negative effects of
ozone depletion and that they will buy products such as hats
and sun-cream to prevent damage to their health.
The willingness to pay for a clean environment is deducted
from people’s purchases of products and services to avert the
negative effects of pollution.
14. ABM is a cost-based method, since the costs of purchasing
these items are used to value environmental qualities, even
though the social preferences for a healthy environment may
be much greater than the expenditures on these products.
Buying such products actually means that they have less
money to spend on the environment .
people may not react to small changes in environmental
quality. They may only react when a certain threshold has
been passed.
16. Case Study Cheimaditida wetland
Several lakes in Greece were drained to generate
hydroelectric power or to expand agricultural land, resulting
in biodiversity loss.
Greece lost 63% of its wetlands between 1920 and 1991
(Barbier et al.,1997).
The aim of this case study is to estimate the non-use values of
the Cheimaditida wetland in Greece using the CVM which is
one of only two valuation techniques able to estimate non-use
values of environmental resources.
These non-use values can be combined with use values of the
Cheimaditida wetland (Psychoudakis et al., 2005 for
estimates) to obtain its TEV which can then be used for CBA of
management strategies for this wetland.
17. The main economic activities in the area are irrigation and
fertilizer-intensive agriculture and fishing.
Both are adversely affecting water quantity and quality of
the wetland, thereby reducing its ability to maintain
biodiversity and other life support functions (Seferlis, 2004).
Methodology:
The purpose of this study is to elicit the non-use values
associated with the wetland .
In this study, respondents were asked to state their valuation
(WTP) for an improvement in the quantity and quality of the
environment.
• These are the four characteristics, expected to generate non-use
values, were selected in this study: These were (a)
biodiversity, (b) open water surface area, (c) inherent
research and educational values that can be extracted from
the wetland and (d) values associated with environmentally
friendly employment opportunities.
18. The majority of the non-use values associated with wetlands that
were estimated were attributed to biodiversity.
Using these characteristics, and after extensive consultations with
scientific experts, the Greek Biotope and Wetland Centre, a
current scenario and two management scenarios were designed:
Scenario A: no management
decline in population and size of habitats:-10%
declines in Open water surface :-3–10%
Scenario B: managing the wetland to maintain current conditions
Population and size of habitats:-current level
Open water surface :-20%
Scenario C: managing the wetland to improve current conditions
Increase in Biodiversity by:-10%
Open water surface increase by :-60%
19. Due to limited time and resources, an open-ended approach was
used to elicit WTP values for the two different wetland
management scenarios.
An open-ended (OE) elicitation format asks the respondent
“How much are you willing to pay to…”, rather than a close-ended
format which asks “Are you willing to pay €X to…”.
The respondents were asked whether they are WTP to move
from scenario A to B and if yes, to state their maximum WTP.
Similarly the respondents were asked whether or not they are
WTP to move from scenario A to C and if yes, to state their
maximum WTP.
While stating their WTP values the respondents were reminded
of their budget constraints, household expenses, as well as
other substitute sites in Greece.
Result is shown in next slides
20. Means and standard deviations (in parenthesis) of respondent characteristics by group
21. Conclusion
The results from the valuation model reveal that those who
visited the wetland and those with higher incomes were more
likely to attach higher values to the non-use values of the
wetland.
The fact that there was sample selection bias for the first
improvement scenario (A to B) and no such bias for the second
improvement scenario (A to C)
It suggests that the sample in the first scenario failed to be
representative of the whole population whereas the sample for
the second improvement scenario was representative of the
whole population.
Thus, the Greek public would prefer a greater improvement in
management of the wetland to a smaller one.
22. Overall, the results of this contingent valuation case study
indicate that the Greek public attaches positive and significant
non-use values to the Cheimaditida wetland.
These results assert that CVM can produce valid nonmarket
estimates of non-use value.
These non-use values can be combined with direct and indirect
use values of the Cheimaditida wetland to estimate its TEV,
which can provide policy makers with the necessary economic
information to carry out a CBA, and thus to ensure the
sustainable and efficient management of the Cheimaditida
wetland.
23. References
Birol et al. ..“Using economic valuation techniques to inform water resources
management: A survey and critical appraisal of available techniques and an
application” 2006.
Bishop et al..” Assessing the Economic Value of Ecosystem Conservation” 2004.
Dixon et al.” Environmental Valuation: Challenges and Practices” 2008.
Dosi et al.” Environmental Values, Valuation Methods, And Natural Disaster
Damage Assessment” 2000.
Eastwood et al..” Generalisability in economic evaluation studies in healthcare: a
review and case studies” 2004.
The Economic, Social and Ecological Value of Ecosystem Services: A Literature
Review 2005.
Venkatachalam et al.“The contingent valuation method: a review” 2003.
Zdemiroglu et al..”Economic Valuation with Stated Preference Techniques” 2002.