Benefits and Costs of Non-market Value Methods for Environmental Management

Environmental programs and policies cost billions of dollars per year and environmental policy makers and managers can be assisted in their decisions on the allocation of public resources to environmental investments by information on the community’s preferences for environmental outcomes and actions. Ideally, this information will be expressed as monetary values (i.e. nonmarket values expressed as willingness to pay or willingness to accept) as this allows comparison of benefits and costs of environmental projects, and comparisons of alternative environmental benefits which would otherwise be incommensurate. Examples of these “non-market” benefits, include existence values for threatened species, the amenity value of an urban wetland, and recreation in natural places. Recognizing the need to quantify these and other non-market benefits, environmental economists have devoted considerable effort to the development and application of a range of non-market valuation (NMV) techniques. These have varying strengths and weaknesses and different techniques are suited to estimating different types of non-market values. This project will develop a rigorous framework for selecting the most appropriate approach to handling NMV information gaps for particular management or policy decisions. The aim of this research is to assist decision makers in three ways: (i) by demonstrating quantitative analyses to support a range of decisions about NMV methods; (ii) by developing heuristics about when particular methodological choices are more likely to be preferred; and (iii) by assisting decision makers to think through these decisions in a more sophisticated and complete way.