Environmental Economics and Valuation.pptVIP

Environmental Economics and Valuation Alberto Longo Department of Economics and International Development University of Bath, England A.Longo@bath.ac.uk Tel. +44 1225 384508 Integrated Assessment of Trade Related Policies and Biological Diversity in the Agricultural Sector International Environment House, Chateleine, Geneva, 15 July 2005 Why valuation? Once policies, biodiversity indicators, scenarios, targets have been identified, it is useful to compare them with the status quo by quantifying impacts in monetary terms. We have the opportunity to advise policy makers! Enable environmental impacts to be included in Cost-Benefit-Analysis (CBA) and therefore in Integrated Assessment To take account of environmental damages/benefits caused by the consequences of trade related policies To consider the monetary benefits of additional policies that protect/enhance the quality of the environment (biodiversity) Categories of environmental benefits Total economic value = Use values + Non use values Non use values= Option values + Existence values + Bequest values Use Values: benefits that derive from the actual use of the environment (using herbs for medicinal purposes) Option values: additional value placed on a natural resource by those people who want to have the option of using the goods and services in the future Existence values: People wish to maintain or improve environmental assets out of sympathy for animals and nature or from moral conviction. Bequest values: the desire to preserve environmental assets for the enjoyment of other people of both the present generation and the future generations. How do we valuate the effects of policies on biodiversity? Market based approaches Production function Cost of illness Cost based Non-marked valuation techniques Hedonic pricing method Travel cost method Contingent valuation Choice experiments Benefits transfer Are these techniques new? Harold Hotelling (1949) “An Economic Study of the Monetary Valuatio