Tuesday, October 20, 2015

More valuation readings

Here is a great website for additional reading on valuation: 
Ecosystem Valuation

This article by john Loomis is also a good read for the "big picture": 
Economic Values without Prices (Loomis, Choices, 2005)

Here is another good summary article from Robert Mendelsohn and Sheila Olmstead:
The Economic Valuation of Environmental Amenities and Disamenities 

3 comments:

Leanna Kalicharan said...

Thanks Professor Schuhmann. The website is very concise and easy to navigate; only skimmed the other two sources but all seemed informational so will have to indulge in deeper reading.

However, I am perplexed at times. Valuation methodologies of environmental goods and services can take a market price (market valuation/based) approach and/or a non-market approach. Both or separate?
I know that each has varying sub-categories. Hope I am correct for non-market (non-market valuation) approaches which can be use-value or non-use value based. The website linked both together as valuation techniques. The CERMES technical report however, have them outlined separately. ?

This resource economics thing is giving me a beating at times.

Dr. Peter Schuhmann said...

Leanna- The value of a particular resource can include market components and non-market components. The latter may include values associated with use as well as non-use values. So the short answer is "both". Often times we have to use multiple valuation methodologies to understand how a resource or change in environmental quality contributes to human well being. When describing alternative approaches to valuation, it is common to group them according to the type of values that can be estimated (market, non-market, use, non-use) or according to the type of data that is used (market data, revealed preference data, stated preference data, data from other studies, etc.). I hope this helps.

Shelby White said...

In another course, I have read Priceless: On Knowing the Price of Everything and the Value of Nothing by Frank Ackerman. Ackerman attempts to make a case for the elimination of CBAs and suggests that we value the environment, just for the sake of valuing the environment. There is no need to calculate a price or value for ecosystem services or for conserving tropical forests,etc. It should be inherent that we protect these things because they are a part of life and hold many uncertainties. Ackermen is delusional in some regards, because without assigning these values through non-market valuation, policy-makers and average individuals may not understand the true value of something. Sometimes, economics does not work in the favor of the ecosystem. It may be more profitable to build a hotel than protect a species of fish. However, CBAs and non-market valuation are not the sole method of determining how valuable something is. There is a large moral and option value component associated with policy-decisions.

Non-market valuation is a neccessity in policy making. Otherwise, people may advocate to save a certain species, while ignoring a lesser-known, but more valuable species. CBAs help to convert ecosystems services and goods into monetary values. These are values that everyone can understand and are useful for supporting policy-decisions. Ackerman will likely not be able to eliminate the use of non-market valuation or CBAs in policy-decisions for obvious reasons. As of now, non-market valuation has become a popular method of monetizing things without a market value and this is unlikely to change.