Valuing concerns for nature Flashcards
What is use value vs non-use value?
- Use value: The value that comes from using or consuming a resource of some kind
- Non use value: Not using a resource but still getting the positive effect of it and finding it valuable
There are 4 types of use value, name and explain them
- Direct use value: The value from directly using a resource for personal or economic benefit
- E.g. harvesting timber to sell or use as firewood
- E.g. fishing in a lake for food - indirect use value: The value of of benefits provided by a resource without directly consuming it
- E.g. enjoying a hike in the forest
- The forests ability to improve air quality - Option value: Value a resource because you know you can use it (in the future)
- E.g. Bring a swimsuit to a lake so I have the option to swim if I want - Bequest value: “Reserve”. The value of preserving a resource so that it can be used by future generations
- E.g. protecting forests or beaches
Resonate about the different non-use values (2)
- Bequest value:”Reserve”. The value of preserving a resource so that it can be used by future generations
- E.g. protecting forests or beaches - Existence value: The value of knowing a resource exist, even if you never directly use it.
- E.g. The amazon rainforest. The forest is important to many people since it provides the planet s with many things, however most people will never see it
- E.g. protecting endangered species like whales, even though may never see them in person
What are monetary evaluation methods?
Techniques used to assign a monetary value to goods and services, especially thise that are not traded in traditional markets, such as environmental resources or public goods.
Can be divided into Demand curve approach and non demand curve approaches
Regarding the demand curve approach, what does it mean and what techniques does it contain? Explain
Demand curve approach is evaluating value related to the usage of the resources. It can be divided into Expressed preference methods and revealed preference methods
Explain the expressed preference methods
- Askin about how much people are willing to pay to preserve an asset
3 Big weaknesses:
- People may claim that they are willing to pay a lot to improve something, but in reality they would not pay as much
- Starting point bias. Happens when the initial suggested amount in a question affects the respondent answer. So if starting point is high, responses tend to be around a similar value
- Income effect: refers to how a persons income may affect their willingness to pay for something
What are revealed preference methods?
Shows what people like/value based on their action/what they do instead of asking them directly.
There are two different methods within revealed preference methods: Travel cost method and Hedonic pricing method
What is the travel cost method? Also explain the weaknesses
A revealed preference method:
Assumes that the amount of money people are willing to pay for visiting a site is reflected in the cost they incur to travel there
Weaknesses:
- Multiple visit journeys: hard to determine which cost is valued: 2€ for metro or €400 flight ticket?
- Substitute sites: Alternative locations people might visit instead of the main site, affecting its value. For e.g. another historical site in Rome could replace the colloseum for some visitors
- Non-paying visitors: Is someone has walked to a site that value corresponds to zero, which is not accurate nor realistic
What is the Hedonic pricing method? Are there any weaknesses?
A revealed preference method: A way to estimate the value of a good or service by looking at its individual features or characteristics, to find out how much each characteristic contributes to its value.
- E.g. the location of a house will affect its price: houses near metro cost 20% more than houses further away from the metro
- Weakness: a lot of data is required
What is the non demand approach? What are the methods within this category?
Assesses the value of environmental goods or services without relying on market demand or peoples willingness to pay. More related to external factors like pollution
Contains the following methods:
- Dose response approach:
- Replacement cost techniques
- Mitigating behavior
- Opportunity cost
What is the Dose response approach?
A non-demand curve approach. Measures how pollution affects resources (like fresh air) and its economic value
- E.g. If a tree normally produces 100 kg of apples worth €100, but a nearby incinerator reduces the growth to 80 kg with 80€. The 20€ loss shows the cost of polluted air or how much fresh air is valued
What is the replacement cost techniques?
A non-demand curve approach. The cost of replacing or restoring a damaged asset
- If planting trees costs 200€ to improve air quality , the unpolluted fresh air is valued at 200€
What is mitigating behavior?
A non-demand curve approach. Doing something to prevent the environment from being damaged
E.g. if the government installs an incinerator with a filter to reduce pollution costing €300, then the economic value of fresh/unpolluted air is €300
What is opportunity cost?
A non-demand curve approach. Estimating the benefits of an activity causing the environmental damage
- An incinerator also have positive impacts, such as job creation (100€), which could lead to benefits being higher than the negative effects, like 20€ lost from air pollution
- Obs! Important to add many aspects in real life:
For e.g. benefits 100€ and damages 20€ , 20€ may not include the cost for health care due to respiration problems from polluted air
