Valuing The Environment Essay Research Paper INTRODUCTIONEnvironmental — страница 2

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economists (Barde & Pearce, 1991). However, since there are circumstances where there are no behavioural footprints from which to infer value, the hypothetical preference approach is used. In this case, surveys are carried out placing consumers in hypothetical situations and asking them to express directly their environmental valuations (Pearce, 1993; Jacobs, 1991). As Chart 1 shows, there are two main hypothetical preference methods. The first, the contingent method, amounts to asking people how much they are either willing to pay or willing to receive for the conservation or loss of a particular environmental feature. The advantage of the contingent method is that it can evaluate environmental assets for which the public are willing to pay to preserve but most probably will

never encounter. An example of this approach is provided by Turner et al. (1994), regarding the Flow Country, an important natural wildlife habitat and wetland area in Northern Scotland. A firm revealed its intentions to drain and plant the area and conducted a contingent valuation method survey. The results showed that even though a limited number of people visit the area, individuals were willing to pay a higher sum to preserve the area than could ever be produced from growing timber there (Turner et al., 1994, p.123). The stated preference method or contingent ranking is the second method of hypothetical preference. In this case, the respondents are given a number of alternative situations and are asked to rank them. The preferences are then valued by linking them to the real

price of something traded in the market (Pearce, 1993). THE CASE FOR AND AGAINST MONETARY VALUATION Placing monetary values on environmental assets and resources can be useful, as it enables them to be compared directly with the financial benefits of a possible development. Environmental implications could be given the same weight as other financial impacts and may influence the decision making process so as to prevent environmental damage being inflicted. Furthermore, as it is unavoidable that resources will be consumed, monetary values can assist in deciding how to prioritise resource use. It also provides with a universal unit for comparing heterogeneous resources. Above all, the mere act of seeking values for the environment, would assist in dissolving the belief that Mother

Nature supplies everything for free. However, being incorporated into the economic system does not guarantee that environmental effects will not be ignored nor that they will be given the same importance. In order to reach a conclusion regarding the usefulness or suitability of valuation methods, it is essential to present the criticisms that have been put forward over the years. Although the travel cost method may seem straightforward in practice there a number of problems relating to this technique. First of all, the value of time spent in travelling to and from the site is usually not included in the calculations due mainly to the difficulty of defining the value of time. How does time spent in travelling for the purposes of work compare to that of travelling for recreational

purposes? In addition, what if one enjoys travelling? By omitting the value of time critics believe that the recreational value of a site is significantly underestimated. There have been attempts to calculate the value of time, however no consensus has been achieved. Furthermore, this method discriminates against those who value a site highly and choose to buy houses in close proximity to such a site. In addition, the method does not differentiate between two users that have travelled the same distance, but one because he/she particularly enjoys the site whereas the other simply because there is no substitute (Turner et al, 1994; Hanley & Spash, 1993). Furthermore, the isolation of particular characteristics of houses and the correlation to particular prices may prove to be

an obstacle in the implementation of the hedonic pricing method. In addition, this method requires the collection of a large amount of information which is sometimes inaccessible and too complex to analyse, of which the omission may influence considerably the results of the equations (Jacobs, 1991; Hanley & Spash, 1993). It also assumes that people are free to choose where they live and ignores the fact the housing markets are often segmented on grounds such as ethnic composition (Turner et al, 1994). In addition, Abelson (1979) argues that the logic of revealed preference is inadequate, as preferences cannot always be inferred from behaviour. As evidence he describes the story of the donkey that cannot choose between two haystacks and choosing neither dies of starvation. One