Techniques to Value Environmental Resources:
an Introductory Handbook

Published as a joint exercise by the
Commonwealth Department of the Environment, Sport and Territories,
the Commonwealth Department of Finance,
and the Resource Assessment Commission
Australian Government Publishing Service, 1995

Contents Page > Previous

Chapter 7 - THE POTENTIAL

When faced with a decision on the use of an environmental resource, the decision maker needs to place a value on the gains or losses associated with each option. In this way, the alternative uses can be assessed on a comparable basis. The purpose of this final chapter is to review the status of the techniques and suggest some further steps in valuation.

The valuation methods described in Chapters 3, 4 and 5 demonstrated that:

there are many techniques which can be used
many of the techniques have been applied in Australia over a number of years
many different types of environmental effects have been given a monetary value.

Some techniques have been regularly used for many years. For example, the change-in-productivity and property-value methods have long been used to value the unpriced effects of agricultural use of the land. The property-value method is used routinely to work out the cost of noise in the assessment of highway projects in New South Wales.

This substantial record, together with the constant need for economic information and the theoretical and market validity of the techniques, suggests that there is great potential for further applications. The examples have demonstrated that these techniques advance the sustainable use of resources and conservation of the environment.

THE NEXT STEPS

Debates about the techniques and the usefulness of their estimates of monetary value will continue. In Europe and the United States of America, handbooks are being prepared to encourage valuation and to promote the systematic use of monetary values in the development and appraisal of policies.

Research should continue to refine the techniques and better identify their uses. Even with the present state of knowledge, there are further roles for the values and techniques.

Replacement costs and relocation costs could be included as part of all analyses to capture the full costs of alternatives. Reliable values for environmental effects could be integrated into environmental impact statements.
The preventative-expenditure technique could be used to assess the effects of noise, domestic water quality, congestion and pollution.
The property-value technique has potential for widespread application to the urban and rural environment.
Contingent ranking could complement contingent valuation.
The key trade-offs in a decision could be regularly presented in results of analyses.
The opportunity cost of policies to avoid irreversibility could be routinely assessed and highlighted. The monetary values of environmental effects could be integrated into options for environmental standards and broad national priorities and into assessments of the balance between conservation and development.
Future losses in productivity could be added into today's balance sheets to better assess the economic worth of today's decisions.
The full market costs of the use, maintenance and replacement of environmental resources could become part of the financial accounts of firms. This would better reflect the costs of sustainable development.

REFERENCES

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Contents Page > Previous

Publications

Techniques to Value Environmental Resources:
an Introductory Handbook

Chapter 7 - THE POTENTIAL

THE NEXT STEPS

FURTHER READING ON THE TECHNIQUES

REFERENCES

Publications

Techniques to Value Environmental Resources: an Introductory Handbook

Chapter 7 - THE POTENTIAL

THE NEXT STEPS

FURTHER READING ON THE TECHNIQUES

REFERENCES

Techniques to Value Environmental Resources:
an Introductory Handbook