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Chapter 4: Environmental Policy Analysis
Why do we value the environment?
3 reasons are behind valuing the environment.
The value indicates the efforts of humans to sustain natural resources. Namely, the valuation of Cox's Bazar which is located along the Bay of Bengal in south-eastern Bangladesh.
Valuation of the environment:
1. Identifying the affected categories
2. Estimating responses by the affected parties
3.Placing a monetary value on the physical damage
Types of values:
3 types of values are as follow:
1. Use value
2. Option value
3. Non-use value
Use value
It refers to the direct use of environmental resources. For instance, fish harvested from the sea, timber harvested from the forest. Pollution can create a loss of use-value such as when air pollution increases the vulnerability to illness, an oil spill adversely affects a fishery. It includes consumption value for direct and indirect purposes such as sound, touch, and eyesight on flower-garden respectively.
Option value
It refers to the value people place on a future ability to use the environment. It introduces the willingness to preserve an option to use the environment in the future even if one is not currently using it. Whereas use-value reflects the value derived from current use, option value indicates the desire to preserve a potential for possible future use.
Non-use value
It denotes the common observation that people are more than willing to pay for improving or preserving resources that they will never use. It includes bequest value such as children, grandchildren, altruistic value, and existence value such as wishing existence of Paharpur Buddhist Vihar of Naogaon if one goes.
Total willingness to pay includes the summation of use-value, option value, and non-use value.
Valuation methods are the following:
1. Revealed preference methods
2. Stated preference methods
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