Language
Country/Area
No result found
Mysterious environmental value: Do you know what "indirect valuation" is? Uncover the hidden value!
In today's society, the importance of the environment is increasingly valued, but how to value environmental resources that cannot be traded in the market has become a major challenge. In this case, "indirect valuation" technology comes into being, providing us with a new way to understand and evaluate the value of these invisible resources.
What is indirect valuation?
Indirect valuation is a survey-based economic technique used to assess the value of non-market resources, such as environmental protection or the human impacts of externalities such as pollution. These resources do provide utility to people, but because they are not sold directly, they are difficult to value using price models. For example, people can enjoy the beauty of a magnificent mountain view but cannot quantify that value in monetary terms.
Indirect valuation surveys typically ask people how much they would be willing to pay, or the amount of compensation they would be willing to accept, to maintain a certain environmental feature (such as biodiversity).
Historical Background of Indirect Valuation
Indirect valuation was first proposed by S.V. Ciriacy-Wantrup in 1947, aiming to obtain the value of non-market goods from the perspective of market value. In 1963, Robert K. Davis first put the theory into practice by conducting surveys to estimate the value that hunters and tourists placed on specific natural areas. In his doctoral dissertation, "The Value of Outdoor Recreation: An Economic Study of Maine's Forests," Davis found good correlation between the survey results and value estimates based on travel costs.
Controversy and Challenges
Although indirect valuation techniques are gaining acceptance, their use still faces many challenges. Many economists question the validity of this approach, preferring to base their decisions on preferences reflected in market transactions. Early indirect valuation surveys often used open-ended questions, such as “How much compensation would you ask for if area X was destroyed?” Such questions can be affected by strategic behavior, resistance to answering, response bias, and respondents ignoring income constraints. .
In 1993, a panel chaired by Nobel laureates Kenneth Arrow and Robert Solow recommended that indirect valuation surveys should be carefully designed and controlled to ensure that accurate economic values are obtained.
Current international status
Today, indirect valuation is widely accepted as a real estate valuation technique, especially in the pollutant industry or other situations when market transaction models are not applicable. In addition, this technology is also used by US government agencies to conduct cost-benefit analyses, especially in projects that affect the environment.
Application scope of indirect valuation
The application scope of indirect valuation technology is very wide, including the evaluation of high-quality water sources and the value analysis of various ecological restoration projects. Specific examples include an assessment of water quality and recreational opportunities downstream of Glen Canyon Dam in the United States, and a biodiversity restoration project in a spawning ground of dead fish. Indirect valuation has also proven to be an important tool in the assessment of trophy lands in Kakadu National Park in Australia and in the United States.
ConclusionIn this era of emphasis on environmental value, indirect valuation techniques provide us with a new perspective to understand resources that cannot be evaluated by the market. This enables us to better balance the contradiction between economic development and environmental protection. However, this also raises a question: when we rely on these valuations, are we truly reflecting the actual value and significance of the resources?
