PALAWAN STATE UNIVERSITY

GRADUATE SCHOOL
Master of Science in Environmental Management

VANESSA C. JABAGAT
Address: RV. Mitra Street, Brgy. Pulot Center Sofronio Española Palawan
EMAIL: vanessajabagat01@gmail.com
Contact No: 09561556595
______________________________________________________________________________

Esc.207 Economic Valuation

Professor: Dr. John Patrick Regoniel

Module 3: THE ECONOMIC VALUE

For this week, summarize the concepts that you have learned in this module.
Strive to write a 400-word essay.

  Economic valuation is a concern ultimately with the value of natural resources to

improve human welfare., The various environmental benefits resources and ecosystems are
measured in terms of their contribution to providing goods and services of value to humanity.
However, some members of society may argue that certain ecosystems and living resources they
contain may have an additional ‘pre-eminent’ value in themselves beyond what they can provide
in terms of satisfying human preferences or needs. From this perspective, preserving certain
environmental resources could be a matter of moral values rather than efficient or even fair
allocation.
Damage and loss of environmental resources is an economic problem because important
values disappear, some perhaps irreversibly, when these resources are degraded or lost. Each
choice or option for the environmental resource – to leave it in its natural state, allow it to
degrade or convert it to another use – has implications in terms of values gained and lost. The
decision as to what use to pursue for a given environmental resource, and ultimately whether
current rates of resource loss are ‘excessive’, can be made only if these gains and losses are
properly analyzed and evaluated. This requires carefully considering the values gained and lost
under each resource use option.

Economic valuation is an attempt to provide an empirical account of the value of

services and amenities or of the benefits and costs of proposed actions (projects or policies) that
would modify the flow of services and amenities.
In this course to appreciate the total value of an environmental improvement or asset, an
approach called total economic value (TEV)that has been developed by economists. TEV can
be divided into two broad areas: use values and non-use values. Use values are associated with
direct use of the environment such as fishing and swimming in a lake, hiking in a forest -- or
commercial uses such as logging or farming. Non-use values are related to the knowledge of the
continued existence of the environment (existence values), or the need to leave environmental
resources to future generations (bequest values). Methods Used for the Environmental Valuation
Contingent Valuation Method (CVM)(1) Travel-Cost Method(2) The Hedonic Price Method(3)
Preventive Expenditure Method(4) Surrogate Markets(5) Property-value Method Wage-
differential Approach and Opportunity Cost Method.
Important issues for environmental economics to resolve. First is the discount rate issue,
given that many environmental costs and benefits are long term this needs to be taken into
account in calculations. Second is the issue of risk and uncertainty. The environment has
unknown resilience and resistance and impacts on the environment are difficult to predict with
reasonable certainty. Thirdly, environmental impacts are difficult to measure. Fourthly,
valuation of the environment in monetary terms is difficult, special techniques are used but are
not perfect. Finally, there may be distortions to the market, which undervalue the environment
(such as taxes, subsidies, tariffs, fixed exchange rates, interest ceilings, and minimum wage
rates). Nevertheless, it is essential that the government utilize environmental economic valuation
methods so that benefits of the natural environment to society can be assigned monetary values
and fairly compared with other benefits. When this is done, we may well recognize the error of
some of the choices that we are making which promote environmental degradation as an
unavoidable cost of economic development. We may in fact find that alternative development
approaches that promote environmental conservation are more valuable to society's socio-
economic development.