Economic Valuation of Wetlands: Valuation Methods
Economic valuation methods are diagnostic tools which help assess individual or collective preferences for wetland ecosystem services in monetary terms. Such values can be estimated based on information directly derived from market transaction or through transactions in related markets. In cases where markets do not exist, individuals can still express value in terms of their ‘willingness to pay’ for a perceived increase in benefits or ‘willingness to accept’ compensation for a decrease in benefits. The choice of a valuation method needs to be made based on consideration of ecosystem services and the value component that is to be elicited. While direct market valuation techniques are suited for provisioning services, regulating services have been mostly valued using production function techniques or avoided costs and cultural services through a range of stated and revealed preference methods. The potential advantages and limitations, including the range of uncertainties associated with value estimates, need to be carefully considered while applying the values in policy contexts. For a robust policy interpretation, economic values need to be complemented by a good understanding of biophysical complexities as well as socio-political contexts in which ecosystem services are delivered and managed.
KeywordsEconomic valuation Revealed preference Stated preference Benefit transfer Uncertainty
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