Advantages of the Market Price Method
¥ The market price method reflects an individual's willingness
to pay for costs and benefits
of goods that are bought and sold in markets, such as fish, timber, or fuel wood. Thus, peopleÕs values are likely to be
well-defined.
¥ Price, quantity and cost data are
relatively easy to obtain for established markets.
¥ The method uses observed data of actual
consumer preferences.
¥ The method uses standard, accepted
economic techniques.
Issues and Limitations of the Market Price Method
¥ Market data may only be available for a limited number of
goods and services provided by
an ecological resource and may not reflect the value of all productive
uses of a resource.
¥ The true economic value of goods or
services may not be fully reflected in market
transactions, due to market imperfections and/or policy failures.
¥ Seasonal variations and other effects on
price must be considered.
¥The method
cannot be easily used to measure the value of larger scale changes that are
likely to affect the supply of or demand for a good or service.
¥Usually, the
market price method does not deduct the market value of other resources
used to bring ecosystem products to market, and thus may overstate benefits.