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.