¥ The methods may provide a rough indicator of economic value,
subject to data constraints and the degree of similarity or substitutability between
related goods.
¥ It is easier to measure the costs of producing benefits than
the benefits themselves, when goods, services, and benefits are non-marketed. Thus, these approaches are less data- and
resource-intensive.
¥ Data or resource limitations may rule out valuation methods
that estimate willingness to pay.
¥ The methods provide surrogate measures of value that are as
consistent as possible with the economic concept of use value, for services which may be
difficult to value by other means.
Issues and Limitations
¥ These approaches assume that expenditures to repair damages
or to replace ecosystem services are valid measures of the benefits provided. However, costs are usually not an accurate measure of
benefits.
¥ These methods do not consider social preferences for
ecosystem services, or individualsÕ behavior in the absence of those services. Thus, they
should be used as a last resort to value ecosystem services.
¥ The methods may be inconsistent because few environmental
actions and regulations are based solely on benefit-cost comparisons, particularly at the national
level. Therefore, the cost of a protective
action may actually exceed the benefits to
society. It is also likely that the cost of
actions already taken to protect an ecological resource will underestimate the benefits of a new
action to improve or protect the resource.
¥ The replacement cost method requires information on the
degree of substitution between the market good and the natural resource. Few environmental
resources have such direct or indirect substitutes. Substitute goods are unlikely to provide the same types of benefits as the
natural resource, e.g., stocked salmon may not be valued as highly by anglers as wild salmon.
¥ The goods or services being replaced probably represent only
a portion of the full range of services provided by the natural resource. Thus, the benefits of an action to protect or restore the
ecological resource would be understated.
¥ These approaches should be used only after a project has been
implemented or if society has demonstrated their willingness-to-pay for the project in
some other way (e.g., approved spending for the project). Otherwise there is no indication that the value of the good or service provided by
the ecological resource to the affected community greater than the estimated cost of the
project.
¥ Just because an ecosystem service is eliminated is no
guarantee that the public would be willing to pay for the identified least cost alternative merely
because it would supply the same benefit level as that service. Without
evidence that the public
would demand the alternative, this methodology is not an economically
appropriate estimator of ecosystem
service value.