¥ 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.