China Policy Journal Volume 1, Number 1, Fall 2018 | Page 65

China Policy Journal
cultural or educational, are very often
non-excludable and non-rival, which
means that their exchange on the market
is impossible. Second, many aspects
of the wellbeing that an individual receives
from nature are not measurable,
and some elements of the total value of
nature to humans may not even be observable.
A good example is the non-use
value of the environment and resources:
simply knowing the “existence” of good
functions of the ecological system and
the assurance of their provision to future
generations can create satisfaction
that is not associated with any observable
consumption behaviors.
Previous studies have proven
that the non-use value may occupy a
high percentage in the total value of
the environment. Wattage and Mardle
(2008) found that the proportion of aggregated
preferences related to the use
value to conserve a wetland ecosystem
was 55.3%, compared with 44.7% for
the non-use value. Sander, Walsh, and
Loomis (1990) concluded that the use
values (e.g., irrigation, swimming, fishing,
and tourism) of the 15 rivers in the
state of Colorado in the United States
were only approximately 1/5 of their total
value; the other 4/5 of the value was
principally non-use value.
We can distinguish five categories
of ecological goods and service
(EGS) valuation methods. The first
consists of the methods that are based
on market prices; they only assess the
direct use value of EGS referenced to
their market value. The second category
consists of the methods based on
costs, which estimate the EGS value by
the cost of avoided damage or the replacement
cost of ecosystem losses. The
third category consists of the revealed
preference methods (e.g., hedonic
price, travel costs), which are based on
consumer preferences that are revealed
by their behavior in an existing market.
An example of this method, the hedonic
price, considers the complementarity
between air quality within an area and
house prices (Bateman et al. 2011; Desaigues
and Point 1993; Malër 1974)
and uses the increase of the house value
due to the better air quality as an assessment
of the economic value of the better
air quality, all else being equal. The
fourth category consists of methods
based on stated preference (e.g., contingent
valuation, discrete choice experiments),
which measure the value of
EGS via simulated markets to identify
survey respondent trade-offs between
the price to pay (or compensation to
accept) and improvement (or degradation)
of the environment. Finally, the
benefit transfer methods involve estimating
the value of EGS for a target site
using existing valuation estimates from
primary studies for similar sites that
explicitly use one of the four preceding
method categories (Navrud and Ready
2007).
Each method has its advantages
and disadvantages. The measure of
cost/market price is relatively easy to
use but only focuses on marketable
characteristics of the ecosystem. Revealed
preference methods depend
on observable consumer behaviors in
markets for complementary goods and
can thus only measure the direct- and
indirect-use values of EGS. Benefit
transfer is a secondary method that ex-
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