Valuation of Ecosystem Services from Nordic Watersheds

From awareness raising to policy support? (VALUESHED)

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The emergence of the ecosystem services concept suggests that economic valuation studies are already fulfilling a role in raising awareness by demonstrating the loss of nature’s goods and services using monetary indicators. In order to have future relevance in capturing value and giving support to policy-makers, valuation methods must specifically address resource accounting, priority setting, and instrument design. This report provides an overview of economic valuation methods of ecosystem services from watersheds in the Nordic countries. The study was commissioned by the Nordic Council of Ministers and conducted by The Norwegian Institute for Nature Research, The Norwegian Institute of Water Research and Sweco Norge during the period May – November 2011. The study indicates that economic valuation methods can be applied to watershed management in multiple ways. However, policy makers should be wary of “one size fits all” valuation estimates that appear ready to use across different watershed types and stakeholder interests.



Valuation methods

Private goods are both excludable and rival in consumption, while public goods are typically neither. Since the consumption of private goods by one individual reduces the amount of the good available for consumption by others, and people can be effectively excluded from using the good, private goods can be valued through market prices. Non-market valuation methods are needed for economic assessment of impacts on public goods like environmental quality, for example water quality. Nonmarket valuation methods try to elicit individuals’ (or households’) preferences for public goods through their behaviour in markets for private goods which are related to the public goods (i.e. revealed preferences – RP), or their behaviour in constructed, hypothetical markets (i.e. stated preferences – SP) for the public goods.


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