Knowledge Platform

Valuation: monetary values

In this group we include methods aimed at the estimation of economic values generated by landscape management through monetary evaluation. Monetary evaluations take advantage of the consolidated neoclassical economic theory of utility and of producing simple results that are currently used in decision problems and policy-making, using a unit of measurement that users are usually familiar with. A commonly used classification of these methods distinguishes two main groups of techniques: stated/ revealed preferences and cost-based techniques, which refer to replacement costs and avoidance costs.

General Purpose and Application

Monetary evaluation reflects an attempt to translate environmental assets in a measurement unit that could be used in the cost benefit analyses applied to public decision processes. Stated preference techniques, such as contingent valuation and choice experiments, have been widely used to estimate the public preferences as expression of the value of landscapes and its valorisation. This has been particularly the case for the assessment of the visual quality and amenity values of landscapes.

Lessons learned

The significant disadvantages of some of revealed preferences methods (for monetary valuation) are the possibility to consider only the use value of the goods (mainly recreational use and/or of local residents), and are high data-intensive. When avoidance actions or replacement of services is not likely to occur, methods related to replacement/avoidance costs risk to over-estimate the value of the service.

The experiences carried out in the project ( ES, NL) shows that adaption to landscape-related evaluation requires further research. In particular it seems very interesting the potential yielded by a common grid of dimensions, to be adapted to the specific elements of different regions, to partially overcome difficulties with the high degree of local specificity of landscape features.

However, the discussion of results from the Montoro case study (Spain) point out several relevant issues for the use of data arising from the application of these methods. First, results of this study are associated to a set of assumptions and specificities (e.g. the selected landscape elements) which need to be taken into account before extrapolating them to other areas. It also assumes that use value is mainly due to landscape aesthetics, while there could be other value components. In addition, very specific assumptions may be required in the design of the experiment (e.g. cut-off on scales) that may not be of general validity. Finally, assumptions about complete landscape change may be unrealistic and need to be translated into more feasible partial or heterogeneous changes.

Further Reading

Freeman, A.M., 2003. The Measurement of Environmental and Resources Values. Resources for the Future, Washington, DC.