48
3 Economic Framework of Conservation
goods, the components of the total economic value are derived from the use value,
which is normally divided into the direct and indirect use value and the option
value, as well as from the non-use value, which consists of the bequest value and
the existence value 21 • Fig. 3.1 shows the desegregated values of biodiversity as an
example for the overall value of natural assets. One immediately obtains an idea of
the anticipated benefits derived from the different values and of the decreasing
quantifiability and valuability from left to right in the range of value categories
depicted in Fig. 3.1. The differentiation of the existing values of biodiversity
makes clear why genetic resources conservation should not only be supported
because of the use values, but also because of the non-use values (Turner, 1993,
Pearce et aI., 1990).
Various valuation techniques have to be applied to quantify the different
economic values. A number of techniques, which have been developed for
assessing the value of public goods in general, have been utilized for the valuation
of natural resources as well. Table 3.1 categorizes all relevant valuation
techniques according to the type of market they rely on and depending on the kind
of behavior of the individuals concerned. Where possible, the asset or parts thereof
are valued based on the average return of production as well as on some specific
adjustments. These calculations are based on actual market prices and factual or
potential behavior of the involved actors. The values of agricultural land, forest
and non-renewable resources are estimated on the basis of this technique. In the
case of the absence of a conventional market, prices of surrogate markets may be
used for valuing the asset. The underlying assumption for the utilization of
surrogate markets is the fact that the natural asset is linked to private goods and
therefore conclusions from the demand for the private good can be drawn for the
natural asset (Endres, 1995). This technique is used quite frequently for valuing
the progress of pollution and of biodiversity in general, especially through national
parks by the travel cost method. The majority of use values of natural resources
are able to be estimated by the techniques based on conventional or surrogate
markets whereas the non-use values mainly have to be estimated by utilizing
constructed markets. Underlying all the techniques corresponding to surrogate and
constructed markets is the willingness of individuals to pay for the environmental
good (Braden and Kolstad, 1991).
Missing or incomplete markets exist not only for genetic resources, but also for
land and water in several developing countries (Grohs, 1994; Rosegrant et aI.,
1997). Consequently, these techniques are applied to very different natural
resources. There are several approaches for valuing biodiversity. Most methods
treat biodiversity as non-marketed goods and services, utilizing either the
surrogate or constructed markets, thereby estimating people's willingness to pay.
Depending on the different methods used, economists are estimating different
values for different parts of biodiversity.
" See for more detail Chap. 3.2.2'
3 Economic Framework of Conservation
goods, the components of the total economic value are derived from the use value,
which is normally divided into the direct and indirect use value and the option
value, as well as from the non-use value, which consists of the bequest value and
the existence value 21 • Fig. 3.1 shows the desegregated values of biodiversity as an
example for the overall value of natural assets. One immediately obtains an idea of
the anticipated benefits derived from the different values and of the decreasing
quantifiability and valuability from left to right in the range of value categories
depicted in Fig. 3.1. The differentiation of the existing values of biodiversity
makes clear why genetic resources conservation should not only be supported
because of the use values, but also because of the non-use values (Turner, 1993,
Pearce et aI., 1990).
Various valuation techniques have to be applied to quantify the different
economic values. A number of techniques, which have been developed for
assessing the value of public goods in general, have been utilized for the valuation
of natural resources as well. Table 3.1 categorizes all relevant valuation
techniques according to the type of market they rely on and depending on the kind
of behavior of the individuals concerned. Where possible, the asset or parts thereof
are valued based on the average return of production as well as on some specific
adjustments. These calculations are based on actual market prices and factual or
potential behavior of the involved actors. The values of agricultural land, forest
and non-renewable resources are estimated on the basis of this technique. In the
case of the absence of a conventional market, prices of surrogate markets may be
used for valuing the asset. The underlying assumption for the utilization of
surrogate markets is the fact that the natural asset is linked to private goods and
therefore conclusions from the demand for the private good can be drawn for the
natural asset (Endres, 1995). This technique is used quite frequently for valuing
the progress of pollution and of biodiversity in general, especially through national
parks by the travel cost method. The majority of use values of natural resources
are able to be estimated by the techniques based on conventional or surrogate
markets whereas the non-use values mainly have to be estimated by utilizing
constructed markets. Underlying all the techniques corresponding to surrogate and
constructed markets is the willingness of individuals to pay for the environmental
good (Braden and Kolstad, 1991).
Missing or incomplete markets exist not only for genetic resources, but also for
land and water in several developing countries (Grohs, 1994; Rosegrant et aI.,
1997). Consequently, these techniques are applied to very different natural
resources. There are several approaches for valuing biodiversity. Most methods
treat biodiversity as non-marketed goods and services, utilizing either the
surrogate or constructed markets, thereby estimating people's willingness to pay.
Depending on the different methods used, economists are estimating different
values for different parts of biodiversity.
" See for more detail Chap. 3.2.2'