ANNEX 1: ANNOTATED REFERENCES ON VALUATION

by Ms. Carol Turnbull

Dixon, J. A., L. Fallon Scura, R.A. Carpenter, P.B. Sherman. 1994. Economic Analysis of the Environmental Impacts. London: Earthscan Publications Ltd.

This volume is the second Earthscan edition of Economic Analysis of the Environmental Impacts of Development Projects. This new edition has been substantially revised and updated. Recent field experience provides many new case-studies and references. In addition, the presentation of valuation techniques has been reorganized to reflect the applicability of the various techniques in the field.

The volume is divided into two parts. Part I presents the valuation methods. Part II is a detailed presentation of nine case studies.

The first chapter provides an introduction to economic analysis of the environment and its relation to development, specifically at the project level. Chapter 2 discusses the use of environmental assessment to identify and quantify project impacts and its contribution to economic analysis and priority setting. Chapter 3 provides the theoretical basis for the valuation techniques addressed in later chapters.

Generally applicable techniques using market prices are presented in chapter 4. Three different techniques are presented: changes in productivity and the value of output, cost of illness, and opportunity costs. Guidelines for choosing a technique, assumptions, and constraints of each method are discussed. The authors cite many examples and case studies (included in part II), as well as references for further investigation.

Chapter 5 presents seven techniques termed 'selectively applicable' because of data requirements, stronger assumptions, or care required to use them. Two surrogate market techniques are presented: travel-cost, and marketed goods as surrogates for environmental services or goods. Five contingent valuation techniques include bidding games, take-it-or-leave-it experiments, tradeoff games, costless choice, and the Delphi technique. Examples and case studies illustrate the advantages and limitations of each technique.

Potentially applicable methods are presented in chapter 6. These include two general categories: hedonic value methods, and macroeconomic variables and models. Property and other land-value approaches, and wage differentials are the hedonic methods addressed. The macroeconomic variables and models discussed are linear programming, natural resource accounting, and macroeconomic and economywide policies.

Chapter 7 addresses issues of economic valuation that generate controversy and raise ethical questions. Questions of income distribution; intergenerational equity; risk and uncertainty; irreversibility; value of biodiversity; incrementalism; value of human life; and cultural, historical, and aesthetic resources are discussed with brief descriptions of current thought on each issue.

Part II completes the volume. The nine case studies illustrate the techniques discussed in chapters 4 and 5, and demonstrate some finer points of analysis.

Dixon, J. A., R.A. Carpenter, L.A. Fallon, P.B. Sherman, S. Manopimoke. 1986. Economic Analysis of the Environmental Impacts of Development Projects. Manila: The Asian Development Bank.

The following description is from the authors' abstract:

The objective of this source book is to demonstrate the applicability of a range of quantitative economic valuation techniques to the planning and appraisal of Bank projects. The approaches attempt to harness economic analysis to the problems surrounding the maintenance of human welfare and ecological stability in managed natural systems.

Following a general introduction, the use of environmental assessment procedures in project identification and specification is discussed in chapter II. The third chapter outlines the basic theoretical assumptions that underlie the project appraisal process. Chapters IV and V then describe and illustrate a range of generally and potentially applicable techniques for the economic measurement of environmental impacts. The sixth and final chapter summarizes the issues that remain to be addressed in the development of a truly comprehensive project appraisal methodology. Several worked case studies which draw upon actual project experience are presented in appendix A.

The overall philosophy of the source book is that there is no substitute for the systematic economic evaluation of the intended and unintended environmental consequences of development initiatives.

Dixon, J. A., and M. M. Hufschmidt, eds. 1986. Economic valuation techniques for the environment: A case study workbook. Baltimore: Johns Hopkin University Press.

The following description is from the editors' introduction in Chapter 1:

This compilation of case studies is a companion volume to Environment, Natural Systems, and Development: An Economic Valuation Guide by Hufschmidt et al.... Both books result from a continuous, multinational collaborative study begun in 1979 under the auspices of the Environment and Policy Institute (EAPI), a unit in the East-West Center at Honolulu, Hawaii....

This case study workbook is designed for use in conjunction with the Guide to illustrate how environmental dimensions can be explicitly incorporated into project design and evaluation....

The workbook is divided into two parts. The first part contains three chapters including... [the] introduction. Chapter 2 presents a hypothetical case study that illustrates many of the errors commonly made in project evaluation. Since the approach of the Guide is largely concerned with economic rather than financial analysis, these differences are stressed in Chapter 2 of this workbook....

Chapter 3 presents information on time horizons, discounting and computational aids. Although details of valuation techniques are presented in the Guide... this chapter discusses points that have frequently been raised in initial dissemination workshops based on the Guide and various case studies. As with most questions in an actual analysis, there is no single correct answer to such frequently raised queries as to what is the appropriate time horizon or discount rate. Rather, information is presented that will assist the analyst in choosing a reasonable value given the facts of each case. Standard formulas used in project evaluation are also presented and discussed, and the use of discounting tables is covered.

The second part of the workbook consists of a brief introduction and seven case studies based on actual projects in five Asia-Pacific countries. Each case study is presented as a self-contained teaching unit in a standard format. The problem to be studied is explained and data are presented. The appropriate valuation technique is introduced, and the steps in the analysis are outlined for the reader. Finally, a separate sample solution is presented for each case study.

Freeman, A. M.. 1993. The Measurement of Environmental and Resource Values. Washington, D.C.: Resources for the Future.

Freeman's 1979 volume The Benefits of Environmental Improvement: Theory and Practice, was recognized as a successful integration of the then current theoretical knowledge of environmental benefit estimation. This new volume is a revision of the earlier volume. It includes new material on contingent valuation, the valuation of mortality risks, and intertemporal welfare measures. The publishers expect this volume to “set the standard for the next decade of research in environmental economics” (p. xvi).

Chapters 1 through 5 provide an overview of resource evaluation, basic theories of direct and indirect benefit estimation, and nonuse values. Chapter 6 discusses hypothetical methods of valuation. Chapters 7 through 9 address aggregation of values over time, risk and uncertainty, and factor pricing of environmental quality. A discussion of health effects and recreational uses valuation, property values, and hedonic wage models, completes the volume. Table 14-1 in the final chapter provides a summary of techniques applicable to given environmental sectors and the chapter location of the relevant discussion.

In his conclusion, the author adds two qualifications to an optimistic assessment of the state of the art:

1. The economic framework, with its emphasis on human welfare, cannot adequately value issues such as biodiversity, and protection of ecosystems, except that part of the value which estimates of nonuse and human use can capture.

2. Welfare estimates can be sensitive to the effects of model choice and choice of functional form. A better understanding of the properties of model uncertainty and their contribution to estimates of welfare uncertainty is needed.

Godoy, R., R. Lubowski, and A. Markandya. 1993. A method for the economic valuation of nontimber tropical forest products. Economic Botany. vol. 47 pp. 220-233

This journal article presents a method for conducting a valuation of nontimber tropical-forest products. Reviewing 24 quantitative studies drawn from anthropology, zoology, ethnobotany, and economics, the authors discuss problems with past studies and make recommendations for future work. Four major problems are identified in studies to date:

1. Incompatibility of results
2. The tendency to examine flora or fauna, but not both
3. Lack of attention to sustainability
4. Disproportionate attention to Latin America.

The authors discuss problems and limitations of current methods and make specific recommendations for study design, measurement methods, pricing of forest goods, estimates of marginal cost, and assessments of sustainability. They caution that researchers must more rigorously address methodological problems to obtain generalizable results.

Gregersen, H.M. 1982. Valuing Goods and Services from Tropical Forests and Woodlands. U.S. Congress, Office of Technology Assessment.

This report opens with a discussion of the use, applicability, and limitations of monetary valuation. A framework for economic evaluation is introduced in section II, and discussed with relation to quantifying tropical forest outputs. Problems specific to valuation in tropical forests are identified and discussed. A discussion of shadow pricing includes examples drawn from fuelwood substitution and stresses the importance of political acceptability in selection of methods. (Appendix 2 contains a reprint of a survey article by P.F. O'Connell^[5] that further describes various shadow pricing methods).

In section III, a discussion of the current use (and, in some cases, disuse) of economic analyses in decision-making related to tropical forestry activities addresses the following institutions in separate sections: the private sector, development banks, bilateral institutions, multinational development agencies, and government agencies of tropical nations. Each section highlights examples of use and briefly summarizes some challenges to economic analysis for these institutions.

The report closes with a discussion of strategies for improving economic evaluation systems and their use. The author stresses the importance of distinguishing who pays and who gains, as well as externalities and linkages on varying time horizons.

Gregersen, H., A. Lundgren, T. Graham-Tomasi, K. Kanel. N. Meyers. J. Holler. Z. Xu. 1990. Valuing the Contributions of Forests to Human Welfare: Theory and Practice. Background Papers. St. Paul, MN: Forestry For Sustainable Development Program, FAO of the United Nations, the United Nations Environment Programme, and the World Bank. Draft.

This collection of background papers was produced as part of the joint FAO, FFSD, UNEP, World Bank project to develop Guidelines for Assessment of Forestry Project Impacts (GAFPI). It presents the then current state of the art methodology and practice in assessing the contributions of forests to human welfare. These papers focus on the valuation of benefits and costs of forest projects.

In the opening paper, Gregersen and Lundgren examine the relative nature of values and the importance of specifying a perspective before attempting valuation exercises. In two separate papers, Graham-Tomasi addresses the conceptual basis for and methodologies of valuation. Kanel identifies forest products and services and reviews empirical valuation methods. Sustainable harvesting of nontimber products and services is the focus of Meyers' paper. He looks at several categories of products and models, including extractive reserves, traditional forest land agroecosystems, value of biodiversity, and buffer zones. Holler addresses the assessment of wildlife values. She stresses the importance of understanding wildlife populations, habitat, and human-wildlife linkages, and proposes a methodology to incorporate both market and nonmarket values into a comprehensive framework for wildlife valuation. In the final paper, Xu provides an overview of methodology and issues related to the capital value of forests. The authors' working bibliography on valuation of forest outputs is included as an appendix to the volume.

Hufschmidt, M. M., et al. 1983. Environment, Natural Systems, and Development: An Economic Valuation Guide. Baltimore and London: Johns Hopkins.

A multinational team of economists and natural resource professionals prepared this volume under the auspices of the East-West Environment and Policy Institute (EAPI). It is designed as a training guide to illustrate the application of economic analysis techniques in real-world problems.

The volume contains eight chapters with many figures and tables to illuminate the text. Chapter 1 contains a conceptual overview and introduction to benefit-cost analysis. The institutional and planning setting is the subject of chapter 2. Chapter 3 discusses principles of benefit-cost analysis and their extension to the environment.

The remaining chapters address specific aspects of valuation and analysis. Chapter 4 introduces a discussion of activity analysis, with a specific focus on residuals, on-site and off-site linkages, and the selection of activities to analyze. Chapter 5 examines the analysis of effects on natural systems and receptors. The discussion highlights problems of estimation, choice of models, and gives examples of different approaches to analysis. Environmental quality valuation is examined using two different approaches in chapters 6 and 7. Chapter 6 discusses market, surrogate market, and survey-based valuation approaches from the benefit side, while chapter 7 assumes valuation from the cost side. The final chapter introduces input-output models and linear programming in a discussion of multi-activity economic-environmental quality models. An annotated bibliography of key references completes the volume.

IIED. 1995. Economic analysis of tropical forest land use options: a review of methodologies and applications. (Forthcoming)

This forthcoming report by the International Institute for Environment and Development (IIED) presents the preliminary results of a literature review of empirical and methodological research on tropical forest land use options (TFLUO). The report is part of a two-phase study to “develop methods to assess the net economic benefits and distributional consequences of alternative tropical forest land use options” (p. 1). Phase I (which includes this report) will survey and assess current methodology, identify possible Phase II partner(s), and conduct trial valuations to test methodology. Phase II will seek to apply the methodology of Phase I in a detailed case study.

More than 250 bibliographic sources on economic assessment of TFLUO are presented in appendix D. Of these, 69 were selected for detailed staff review. Section 4 discusses the findings of 55 of these articles and reviews, in this context, the primary economic analysis techniques used in the tropical forest setting. Complete reviews of the 55 selected articles are presented in Appendix C. The best of these articles are discussed at greater depth in section 5. The final section assesses the results of the literature review, including the range and strength of geographic coverage, land use options, forest products and values, economic methodology, and quality of data. In addition, gaps in past research and future research priorities are identified and discussed.

Lockwood, M., T. DeLacy. eds. 1992. Valuing Natural Areas: Applications and Problems of the Contingent Valuation Method. Proceedings and related papers from a workshop held 29 & 30 June 1992, Charles Stuart University, NSW, Australia.

The following description is from the editors' foreword:

This volume bring together for the first time a number of papers by. Australian researchers and policy makers concerned with the role of non-market valuation, and in particular contingent valuation, in assisting natural area land use and resource allocation decisions. Two papers by the eminent US researcher Dr. George Peterson - a recent case study and a state-of-the-art critique - also give this compilation an international perspective.

The first two papers in this volume give a general description of non-market valuation methods and review some of the economic evaluations undertaken in Australia in the 1980s. Six case study applications of contingent valuation follow. These applications deal with a range of natural area valuation problems: wildlife, wetlands, dune systems and native forests. The next four papers examine some technical and philosophical issues associated with contingent valuation. The final three papers discuss the problems of using contingent valuation results in a policy context, assess the way forward for contingent valuation in Australia, and review recent innovative research into the method.

Munasinghe, M., E. Lutz. 1993. Environmental economics and valuation in development decisionmaking, in Environmental Economics and Natural Resource Management in Developing Countries, M. Munasinghe ed., Ch 2. Washington D.C.: The World Bank.

This chapter opens with a general discussion of environmental economics and the incorporation of environmental values into project evaluation, national accounting systems, and economic policies. A discussion of environmental cost-benefit analysis includes coverage of valuation concepts, multi-objective decision-making, discount rates, and risk and uncertainty.

The authors use many examples and case studies to illustrate a variety of practical approaches to valuation, including the use of conventional markets, implicit markets, and constructed markets. Change in productivity, loss of earnings, replacement cost, shadow projects, travel cost, property value, and contingent valuation are among the methods discussed.

The authors suggest that the use of shadow projects, “that provide for substitute environmental services to compensate for the loss of environmental assets under ongoing projects” (p. 32), is most relevant when 'critical' environmental assets are at risk, because the use of shadow projects assumes that maintaining environmental capital is a constraint. They caution that studies based on property value and wage differential have limited applicability in developing countries because they assume competitive markets, a high level of information, and elimination of all other factors besides the environment that might influence prices. Contingent valuation is recommended for use in order of magnitude valuations because it does not provide precise estimates when compared with market-based approaches.

Annex 2B provides a more detailed presentation of case studies from Lesotho, Zimbabwe, Costa Rica, Kenya, and Haiti.

Pearce, D.W., A. Markandya. 1989. Environmental Policy Benefits: Monetary Valuation. Paris: OECD.

This report on economic valuation of the benefits of environmental measures grew out of the OECD Conference on Environment and Economics held in 1984. It attempts to extract and compile a summary of the “best” benefit assessment work done before the report's publication. The report deals solely with benefit assessment and the techniques and procedures needed to conduct monetary evaluation.

Chapter 1 discusses the importance of environmental policy and rationale for monetary assessment. A discussion of the merits of alternative nonmonetary techniques continues into chapter 2, but no systematic analysis of nonmonetary techniques is attempted. Chapter 3 introduces concepts of total economic value.
Chapter 4 presents techniques of direct and indirect valuation. Hedonic pricing, value of life using wage risk studies, contingent valuation, and travel cost are discussed in separate sections. Each section opens with an introduction to the technique, difficulties associated with its assumptions and requirements. Case studies are discussed in the text and summarized in tabular form for each section.

In Chapter 5, dose-response studies are presented as indirect procedures for benefit estimation, with separate sections on pollution and health, material corrosion, vegetation damage, and particulate matter effects on household cleaning. Each section discusses some challenges of that particular valuation. Summaries of case studies illustrate the progress being made in statistical and scientific approaches.

Chapter 6 discusses the role of discount rates in determining future values of environmental damage and assets. The Krutilla-Fisher-Porter model is presented as an example of an approach to incorporating irreversible damage into cost-benefit problems. The authors offer their assessment of the applicability of techniques to the problems of different environmental sectors in tables 15 and 16 of chapter 7. Eight annexes provide a more detailed quantitative treatment of option pricing, hedonic pricing, hedonic wages in the labor market, willingness to pay, contingent valuation, travel cost models, valuing health, and the Krutilla-Fisher approach.

Pearce, D., A. Markandya, E.B. Barbier. Blueprint for a Green Economy. 1989. London: Earthscan Publications Ltd.

This volume opens with a discussion of sustainable development and environmental policy. Chapter 3 provides a good basic introduction to economic valuation of the environment and the reasons for using monetary measures.

The authors summarize case studies from the Netherlands and Germany to illustrate the use of benefit estimation as a measure of the importance of environmental damage. A case study from the U.S. provides a different approach to the same problem using estimates of damage avoided. The authors caution that nonmarket pricing must be tested for consistency and reliability by testing with results in a similar context, with results using other techniques, and with results using “real market” experience. Direct valuation techniques using willing to pay (WTP) and willingness to accept payment (WTA) are addressed in the remainder of the chapter.

Three case studies illustrate the use of hedonic pricing techniques to estimate environmental quality. The studies use the impact of air pollution, aircraft noise, and traffic noise on property prices as measures of environmental quality. Contingent valuation and travel cost approaches are compared in a case study of water quality at the Monongahela River, Pennsylvania, USA. Membership in conservation and nature appreciation groups in the UK is used to estimate existence value of environmental goods. Option values and existence values are compared in a study of wildlife from the U.S.

“Annex to Chapter 3” addresses the difficulties in applying valuation techniques. It comments on data problems, mathematical and statistical difficulties, economic assumptions and interpretations, and problems of accuracy and reliability, for both direct and indirect approaches to valuation. Chapters on environmental accounting, discounting, and policy incentives complete the volume. Annex 1, entitled “A Gallery of Definitions,” addresses the difficulty of rigorously defining sustainable development and provides a variety of definitions.

Pearce, D., D. Whittington, S. Georgiou, D. James. 1994. Project and Policy Appraisal: Integrating Economics and Environment. Paris: Organization for Economic Co-operation and Development.

This volume focuses on projects and policies that are environmental in purpose or will have a significant environmental impact, and through a discussion of valuation, attempts to answer the question, “How shall we decide economic and environmental policies and investments?”

Parts I and II (chapters 1 through 5) provide an introduction and a basic theoretical overview. The authors discuss the effect of changes in states of the world on individual well-being in the context of economic efficiency. They also address the use of decision rules in policy choice and the aggregation of tradeoff coefficients to compare policy alternatives. Chapter 5 examines shadow pricing and the estimation of coefficients to convert market prices to economic prices.

Part III, entitled “Valuation,” opens with a review of principal techniques for valuation of nonmarket goods and services. Tables 6.2 through 6.7 provide lists of recent studies, selected to show trends in valuation research. Studies are compared by environmental sector, valuation technique, and study location. Specific valuation techniques are addressed separately in subsequent chapters.

Chapter 7 addresses contingent valuation, some practical difficulties with this approach, and its importance for estimating environmental benefits where other techniques cannot be applied. Chapter 8 discusses the use of surrogate markets to estimate values of environmental goods and services. The authors discuss property value, travel cost, and wage risk methods, as well as the use of markets for substitutes of an environmental good or service. The use of dose-response relationships for damage function estimation is examined in chapter 9. The benefit transfer approach, discussed in chapter 10, uses the results or consequences of previous projects to estimate economic values of a similar project. The discussion includes three variations on the method, as well as a summary of the advantages and difficulties of its use. Chapter 11 returns to a policy perspective with a discussion of how changes in environmental assets might be incorporated into the underlying theory of national accounting.

Part IV addresses discounting, risk and uncertainty, and time. Under the heading “Implementation,” part V contains chapters devoted to government intervention, pricing, and regulation. Fourteen annexes provide more in-depth treatments of selected computational forms and case studies.

Peterson, G.L., B.L. Driver, R. Gregory, eds. 1988. Amenity Resource Valuation: Integrating Economics with Other Disciplines. State College, Pennsylvania, USA: Venture Publishing, Inc. 260 pp.

This book attempts to integrate economics with other behavioral sciences, such as sociology and psychology, to address some technical issues that are sources of controversy in the valuation of nonpriced amenity goods and services.

This volume is the product of an interdisciplinary workshop process. Teams were designed to “facilitate stress and integration of different points of view” (p. xi). These teams drafted articles on topics of common interest. At a 3-day workshop, papers were grouped into modules and each module was discussed in two independent sessions, one led by an economist and one by a noneconomist. Five people attended the workshop to critique the overall goals, products, and process. The following summary is from the editors' introduction:

In addition to the introduction, the overview chapter by the editors, and the five critiques, the book contains 17 principal chapters that are organized into five sections. Each of the five sections is introduced and reviewed by the respective session leaders.

Following these principal chapters, each of the five reviewers present their response to the overall effort. In a final chapter the editors strive to integrate the different points of view expressed by conference participants and point out some of the most promising directions for future research.

Peterson, G.L., A. Randall, eds. 1984. Valuation of Wildland Resource Benefits. Boulder and London: Westview Press.

This volume addresses the application of valuation techniques to wildlands. The first four chapters provide a general introduction to concepts of valuation, benefit cost analysis and basic theory of nonmarket benefit estimation. In chapter 5, Alex Anas analyzes the application of land market theory and methods to valuation of market and nonmarket benefits from wildlands as a result of public land management policy. William A. Vogely addresses valuation of mineral resources in chapter 6. Demand price appraisal for standing timber is examined by William F. Hyde in chapter 7. Chapters 8 and 9 address estimation of range benefits and water valuation discussed by authors E.T. Bartlett and S.L. Gray et al. respectively. Alan Randall discusses valuation of scenic views and visibility in chapter 10. Chapters 11 and 13 present views of valuing recreation benefits by Perry J. Brown and Elizabeth A. Wilman, respectively. William W. Shaw addresses issues in wildlife valuation in Chapter 12. The editors provide the following introduction to the volume:

This collection of essays provides a comprehensive review of the most advanced techniques in the valuation of wildland benefits, a field within natural resources economics that is gaining widespread attention as pressure on US wildlands reaches critical levels and debate over their proposed uses and costs grows. The contributors discuss concepts, methods, and problems in wildland benefit valuation, offering critical perspectives on the role of benefit-cost analysis as a decision-making tool in the formation of public land policy. They emphasize benefits rather than costs because, in their judgment, the difficult problems are concentrated on the benefits side. Included in the book is a sophisticated, yet realistic view of the proper role of information in the evaluation of the economic costs and benefits of wildland management plans.

Vincent, J.R., E.W. Crawford, J.P. Hoehn, eds. 1991. Valuing Environmental Benefits in Developing Economies. Proceedings of a Seminar Series, sponsored by the Michigan State University Graduate Specialization in Resource Economics. East Lansing, Michigan: Michigan State University.

This seminar series on valuation in less developed countries grew out of a concern about the detrimental impacts of development projects, the increasing attention being paid to global environmental problems, and the lack of literature on the topic. The editors' preface summarizes the seven papers included in the volume:

The first three papers,... presented by Jeff Schweitzer, Karl Goran-Maler, and Henry Peskin, provide a conceptual overview of issues involved in valuation in developing economies. Schweitzer's paper focuses on valuation as it relates to the programs and objectives of a major donor agency, US AID. It comments on problems and prospects related to contingent valuation, hedonic pricing, hedonic wage, travel-cost, and production function methods. Maler's paper provides a systematic framework for classifying valuation methods by analyzing assumptions about production relationships derived from a household production model. It summarizes several case studies to illustrate use of the methods. Peskin's paper broadens the scope to a macroeconomic level: the incorporation of environmental degradation into national income accounts. It comments on the relationship between valuation and national accounts and uses cases from Tanzania and Indonesia to demonstrate modification of standard accounts.

The papers presented by the remaining speakers - John Dixon, Jan Laarman, Dale Whittington, and Robert Evenson - provide more in-depth case studies. Dixon's paper considers valuation of the diverse benefits and costs related to protected areas. It presents valuation estimates based on a number of methods for two case studies in Thailand and a third study in Cameroon. Baldare's and Laarman's paper also considers protected areas, in this case Costa Rica. It uses a survey-based approach to estimate socially acceptable user fees. The next paper, by Whittington et al., reports the use of contingent valuation to evaluate the benefits of municipal sanitation services. The study was conducted in Ghana. Finally, Evenson's paper employs a productivity-change approach, which has similarities to hedonic pricing, to value genetic diversity in the case of rice in India.

The... speakers who participated in the seminar series do not, of course, represent all the individuals who have carried out valuation studies in developing economies. Additional studies are therefore described in an annotated bibliography included as an appendix at the end of the book.

Winpenny, J.T. 1991. Values for the Environment: A Guide to Economic Appraisal. London: H.M.S.O.

This book deals with approaches to and issues of choosing and appraising projects when environmental concerns must be taken into account. The author discusses valuation principles, techniques, and their practical constraints: data, time, cost and credibility.

Chapter 3 opens with a discussion of cost-benefit analysis (CBA) and cost-effectiveness analysis (CEA) as applied to environmental projects. The chapter continues with an analysis of six different environmental valuation techniques: effect on production; preventive expenditure and replacement cost; human capital; hedonic methods; travel cost method; and contingent valuation. In separate sections the author discusses the principle on which each is based, the method of use, data requirements, and a discussion of the method's usefulness and applicability in developing countries. The chapter concludes with a discussion of discounting, future generations, irreversible effects, uncertainty and risk, and unmeasurable items.

Chapter 4 focuses on the practice of economic valuation. In separate sections the author reviews problems with providing the physical data required for valuation of soil erosion, siltation and deposition; loss of tropical rain forest; desertification; destruction of wetlands; depletion of fishing grounds; air and water pollution; noise; marine pollution and reef destruction; soil salinisation, contamination and groundwater problems; health problems in irrigated farming; loss of biodiversity; and global climatic effects. Each section addresses particular problems of valuation and application of the techniques (discussed in ch. 3).

Five case studies are summarized to illustrate the valuation of soil erosion, siltation and deposition. Case studies from Nepal and Morocco estimate effect on production with and without soil and water conservation measures to justify watershed management projects. Economic losses from soil erosion are estimated in a case study from Java, Indonesia. A study from El Salvador estimates crop yield loss from soil erosion and benefits from avoiding reservoir siltation. A study from Mali estimates a value for soil loss from agricultural lands.

In the discussion of desertification, a case study from Australia attempts to provide estimates of dryland damage costs on a regional and national scale. Two case studies illustrate the discussion of destruction of wetlands. A study from Nicaragua provides a ranking of wetlands characteristics for appraisal purposes. The value of coastal wetlands in property protection from hurricanes is the subject of a study from Louisiana. A case study on airport noise and property values from Atlanta, Georgia, USA, illustrates the discussion of noise valuation. A case study from Cameroon illustrates the discussion of health problems in irrigation farming. The study is an attempt to relate health to productivity of rice farmers.

Besides these case studies, the author cites examples from many additional studies to illustrate the application of valuation methods in diverse situations. Chapters on project appraisal and policy appraisal complete the volume. Appendix 1 contains bibliographic references and suggestions for further reading.