Environmental Engineering Reference
In-Depth Information
health, the environment, the land use, and issues of stakeholder concern and accept-
ability by assigning values to each impact in common units. Deciding which impacts
to include or exclude from the assessment is likely to vary on a site-by-site basis. In
many instances, it is difficult to assign a strictly monetary or quantitative value to
many of the impacts. Hence, assessments can involve a combination of qualitative
and quantitative methods (Environment Agency 1999 , 2000b ). A range of valuation
techniques may be used try and convert particular impacts into monetary values, as
summarised in Table 20.5 .
Table 20.5 Valuation techniques used in CBA and their limitations a
Technique
Limitations
Contingent Valuation Method (CV) is based
on assessments of consumers willingness
to pay (WTP) for something; or their
willingness to accept (WTA) compensation
for it. It is assessed by surveys of
“consumers” (typically using a
hypothetical scenario) who are asked to
assign monetary values to both WTP and
WTA
There is a considerable debate over the validity
of CV in assessing environmental impacts and
benefits. CV can confuse wishes with
preferences. Potential errors and bias can
occur in several ways using these methods, for
example, resulting from the way that questions
are asked, and perceived , by those being
questioned and intrinsic differences between
the hypothetical scenario and the real situation.
Hedonic Pricing (HP) is based on
relationships between the levels of
environmental services (e.g. noise levels)
and the price of marketed goods (e.g.
houses). It cannot be used to estimate the
subjective factors that cannot be seen as
directly affecting marketed goods.
HP is sensitive to the following errors and bias:
the possibility of omission of key variables
from the examined relationship, unknown
correlation between “independent” variables;
assuming a uniform market when it is not in
reality and perhaps most importantly, HP
relies on several restrictive assumptions, for
example, that purchasers are fully aware of
soil quality data and its implications and that
the land development market is at or near to
equilibrium.
Production Function Methods are similar and
infer value from marketed goods and
services. There are two broad approaches:
avoided cost (AC): evaluation of
environmental quality through
quantification of averting expenditure (i.e.
how much are people willing to pay to
avoid or protect them from a decrease in
environmental quality?) and the
dose-response (DR) method, where
physical effects of contamination on the
environment are evaluated and used within
an economic model.
AC can over-estimate the level of expenditure
related to the specific environmental change of
interest. A contentious area where this
technique has also been applied is in valuing
human life, for example in assessing the
benefits of a town by-pass scheme. A key
difficulty with using DR is the selection of the
economic assessment model.
Hanley and Spash ( 1994 ); Mulberg ( 1996 )
a Based on work originally carried out for the University of Nottingham Masters in Contaminated
Land Management
 
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