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Glossary

Dollar-based Ecosystem Valuation Methods

Introduction
This section describes methods that are used to estimate dollar measures of economic values associated with ecosystems.

Each subsection describes one method or a set of related methods, and provides the following information:

  1. A brief non-technical overview of the method.
  2. An illustration showing how the method might be applied, in step by step fashion.
  3. One or more case study examples.
  4. A more detailed and technical description of the method.


Section Contents
 

1) Market Price Method
Estimates economic values for ecosystem products or services that are bought and sold in commercial markets.

2) Productivity Method
Estimates economic values for ecosystem products or services that contribute to the production of commercially marketed goods

3) Hedonic Pricing Method
Estimates economic values for ecosystem or environmental services that directly affect market prices of some other good. Most commonly applied to variations in housing prices that reflect the value of local environmental attributes.

4) Travel Cost Method
Estimates economic values associated with ecosystems or sites that are used for recreation. Assumes that the value of a site is reflected in how much people are willing to pay to travel to visit the site.

5) Damage Cost Avoided, Replacement Cost, and Substitute Cost Methods
Estimate economic values based on costs of avoided damages resulting from lost ecosystem services, costs of replacing ecosystem services, or costs of providing substitute services. 

6) Contingent Valuation Method
Estimates economic values for virtually any ecosystem or environmental service. The most widely used method for estimating non-use, or “passive use” values. Asks people to directly state their willingness to pay for specific environmental services, based on a hypothetical scenario.

7) Contingent Choice Method
Estimates economic values for virtually any ecosystem or environmental service. Based on asking people to make tradeoffs among sets of ecosystem or environmental services or characteristics. Does not directly ask for willingness to pay—this is inferred from tradeoffs that include cost as an attribute.

8) Benefit Transfer Method
Estimates economic values by transferring existing benefit estimates from studies already completed for another location or issue.