3. Key Ideas and Concepts from Economics for Understanding the Roles and Value of Ecosystem Services

  1. Steve Wratten3,
  2. Harpinder Sandhu4,
  3. Ross Cullen5 and
  4. Robert Costanza6
  1. Pamela Kaval1 and
  2. Ramesh Baskaran2

Published Online: 20 JAN 2013

DOI: 10.1002/9781118506271.ch3

Ecosystem Services in Agricultural and Urban Landscapes

Ecosystem Services in Agricultural and Urban Landscapes

How to Cite

Kaval, P. and Baskaran, R. (2013) Key Ideas and Concepts from Economics for Understanding the Roles and Value of Ecosystem Services, in Ecosystem Services in Agricultural and Urban Landscapes (eds S. Wratten, H. Sandhu, R. Cullen and R. Costanza), A John Wiley & Sons, Oxford. doi: 10.1002/9781118506271.ch3

Editor Information

  1. 3

    Bio-Protection Research Centre Lincoln University, New Zealand

  2. 4

    School of the Environment Flinders University, Australia

  3. 5

    Department of Accounting, Economics and Finance Lincoln University, New Zealand

  4. 6

    Crawford School of Public Policy Australian National University, Australia

Author Information

  1. 1

    Havelock North, New Zealand and Marylhurst University, Oregon, USA

  2. 2

    Faculty of Commerce, Lincoln University, New Zealand

Publication History

  1. Published Online: 20 JAN 2013
  2. Published Print: 25 MAR 2013

ISBN Information

Print ISBN: 9781405170086

Online ISBN: 9781118506271

SEARCH

Keywords:

  • economic valuation;
  • ecosystem services;
  • non-market valuation methods;
  • revealed preference methods;
  • stated preference methods

Summary

This chapter describes the primary economic methods used to value ecosystem services. Methods for measuring non-market values fall into two categories: revealed preference and stated preference. Revealed preference methods are based on observations of actual behaviour and allow to make inferences about how individuals value changes in environmental quality. Stated preference methods are based on responses to survey questions. Some common non-market valuation methods used today include the contingent valuation method, choice experiments, the travel cost method, and the hedonic pricing method. These methods aid in valuing many ecosystem services but fall short of valuing all ecosystem services, for which other methods are employed. These include the avoided cost method, the replacement cost method, the restoration cost method, factor income, and the benefit transfer method. The chapter also discusses the results of an ecosystem service valuation literature review and finally offers recommendations on how to conduct ecosystem service valuation studies.