Approaches to economic valuation in environmental impact assessment: a review
by Anthony B. Lumby
Interdisciplinary Environmental Review (IER), Vol. 8, No. 1, 2006

Abstract: Environmental Impact Assessment (EIA) constitutes a form of systematic decision-making with a view to identifying the best project amongst a series of alternatives. Within the EIA process, the economic component is that of cost-benefit analysis (CBA), in which all costs and benefits, including environmental costs and benefits, are identified and valued. For economists, one of the major challenges facing the effective conduct of CBA is the ability to capture total economic value because of the difficulty in assessing the value of all environmental impacts, particularly where such impacts are not reflected in market prices. In order to remedy this example of market failure, a wide range of economic valuation techniques has been developed in order to allow us to assign a value to all environmental costs and benefits, especially those for which no markets exist. Against this background, the purpose of this paper is essentially threefold: (a) a brief review of the key issues in EIA with particular reference to CBA; (2) a discussion of the notion of total economic value and the need for economic valuation in CBA; and (3) a brief review of the more important valuation techniques available to us.

Online publication date: Mon, 13-May-2013

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