Approach to Appraisal • Describing the impacts • Using ASTs • Identifying the impacts • Valuing the impacts • Obtaining a new value

Obtaining a new value

Overview

There will be occasions when a monetary value for a saltmarsh is required, but the values available are not comparable or appropriate for the site being appraised. This means that an original value may need to be derived.

There are a number of methods available that can be used to obtain a (monetary) value for the impacts. It is important that the approach used is objective, consistent and robust if the values obtained are to be used in the decision-making process; otherwise, it is preferable to base the decision on qualitative and quantitative descriptions. Furthermore, the cost of the approach should also not exceed the benefits of including a monetary estimate.

As many environmental and social costs (and benefits) frequently fall outside the marketplace and hence are not traded, the economic value of such impacts has to be obtained through some other means. A range of economic valuation survey techniques has been developed to assist in this valuation process. These techniques attempt to derive an individual’s willingness to pay for environmental benefits (or willingness to be compensated for an environmental loss) as revealed in the marketplace, through individual’s actions or as directly expressed in surveys. The approaches to obtaining new values can be divided into two groups:

Preference methods

Use of expressed preference methods (including Contingent Valuation) can be very expensive, as they require careful design to ensure that biases are not introduced and that the questions being asked are interpreted correctly by respondents. The environmental ‘goods’ being valued also need to be clearly specified and environmental ‘goods’ are always very difficult to specify, since they include a wide range of functions and services which cover indirect use and non-use values. Consideration of the functions and services also reveals how many of these functions are not immediately visible and, hence, may not be covered by the study.

It is outside the scope of this guide to provide a detailed description of how to undertake surveys to elicit the values that people may hold towards saltmarshes. However, there are many documents that can be referred to should it be considered necessary to obtain a new value. Key references include:

• Penning-Rowsell et al. (2003). The Benefits of Flood and Coastal Defence: Techniques and Data for 2003 (The Multi-Coloured Manual), Flood Hazard Research Centre (FHRC), Middlesex University , Enfield. Chapter 3 provides an overview of the types of approaches that are available, while Chapter 10 briefly describes how the approaches can be tailored to valuing the environmental impacts of projects.
• Eftec (2000). Guidance on Using Stated Preference Techniques for the Economic Valuation of Non-Market Effects, report to the UK Department of the Environment, Transport and the Regions (DETR, later DLTR), London, Edward Elgar Publishing (not available online). Provides detailed information on how stated preference techniques should be used to elicit economic valuations and builds upon the guidance given in Arrow et al. (1993).
• Arrow et al. (1993). Report on the NOAA Panel on Contingent Valuation, available at http://www.darp.noaa.gov/library/pdf/cvblue.pdf. Standard reference document for undertaking contingent valuation studies.
• http://www.ecosystemvaluation.org provides good discussion on approaches to obtaining values and includes a number of case study examples.

Indirect monetary methods

If it is assumed that the cost of providing an alternative means of achieving the same effect represents the benefit of that effect, then it can be assumed that the benefits can be estimated as the cost of providing the alternative. Thus, the value of a saltmarsh could be considered to be the cost of recreating a saltmarsh of the same size and type elsewhere.

A good reference document for deriving indirect monetary values is MAFF, now Defra (1999), Flood and Coastal Defence Project Appraisal Guidance: Economic Appraisal (FCDPAG3). This provides guidance on the types of approaches available to obtain values for recreational and environmental values. A decision tree is included (as Figure 4.1) to help determine the most appropriate approach for determining the minimum economic value of a site.