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

Valuing the impacts

A number of techniques can be used where it is necessary to place a monetary value on impacts. These are summarised in the table below and vary in terms of the resource (both time and manpower) required to estimate the value. Monetary valuation of the impacts should always build upon a description (in words and numbers), thereby providing additional information on the likely value of a project. It is important that a full description of the impact is given, as this will help to determine which money value best reflects the type of impacts that are predicted to occur.

Common Techniques for Valuing Impacts
Method	Applicable to	Description and Importance	Constraints
Market price method	Direct use values, especially wetland products	The value of wetland services and products is estimated from the prices in commercial markets	Market imperfections and policy failures distort market prices
Damage cost, avoided, replacement cost and substitute cost method	Indirect use values (particularly ecosystem services)	The value of flood control can be estimated from the damage that would occur as a result of flooding (damage cost avoided); the value of groundwater recharge can be estimated from the cost of obtaining water from another source (substitute costs)	It is assumed that the costs of avoided damage or substitutes match the original benefit. However, this match may not be accurate, which can lead to under- or over-estimates
Travel cost method	Recreation	The recreational value of a site is estimated from the amount of time and money that people spend on reaching the site	Over-estimates are easily made, as the site may not be the only reason for travelling to that area. The technique is data intensive
Hedonic pricing method	Aspects of indirect use, future use and non-use values (including appreciation)	This method can be used when wetland values influence the price of marketed goods. For example, clean air, presence of water and aesthetic views will increase the price of surrounding properties	The method only captures peoples’ willingness to pay for perceived benefits. If people are not aware of the links between the environmental attribute and benefits to themselves, the value will not be reflected in the price. Very data intensive
Contingent valuation method	Recreation, non-use values (possibly covering appreciation and ecosystem services)	This method asks people directly how much they would be willing to pay for specific environmental services. It is often the only way to estimate non-use values	There are various sources of bias in the interview techniques. In addition, there is controversy over whether people would actually pay the amounts that they state in the interviews
Source: Based on Stuip et al. (2002)

Further information is available from: http://www.englishnature.gov.uk/pubs/
publication/PDF/valueofnat.pdf
and Barbier et al. http://www.ramsar.org/lib_val_e_index.htm.

Numerous studies have already been undertaken that use one or more of the techniques. It may be possible to use these readily available valuations to give an indication of the potential benefits of the functions of a saltmarsh. This can reduce the resources (time and money) required to undertake a project appraisal, which is particularly relevant for the hedonic pricing and contingent valuation (see table above) methods. That is, benefits transfer can be used to provide a value obtained from other studies, providing the other studies are comparable.

Benefits transfer can be applied to the valuation of both use related impacts and non-use related impacts. In this context, use related impacts are those associated with the direct use of an environmental resource (e.g. recreation or boating), with its indirect use (for example, in providing an aquatic ecosystem that will support a fishery) and to the option values people hold in relation to being able to use a resource in the future. Some of these values (in particular direct use values) can be captured by actual markets, through fees paid to undertake an activity or through other expenditures. However, not all use values can be readily captured in existing markets.

Non-use values reflect the preferences of individuals which are unrelated to their current or potential future use of a resource, and which relate to their desire preserve or conserve it in its own right (existence values), to conserve a resource for future generations (bequest values) or to protect it for others within the current generation (altruistic values). None of these non-use values can be captured in actual markets, because the relevant markets either only capture the use values or the relevant markets do not exist.

The use of benefits transfer has been steadily increasing in recent years, the underlying assumption being that existing valuation studies can provide a reasonable indicator of the value of an environmental change for another site and decision context. FCDPAG3 identifies benefits transfer as a viable method (MAFF, 1999), while the Green Book has acknowledged the increasing scope for using benefits transfer methods as databases expand (HM Treasury, 2003).

Most guidance involving the use of benefits transfer recommends an approach based on the following steps:

Step 1:	Identification of the impact category of concern (this can be taken from the ASTs).
Step 2:	Description of the nature of any impact in terms of the physical changes that will take place under a given option (again, this should be available from the ASTs).
Step 3:	Selection of a relevant benefits transfer estimate by examining the set of available values for the type of change under consideration; this should take into account the applicability of the original study and, hence, value to the option being assessed.
Step 4:	Adjustment of the benefit estimate(s) as appropriate to suit the decision context.
Step 5:	Quantification of the affected population (user and/or non-user), where required.
Step 6:	Calculation of the benefits by multiplying the transfer value by the affected population and aggregating.
Step 7:	Undertaking a sensitivity analysis.

FCDPAG3 identifies benefits transfer as a viable option at the pre-feasibility stage of the appraisal of options. The purpose of the pre-feasibility study is to determine whether a scheme is likely to be justified, and whether it is worth investing in more detailed studies (MAFF, 1999).

It is outside the scope of this guide to provide a comprehensive list of all available values for the different types of impacts that may result from actions taken on saltmarshes. Furthermore, new studies are continually being undertaken that are likely to be more robust and more appropriate for benefits transfer. Therefore, a subset of the most appropriate values only are reported here, with links provided to databases that may contain additional values and which are regularly updated (such that new studies will be included). It should be noted, however, that many of these values will cover a number of the functions and services listed in the ASTs; that in many cases the exact coverage of the valuations is not known; and that most of the valuations relate to wetlands and not specifically to saltmarshes.

Along with the valuations considered most appropriate for application to saltmarshes, the Defra web-site also holds a list of key valuation studies, although it is not clear how often this is updated. Other Internet sources that can be used to identify valuation studies include:

• www.evri.ca: use of the database requires a subscription to be paid. It is believed that the Environment Agency subscribe to the service.
• www2.epa.nsw.gov.au/envalue: an Australian database that does not require a subscription