Monetization of the non-use and nonmarket values of ecosystem services is important especially in the areas of environmental cost-benefit analysis, management and environmental impact assessment. However, the reliability of valuation estimations has been criticized due to the biases that associated with methods like the popular contingent valuation method (CVM). In order to provide alternative valuation results for comparison purpose, we proposed the possibility of using a method that incorporates fact-based costs and contingent preferences for evaluating non-use and nonmarket values, which we referred to as value allotment method (VAM). In this paper, we discussed the economic principles of VAM, introduced the performing procedure, analyzed assumptions and potential biases that associated with the method and compared VAM with CVM through a case study in Guangzhou, China. The case study showed that the VAM gave more conservative estimates than the CVM, which could be a merit since CVM often generates overestimated values. We believe that this method can be used at least as a referential alternative to CVM and might be particularly useful in assessing the non-use and nonmarket values of ecosystem services from human-invested ecosystems, such as restored ecosystems, man-made parks and croplands.
Nature provides the foundation of human existence and therefore contains a tremendous value. People perceive these values through ecosystem services, which refer to the benefits people obtained from nature [1]. Indeed, there have been many studies applied the concept of ecosystem services in estimating the use and non-use values of natural capitals. For example, Costanza et al. [2] estimated the economic value of global natural capital by using the values of 17 ecosystem services; Curtis [3] calculated the value of World Heritage Area in Australia by using 20 ecosystem services and goods; Remme et al. [4] used seven ecosystem services values to evaluate the different worth of land in the Limburg province, the Netherlands.
Since not all values from ecosystems are directly perceived by people, the total values of nature can be further divided into use and non-use values [5]. Use values can be further categorized into direct use value, indirect use value and option value.
Non-use values are mainly composed of existence and bequest values [6,7]. Although every ecosystem service possesses both use and non-use values, most provisioning services (e.g. food, water and fuel supply) and regulating services (e.g. climate regulation, waste treatment, soil retention, etc.) can be directly or indirectly utilized by people. This makes these services usually contain more use-values. On the other hand, the values of many cultural and some regulating services, such as aesthetic enjoyment, cultural information and biodiversity maintenance, are non-use or nonmarket in many cases [8,9].
Despite the disputation on the validity of monetizing the values of ecosystem services, monetization of these values is at least necessary especially in the areas of policy decision-making, environmental cost-benefit analysis and environmental impact assessment [10,11]. Several valuation methods have been developed to perform this task. For values that can be directly reflected by commercial market prices, demand-based valuation methods such as market price, travel cost and hedonic pricing can be applied [12,13]. If there is no existing market that can be used as a direct reference for prices, supply-based methods, such as production function, and cost-based methods, such as replacement cost and avoided damage cost, can be used to simulate market conditions for valuation [12,13]. Moreover, for values that cannot be evaluated in the conventional market economy, like non-use values and option value, choice experiment and contingent valuation methods are options for appraisal.
The contingent valuation method (CVM), has become one of the most widely applied valuation methods for non-use and nonmarket values [10,14]. This method basically asks respondents to provide an estimate of how much money they would be willing to pay (WTP) for a certain good or service in a hypothetical or contingent market and then deems this WTP as the value of the good or service [15]. However, its reliability has been long criticized because of the biases that associated with this method, such as embedding effect, sequencing effect, payment vehicle bias, information effect, elicitation effects, hypothetical bias, strategic bias, yes-saying bias etc. [10,16]. Although researchers have been trying to minimize the effects of these biases, studies still found CVM could generate inaccurate estimations [17][18][19].
In order to provide some alternative valuation results for comparison purpose, here we proposed the possibility of using an alternative method that incorporates fact-based costs and preferences for evaluating non-use and nonmarket values, which we referred as value allotment method (VAM). In this paper, we discussed the economic principles of VAM, introduced the performing procedure, analyzed assumptions and potential biases that associated with the method and compared VAM with CVM through a case study for the reliability test.
In essence, the VAM asks people to allot the weight of components of an asset’s total value, in order to appraise the components with non-use and nonmarket values.
In our case, the asset refers to the ecosystem that provides ecosystem services and the components are the services or good with instrumental functions or just intrinsic values. This method is viable under the assumption that the total value of an asset is the sum of all of its component values. In turn, the value of any particular component can also be determined by the total value and the proportion of this component weights in the total value. The proportion of a component weights in the total value can be obtained by stated preferences from people through surveys or interviews.
Therefore, the general equation for valuating the components with non-use or nonmarket values is the following:
In conventional asset appraisal world, there are three generally accepted valuation approaches for asset appraisal: cost, income and market approaches. The income approach estimates the
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