The valuation of resources and environment policy instruments
Introduction
Chapter 8 was concerned largely with the wider global environmental issues and economic impact of tourism with particular reference to sustainability. After introducing the scope and content of the microeconomic analysis of the environment the core of chapter 9 was to demonstrate the relevance to tourism of capital appraisal methods the elements of market valuation the consequences for the environment of market failure and their conservation. Of particular importance is the effect of the sector on the natural resource base.
This chapter starts from the point in figure 9.2 presented in chapter 9 which concerns the valuation of resources following on from the problems associated with market failure. There is almost a sequential relationship between the three main forms of market failure identified in figure 9.2. the remainder of the figure concerns the concept of economic value valuation methods and environmental policy instruments and their evaluation which determine environmental practice as it contributes to sustainability.
Prior to giving an exposition of the methods of valuing resources not traded in the market the concept of total economic value is explained. An exposition and appraisal of the valuation methods are undertaken and their application to tourism assessed. Attention is then turned to the achievement of environmental goals and targets including the mitigation of pollution the use of resource and the associated benefits and costs. The relative advantages and disadvantages of price or market based as opposed to regulatory instruments are the considered. The chapter is concluded by offering some observations on the state of economic methods and environmental action in relation to tourism.
The valuation of resources
The problems arising from the existence of collective consumption or public goods the generation of externalities and the need to consider distributional issues are founded in the need to evaluate demand in order to make decisions on the allocation and optimal use of resources. Issues associated with these problems analysed in chapter 9 are equally applicable in the valuation of resources considered here in particular the assessment of the demand for the use of resources that are un-priced for example open access lands should be on a basis that allows for comparison with prices in a market context. Demand evaluation or perhaps more correctly the estimation of consumer benefits is necessary irrespective of whether or not demand is expressed through the market. Except under specific conditions economics accepts as was indicated in the examination of CBA in chapter 9 concerning shadow prices which will be revisited again below that the market price does not necessarily reflect the value of a good or service. Moreover for non-traded commodities for which there is no market price it is not devised to attach value to them there are thus two elements to estimating consumer benefits. The first is to establish what is meant by value in use and non-use. The second is to employ methods to ascertain that value.
Total economic value
Although the non –priced elements of the environment have been emphasized it must not be forgotten that a number of environmental goods and services are traded in the market where excludability, i.e. private consumption right can normally be exercised. In the market, the exchange value is indicated by the price at which it is traded. Nevertheless in economics it is recognized that