Economic principles of monetary valuation in evaluation studies

Abstract

Agricultural ecosystems, or agroecosystems, provide humankind with important biological resources: food and fibres. Agro-food production relies on biodiversity, but can also have a major impact on biodiversity, both positive and negative. These effects, however, are largely external to the market (they are not fully captured in markets), and thus are not reflected in market prices. Because users ignore these external costs imposed on others, biodiversity is said to suffer tragic overexploitation and degradation. The justification for monetary valuation of biodiversity lies in the fact that it offers a method of measuring the ecological and environmental consequences of economic activities. This chapter describes techniques and concepts of monetary valuation, such as the contingent valuation method and benefit transfer, and delves into the controversy that surrounds the expression of biodiversity values in monetary terms and their effective use within policy. It draws on international literature to review economic valuation techniques on agricultural and agroforestry areas. The chapter concludes with a balanced consideration of the role of monetary valuation in agricultural policy impact assessment, providing an indication of the range of values previously estimated and their meaning in terms of policy. The potential for use in SEAMLESS is also explored. © 2010 Springer Science+Business Media B.V.