Question

Some benefits are nonmarket benefits that have pure nonuse value, e.g. existence value and bequest value. Very often it is difficult to place a completely accurate value on certain environmental goods that have nonuse value. By not making the valuation attempt leaves society valuing them at $0.

Will we make better policy decisions by assigning $0 to something that is hard to measure? Or should we come up with a more appropriate value even with a value that is grossly imprecise?

Answer 1

Non market goods like environmental goods have existence value since they are adding to the beauty of the environment and bequest value to pass it down to the future generations. By putting a value of $0, we are doing injustice to the benefits of these goods which are difficult to account using market value. It is better to assign them some value, however inaccurate, rather then zero value to these goods. Using hedonic and contingent valuation methods, it is possible to get a more accurate value of these goods, and then they can be incoprated into economic indicators.