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Three of the major techniques available for valuing unpriced, non-market resources
are:
This area of BCA is exceptionally difficult, and there are problems with all techniques.
Briefly, CV attempts to place a value on environmental issues, usually by surveying willingness to pay
(WTP) and willingness to accept (WTA), which is what a person would be willing to accept as payment, or pay for selling, or buying, a good or service. CV is a highly contentious issue in
BCA. When analysing results from CV, check that:
 | the tendency of people to overestimate money received
(WTA) and underestimate money paid (WTP) has been considered;
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| respondents had a full understanding of the issues about which they were surveyed. |
Briefly, HP attempts to establish a relationship between the non-market resource (e.g. the environment) and a market situation (e.g. land values and the housing market). HP relies on very restrictive assumptions, such as a fully independent market free from government intervention. When analysing results from HP, consult an econometrician for advice on the choice of functional form, and checking for omitted variable bias, and multicolinearity in the data set.
TCM attempts to determine the value of a recreational site by using the entrance cost, travel costs, the number of times the recreational site is visited, and time costs. Survey work is required for this technique. Analysis of the survey data should include consideration of:
| one-off versus repeat visits;
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| holiday makers versus residents;
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| reasons for the visit;
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| method of calculation of travelling costs; and
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| the problems of estimating WTA versus WTP. |
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David Adamson
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