Editing Environmental economics (section)

=== Valuation ===
Assessing the economic value of the environment is a major topic within the field. The values of [[natural resource]]s often are not reflected in prices that markets set and, in fact, many of them are available at no monetary charge. This mismatch frequently causes distortions in pricing of natural assets: both overuse of them and underinvestment in them.<ref>UK Government Official Documents, February 2021, [https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957629/Dasgupta_Review_-_Headline_Messages.pdf "The Economics of Biodiversity: The Dasgupta Review Headline Messages"]</ref> Economic value or tangible benefits of [[ecosystem services]] and, more generally, of natural resources, include both use and indirect (see the [[Ecological economics#Nature|nature section]] of ecological economics). Non-use values include existence, option, and bequest values. For example, some people may value the existence of a diverse set of species, regardless of the effect of the loss of a species on ecosystem services. The existence of these species may have an option value, as there may be the possibility of using it for some human purpose. For example, certain plants may be researched for drugs. Individuals may value the ability to leave a pristine environment for their children.

Use and indirect use values can often be inferred from revealed behavior, such as the cost of taking [[travel cost analysis|recreational trips]] or using [[hedonic model|hedonic methods]] in which values are estimated based on observed prices. These use values can also be predicted through defensive behavior against pollution or environmental hazards, which can reveal how much people are willing to spend on healthcare and other preventative measures to avoid these hazards.<ref>{{Cite journal |last=Williams |first=Austin M. |date=2019-09-01 |title=Understanding the micro-determinants of defensive behaviors against pollution |url=https://www.sciencedirect.com/science/article/abs/pii/S0921800918304993#:~:text=%E2%80%9CDefensive%20behavior%E2%80%9D%20in%20this%20context,such%20as%20taking%20respiratory%20medications. |journal=Ecological Economics |volume=163 |pages=42–51 |doi=10.1016/j.ecolecon.2019.05.007 |issn=0921-8009}}</ref> Another health-based predictor of environmental use value is the [[Value of life|value of a statistical life]] (VSL), which provides an estimate of how much people are willing to pay for small reductions in their risk of dying from environmental hazards.<ref>{{Cite web |last=US EPA |first=OP |date=2014-04-20 |title=Mortality Risk Valuation |url=https://www.epa.gov/environmental-economics/mortality-risk-valuation#:~:text=In%20the%20scientific%20literature,%20these,would%20be%20willing%20to%20pay |access-date=2025-05-07 |website=www.epa.gov |language=en}}</ref> Non-use values are usually estimated using stated preference methods such as [[contingent valuation]] or [[choice modelling]]. Contingent valuation typically takes the form of surveys in which people are asked how much they would pay to observe and recreate in the environment ([[willingness to pay]]) or their willingness to accept (WTA) compensation for the destruction of the environmental good. [[Hedonic pricing]] examines the effect the environment has on economic decisions through housing prices, traveling expenses, and payments to visit parks.<ref>Harris J. (2006). ''[https://books.google.com/books?id=I8seDAAAQBAJ&q=%22Environmental+economics%22 Environmental and Natural Resource Economics: A Contemporary Approach]''. Houghton Mifflin Company.</ref>