Environmental & Recreational (Non-Market) Values - What You Should Know (FAQs)

Frequently Asked Questions for Users of NOEP's Non-Market database

What are Non-Market values and why are they important?

To make well-informed decisions regarding ocean and coastal management, policymakers need to have a full accounting of the value of the ocean economy. Much of this information can be found by examining current market prices for ocean resources, such as fish and mollusks, as well as the impact of ocean tourism on local economies (available on the Market portion of the NOEP site).

But there are many important environmental and recreational values not found in the marketplace.

What is the value to society of a healthy sea otter population off the coast of California, abundant wildlife in the Florida Keys, wetland and mangrove systems that help mitigate storm damage off the Gulf Coast, or an unobstructed sunset from the shores of the Carolinas?

While these values are often difficult to estimate they are as real as market values; they are just less understood and often overlooked.

It is possible to make reasonable estimates of Non-Market values using various economic and statistical techniques that have been developed over decades. Very often Non-Market values are linked to recreational benefits of ocean and coastal environments, or the environmental services they supply, but the values also extend beyond any direct-use benefits that the oceans and coasts provide.

In some instances Non-Market values represent consumer surplus, which is the difference between what consumers pay for a good and the maximum that they would be willing to pay for it. For example, visitors to California beaches currently do not pay admission, but they might be willing to pay on average up to $10 if admission were charged; this would result in a surplus of $10 that visitors would have each time they went to the beach because of the provision of free beach access.

There are many such instances where citizens receive recreational benefits from coastal and ocean resources at lower costs than they truly value them, resulting in surplus. Analyzing changes in consumer surplus is commonly used by economists as a metric for helping to determine the overall efficiency and social benefit of a variety of policies.

Non-Market values can also be obtained by quantifying the amounts that people pay for ocean resources that are embedded in the price of other goods. For example, by comparing home prices along coastal areas with those inland, the premium paid for ocean views and coastal access can be determined. As anyone who lives near the coast can attest, these premiums can be very high; when multiplied by all of the nation's coastal real estate the total value is huge. From a policy perspective, it is important to understand the extent to which the value of coastal property is sensitive to changes in the quality of the adjacent environmental resources; for example, if the nearby water quality deteriorates property values could decrease as well.

Sometimes a Non-Market value can be estimated by calculating the economic benefits of the environmental service that an ocean ecosystem provides. For example, if mangroves help protect adjacent areas from storm damage, their value can be determined by estimating 1) how much additional storm damage would result in their absence, or 2) the cost of erecting man-made barriers to achieve the same protection.

There is also a category of Non-Market values called non-use or passive-use values, which attempts to measure the values people receive indirectly from coastal and ocean resources. For example, even those who live in the interior of the country may receive some value from simply knowing that coastal resources are well maintained because someday they plan to visit these areas). People may also want to pass a healthy environment along to the next generation even if they have no immediate interests in these resources for their own enjoyment or use.

The sum total of the Non-Market values for ocean and coastal resources in the United States is tremendous: at minimum tens of billions of dollars per year and likely much more. In Florida alone, the Non-Market value of seven selected activities ranged from approximately $16.5 to $53 billion per year1.

In summary, any economic assessment of ocean and coastal resources should include a thorough accounting of Non-Market values to be complete and result in a full underestimation of the true values these public resources provide.

1See "Florida's Ocean and Coastal Economies Report" produced by NOEP in 2006, and Pendleton, L. 2007. The Economic Value of Coastal and Estuary Recreation in The Economics of Estuary and Coastal Restoration: What's at Stake, Restore America's Estuaries, L. Pendleton, editor.

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How can I use the values from the Non-Market Values Database?

Decisions are made every day that affect ocean and coastal resources. When trying to determine which actions are best and who wins and who loses when different decisions are made, the more information the better. The estimates from the studies in the Non-Market Database can help to put values on ocean and coastal resources that are often overlooked since these values are not directly observed in markets. With a more thorough understanding of the range of values provided by ocean and coastal resources individuals can more accurately discuss the trade-offs inherent in policy decisions and stakeholder positions backed with empirical evidence derived from this database. See the "Influencing Public Policy" section for specific examples.

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What if I don't have a statistical background?

NOEP screens the studies for inclusion in the database to ensure that they meet requisite academic standards. While many of the studies include complex statistical analyses, the bulk of each paper typically includes information on the scope of the resource to be valued, a description of the study group, and a summary of the values that were estimated; all of these sections are normally accessible to those without advanced statistical training. In the References and Links section, you will find many resources to assist you to better understand the terminology and the statistical techniques employed.

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How accurate are the Non-Market value estimates?

Estimates are exactly that: estimates. For example, an estimate that visitors on average value viewing an additional group of sea lions (from a beach or pier) at $5.03 is most likely not precise to the penny as the number suggests. Academics typically use what is called the 95% confidence interval to determine the range of values within which the "true" economic value is likely to fall; most studies will make note of this interval.

In the above example, researchers might determine with 95% confidence that the value of viewing each additional group of sea lions is between [$4.45, $5.51]. This range is reasonably narrow, with the low and high-end estimates only about 10% different from the original point estimate of $5.03. Keep in mind that the narrower the range the more precise the overall estimate.

If the range for the 95% confidence interval was instead [$2.00, $8.06] it is very likely that the "true" value for viewing an additional group of sea lions is very different than $5.03 and we would put less stock in the point estimate.

More importantly, Non-Market values are best used to help gauge the relative magnitude of a variety of difficult-to-estimate values for ocean and coastal resources. For example, whether viewing an additional group of sea lions is worth $5.03 or $50.30 may impact the decision as to whether investing in additional sea lion protection makes economic sense (bearing in mind that economic criteria is just one of many criteria that should guide public policy).

Note: While the NOEP strives to provide information about the highest quality Non-Market research available, the NOEP does not endorse or guarantee the accuracy of any specific value estimate in these studies.

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What if the values derived in the studies are old?

This presents a problem since many factors that influence Non-Market values change over time; e.g. average income, education levels, and other demographic information, as well as environmental preferences and the geographic distribution of the population. The most recent estimates tend to be the most accurate.

However, a reasonable approximation of what older Non-Market values would be today can be derived by using the Consumer Price Index (CPI) and turning old nominal values into current real values, just as we would when comparing the price of a car in 1980 with what it would cost in today's prices.

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What if there are value estimates for a specific resource in another region or state but not where I am looking?

Because there are so many types of coastal and ocean resources and Non-Market value studies are both time-consuming and expensive, not every resource has been valued in every region of the country. However, using a technique called benefit transfer, it is sometimes possible to use value estimates derived in one study to estimate the value of the same or a similar resource in another region.

For example, say there is a study which estimates the value of beach recreation for the Oregon coast, and someone wanted to know the value of beach recreation for the Washington coast, but no such study existed. In this case it may be possible to extrapolate the findings from the Oregon study to the Washington area, making allowances for different levels of income, population, and taking note of any unique features in both Oregon and Washington beaches.

Benefit transfer is a commonly used technique that can help save time and money and provide rough estimates of the magnitude of Non-Market values for areas where little or no research has been undertaken. It is important to note, however, that nothing can substitute for original research and that the values derived from benefit transfer are significantly less precise than those derived from site-specific data.

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What if there are no Non-Market valuation studies for the type of ocean and coastal resource for which I am interested?

While the staff at the NOEP has worked hard to put together a comprehensive and up-to-date database for Non-Market values, it is always possible that we have missed something. But it is also quite possible that if the type of resource you are looking for isn't part of our database then it has not yet been valued by researchers.

In this case, you may want to consider contacting environmental economists in your region (which can be found by perusing the lists of faculty in economics, environmental studies, and agricultural and natural resource economics departments), local environmental groups, or public officials and try to persuade them that it would be in the public interest to have value estimates for the resource in question. It is often the case that studies are conducted at the behest of interested parties.

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updated 30-Sep-2008