Environmental pricing: Review of the methods and an attempt to answer the question of their robustness

Document Type : Research Paper


Department of Environment, Tabriz University, Ardebil Province, Iran


The main purpose of pricing environmental goods is to enable them to be recognized as integral component of any economic system. The environmental values are not associated with production or consumption, and they are not exchanged in the markets. Examples are the benefits that people simply get from knowing something, such as a national park. Many environmental goods and services are not priced because the costs of consumption are not born by the producer or consumer. Environmental pollution impacts are cases taking place as a result of, for example, releasing waste products into water. Good air depends on the waste processing service of ecosystems. If this is not provided, washing expenses, infection, etc. will increase, because more particulates reside on the clothes, cars, and so on, and thus more people are subjected to diseases. This paper reviews the methods of valuing environmental non-rnarketed goods and services that are most discussed in recent economic literature, including: replacement costs, travel cost method. hedonic Pricing method, and contingent valuation method.
 Keywords: Environmental economics, Pollution, Environmental goods and services
 Common, M. (1988). Environmental and Resource Economics. An Introduction, Longman.
 Dixon, J.A.R, Carpenter, A., Fallon, l.A., Sherman, P.B. and Manopimke, S. (1988). Economic Analysis of the Environmental Impacts of Development Projects. Earthscan, London. p. 28 
Farber, S. and Costanza, R. (1987). The Economic Value of Wetlands Systems. Journal of  Environmental Management 24: 41-51.
 lmber, D., Stevenson, G. and Wilks. I. (1991). A Contingent Valuation Survey of the Kakado Conservation Zone. Resource Assessment CommissionlAustra|ian Government Public Service, Canberra. pp25-27
 Khorshiddoust, A.M. (1998). The Role of Economic Analysis and Pricing in Environmental Valuation. (in Persian), Mohit Shenasi (Understanding the Environmental) Journal of the Faculty of the  Environment, Tehran University, No. 20.
 King, D. and Sinden, J.A. (1988). Influence of Soil Conservation on Farm Land Values. Land Economics 64(3): 242-255.
 Knetsch, J.l. (1993). Environmental Valuation: Some Practical Problems of Wrong Questions and Misleading Answers. Paper presented in Resource Assessment Commission, Australia.
 Loomis J.B. and Walsh, R.G. (1996). Assessing Wildiife and Environmental Values in Cost-benefit Analysis: State of the Art. Journal of Environmental Management 122: 125-131.
 Pearce, D.W. (1971). Cost-Benefit Analysis. McMillan, London. pp. 6-55
 Pearce, D., Markandya, A. and Barbier, E.B. (1989). Blueprint for a Green Economy. Earthscan, and London. pp. 4-63
 Pearce. D.W. and Turner, R.K. (1990). Economics of Natural Resources and the Environment. Harvester Wheatsheaf, London, pp. 3-142
 Ribaudo, M.C. and Epp. D.J. (1984). The Importance of Sample Discrimination in Using the Travel Cost Method to Estimate the Benefits of Improved Quality, Land  Economics 60(4): 392-403.
 Sinden, J. and Thampapillai, D.J. (1991). Introduction to Benefit Cost Analysis. Oxford University Press. pp. 3-6
 Smith, V.K., Desvousges, W.H. and Fisher, A. (1986). A Comparison of Direct and Indirect Methods ‘ for Estimating Environmental Benefits. American Journal of Environmental Economics, 68(2): 280- 290.
 Streeting, M.C. (1990). A Survey of the Hedonic Price Technique. Resource Assessment Commission/Australian  Environmental Pricing; Review  45      Government Publishing Service. Canberra. pp11
 Thampapillai, D.J. (1993). The Valuation of Environmental Goods and Services, The NETTLAP Workshop on Environmental Economics. United Nations Environmental  Program, Singapore. pp14
Tisdeli, C.A. (1991). Economics of Environmental Conservation. Elsevier, Amsterdam.