Question

How do you value our environment?

Answer 1

We can calculate the economic value of our environment by recognising that human beings have preferences for betterment in the environment and are ready to pay for improving the quality of environment. For example in cities like Delhi in India people are ready to pay to reduce smog and to have a clean air.

But unfortunately, market mechanism does not work here and we can't determine value of  environment merely by using demand and supply rules.

So economists has been developed number of special techniques known as non market valuation techniques to value environment or environmental quality improvements.

Economists worked more than two decades to develop these techniques. Different economist uses different techniques to calculate the value of environment. Let us have a brief look into each of the techniques now.

Some economist uses surveys in their techniques to find out the value of the environment .They directly asks people how much they are ready to pay for the improvement or betterment of the environment.

Another group of economists derived the value of environment by observing the "market prices" related with "environmental assets" in their techniques.

Another approach that is used to value environment is calculation of total value of the environment (TEV) by dividing total economic value into use value and non use value.

Use value are connected with the direct use of environment like sight seeing, swimming in the lake, fishing in the sea. Non use values are connected with the knowledge about environment, knowledge  about sustainable development and knowledge about preservation of the nature for future generation etc.

Another way of calculating value of environment is on the basis of economic activity connected with the use of environment.

These are the most popular measures that we can use to value our environment.