Question

Explain the difference between "user value" and "existence value." Define both and explain the importance of each when measuring the benefits of environmental goods.

Answer 1

User value

It basically refers to the benefit or utility which is derived from the use of an environmental good. It comes from the direct use of the good but the use value can be direct or indirect which depends on consumptive or non-consumptive use. Consumptive use refers to direct extraction like fish harvesting, whereas non-consumptive use refers to only using the resource for temporarily purpose like Swimming in water.

Existence value

The existence value is the benefit derived from an environmental good due to its continuance as a good or as a service. It is the utility which people receive from knowing that a particular environmental resource exists. It is also called Non use value. It also holds heritage and cultural values.

When we need to measure the benefits of the environmental goods, then the user value is more important since it involves direct contact with the good and thus provides the utility to the user, but the knowledge about the good and its use is equally important to preserve the environment and save the resources for future generation. Thus existence value is also important to make sustainable use of resources and preserve them for heritage.