There are basically two concepts associated with
valuing land. These are identified as the market price approach and
non-market valuation. The market price approach is relatively
straightforward and involves establishing value for goods
traditionally sold in commercial markets.
However, much of the land issues that confront the
Florida Fish and Wildlife Conservation Commission may be classified
as environmental lands. Here, there is a fundamental distinction in
economics between market and non-market goods and services. Goods
and services in an established market are sold for prices that
reflect a balance between the cost of production and what people
are willing to pay.
The opposite is true for non-market goods
(environmental lands) as these goods and services are not directly
bought and sold in commercial markets (clean air and water,
recreation use, etc.).
Non-market values can be generally categorized as
use and non-use or passive values. Use values are based on actual
use of the land and may be defined as the value derived from the
actual use of a good or service, such as hunting, fishing,
birdwatching or hiking.
Non-use values are values that are not associated
with actual use. These values may include (option
value) value for a good and service for their potential to
be available in the future. In this instance, people may be willing
to pay to ensure the supply of the environmental good sometime in
Existence value reflects benefits
from simply knowing that a certain good or service exists. For
example, some people derive satisfaction from knowing that the
Grand Canyon exists, even though they may never see the Grand
Canyon. Bequest value refers to benefits from
ensuring that certain goods will be preserved for future
generations. Therefore, total economic value is the combination of
use and non-use values.
Listed below are typical non-market valuation
techniques used by the FWC.
Travel Cost Method - estimates
economic values associated with sites that are used for recreation.
Assumes that the value of the site is reflected in how much people
are willing to pay to travel to the site. This method is limited to
the measurement of use values.
Contingent Valuation Method - asks
people to directly state their "willingness to pay" for specific
environmental services based on a hypothetical scenario. This is
the most widely used method for estimating non-use values.