ABSTRACT
Increasing human population and rapid economic growth put pressure on the fragile environment and ecosystem, creating situations of conflicts between population growth and production demands on one side, and the environment on the other. These conflicts downgrade the functions and values of ecosystems and undermine the ultimate goal of providing sustainable livelihood to millions of people around the globe. Actually, the deterioration of the environment may be defined as the occurrence of the loss of functions and economic goods, and thus regarded as costs to human society. Such degradation of the environment has brought into focus the need to value the scarce natural resources available to the mankind for various needs. In an economic sense, most ecosystem benefits fall into the category of ‘public goods’ and hence have no direct price. As a matter of fact, while the values are assigned to the private goods and services, markets tend not to assign economic values to the largely public benefits of conservation. On a day-to-day basis, nature is the source of much value to human well-being, and yet it mostly bypasses markets, escapes pricing and defies valuation. It is well understood, now, that this lack of valuation is an underlying cause for the degradation of many of the ecosystems and associated loss of biodiversity. This actually generates a lot of interest among economists as well as environmentalists to develop and practise valuation works in a wide range of economic and ecological systems. Furthermore, of late, in the process of developing different tools that facilitate management of natural resources by taking appropriate trade-offrelated decisions, economic valuation of ecological systems had gained tremendous popularity amongst researchers, managers and policy makers. Economic valuation is used to construct monetary measures of welfare (functions, goods and services) arising from changes in the environment. Valuation has particular importance in the context of social welfare-based public policy. Dixon (2002) describes five areas of political decision making that can benefit from natural resource valuation:
• raising the profile of environmental concerns in setting national or regional sectoral priorities for the budget allocations;
• intervening in the market with taxes, regulations and incentives to correct the under-provision of public goods;
• providing information for cost-benefit analysis to help include environmental concerns into the decision-making process;
• full cost accounting in government statistics; • evaluating the true impact of projects, programmes and policies.
