chapter  4
Welfare Measures: Theoretical Basis for Empirical Assessment
Pages 46

For market goods, welfare effects due to changes in prices have been defined in terms of the area under the appropriate Hicks-compensated demand curve. For nonmarket goods, welfare effects due to changes in quantities have been defined in terms of the area under the marginal willingness-to-pay curve for the good or service. The marginal willingness-to-pay curves exist for public goods and nonmarketed goods such as the services of the environment; but they cannot be estimated from direct observations of transactions in these goods. Given the absence of markets for public goods and environmental goods, how can information on demand and benefits be obtained?