ABSTRACT
The forms in which the benefits of environmental policies may be realized include improved opportunities for recreational and other activities, aesthetic effects such as improved visibility and reduced noise, direct effects on welfare such as reductions in human-health risks, and others. Changes in the physical environment are frequently difficult to value. Improved environmental quality may create opportunities for additional outdoor recreational activities, or may increase enjoyment of activities by providing better visibility, reduced noise, cleaner water, or other amenities that affect enjoyment of these activities. The revealed-preference methodology estimates values by observing market behavior related to the condition and inferring values from it. For example, information about the value of improved recreational opportunities can be inferred from people’s expenditures on travel or equipment needed to participate in these activities, and information on the value of changes in health risks can be inferred from differences in wages between occupations with differing risks.
