A Review of Economic Appraisal of Environmental Goods and Services: With a Focus on Developing Countries

Environmental economics has an extensive literature on procedures for placing economic values on the environment. Most of these methodologies have been developed and refined in the context of developed countries, where high levels of disposable income allow for a high demand for environmental amenities and a willingness to pay for non-use values. This paper argues that the applicability of these methodologies may be limited in developing countries. A microeconomic model, designed to highlight the different roles of environmental goods and services in developed and developing counties, is presented. In developing countries the value of environmental amenities is relatively less important than the value of environmental resources in the production process. The use of the procedures to estimate the value of environmental services in production should be respected, promoted and refined, particularly in light of widespread market failure in developing countries.