Simulated exchange values and ecosystem accounting: Theory and application to free access recreation

This paper discusses the Simulated Exchange Value method, a practical method to estimate values for goods and services currently outside of the market in a manner consistent with the market-based figures considered in national accounts. The method proposes to simulate, in a partial equilibrium context, the price that would occur if a good or service outside of the market, such as free access recreation in forests, were internalized. The method takes into account the demand, estimated using non-market valuation techniques, the supply and the market structure. The discussion covers the case of a linear demand and the case in which the demand is estimated using discrete choice methods. This paper applies the method to free access recreation in the forests of Andalusia, in the south of Spain, and compares the results to those obtained using Hicksian variations.