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Valuing Environmental Damage


  • Johansson, Per-Olov


The purpose of this paper is to review the most important parts of the economic theory and measurement of environmental damage. The paper is structured as follows. Section 2 introduces the willingness to pay concept and money measures such as the compensating variation and the equivalent variation. This section also offers an interpretation of money measures in terms of the outcome of a referendum. Section 3 defines the total value of an environmental asset, in order to give the reader an idea of the complexity of the money measures used in recent empirical studies. Section 4 and 5 introduce risk or uncertainty and discuss the choice of money measure in a risky world. In section 6, three frequently employed methods for the estimation of money measures are introduced. The paper ends with some remarks regarding the limitations of these approaches to decision making. Copyright 1990 by Oxford University Press.

Suggested Citation

  • Johansson, Per-Olov, 1990. "Valuing Environmental Damage," Oxford Review of Economic Policy, Oxford University Press, vol. 6(1), pages 34-50, Spring.
  • Handle: RePEc:oup:oxford:v:6:y:1990:i:1:p:34-50

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    Cited by:

    1. Heister, Johannes & Klepper, Gernot & Krämer, Hans Rachebald & Michaelis, Peter & Mohr, Ernst & Neu, Axel Dietmar & Schmidt, Rainer & Weichert, Ronald, 1991. "Umweltpolitik mit handelbaren Emissionsrechten: Möglichkeiten zur Verringerung der Kohlendioxid- und Stickoxidemissionen," Open Access Publications from Kiel Institute for the World Economy 1173, Kiel Institute for the World Economy (IfW).
    2. Francisco Javier Correa Restrepo & Juan David Osorio Múnera, 2004. "Valoración económica de costos ambientales: marco conceptual y métodos de estimación," REVISTA SEMESTRE ECONÓMICO, UNIVERSIDAD DE MEDELLÍN, June.
    3. Franz Wirl, 1999. "De- and Reforestation: Stability, Instability and Limit Cycles," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(4), pages 463-479, December.
    4. Wolfgang Ströbele, 1992. "Ill-behaviour of transformation-frontiers with environmental quality versus pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(1), pages 19-32, January.
    5. Robert Ayres, 1997. "Environmental market failures: Are there any local market-based corrective mechanisms for global problems?," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 1(3), pages 289-309, September.
    6. Wirl, Franz, 1999. "Complex, dynamic environmental policies," Resource and Energy Economics, Elsevier, vol. 21(1), pages 19-41, January.
    7. David A. Starrett, 1997. "Mobility and Capitalization in Local Public Finance: A Reassessment," Working Papers 97006, Stanford University, Department of Economics.

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