Gg 13824 3123 3g44 378 48969

Source: Adapted from Raphael, C. N. and E. Jaworski. 1979. Coastal Zone Management Journal. 5:181-194.

one of the earliest applications was in wetland valuation. Table 8.2 shows an early example by Raphael and Jaworski (1979) for Great Lakes wetlands. Using market values they estimated benefits to local economies from wetlands for five different uses. They then extrapolated their unit value ($489.69/acre/year) across the total acreage of Great Lakes wetlands (105,855 acres or 42,870 ha) to make a total assessment of $51,836,135/year. This exercise is useful to communicate the concept of value of natural ecosystems, especially in units (dollars) that are widely understood. More recently, the component value method has been applied to tropical rainforest conservation by showing the value of nontimber products that can be harvested from intact forests. Peters et al. (1989) produced the first comprehensive assessment of these nontimber forest products, and their estimations indicated that more value could be generated to local economies from intact forests than from conversion of the forest to other land uses such as ranching or tree plantations. Although controversial, assessments of value of nontimber forest products are an important conservation strategy for the tropics (Nepstad and Schwartzman, 1992; Plotkin and Famolare, 1992). Balmford et al. (2002) extend this type of analysis to a global scale.

The most comprehensive form of financial assessment is cost-benefit analysis, in which all costs and benefits of a project are considered. This has been the standard technique used for choosing between alternative designs in the field of engineering economics. In this analysis the costs and benefits of each alternative design for a project are evaluated in the same units, usually dollars, and then summed. Annual values of costs and benefits over a given life cycle of the project generally are divided by a discount rate to calculate net present value. After this calculation, the alternative with the highest ratio of benefits to costs is considered to be the best choice for implementing the project. The strength of this approach is in the logic of summing costs and benefits to determine the best alternative. The particular alternative with the best cost-benefit ratio represents the best investment opportunity for either a private or public (i.e., government) funded initiative. McAllister (1980) reviews this and other evaluation approaches. Reviews of methods for incorporating environmental values into economic cost-benefit analyses are given by Loomis and Walsh (1986) and Schulze (1991).

FIGURE 8.3 Energy circuit model of a fisheries system. The solid lines represent energy flows and the dashed lines represent flows of money. This model illustrates how money flows account only for the work done by the fisherman and are not connected to the actual production of fish by the estuary. (From Odum, H. T. and E. C. Odum. 1976. Energy Basis for Man and Nature. McGraw-Hill, New York. With permission.)

FIGURE 8.3 Energy circuit model of a fisheries system. The solid lines represent energy flows and the dashed lines represent flows of money. This model illustrates how money flows account only for the work done by the fisherman and are not connected to the actual production of fish by the estuary. (From Odum, H. T. and E. C. Odum. 1976. Energy Basis for Man and Nature. McGraw-Hill, New York. With permission.)

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