Total economic value (TEV) is a concept in
cost–benefit analysis
Cost–benefit analysis (CBA), sometimes also called benefit–cost analysis, is a systematic approach to estimating the strengths and weaknesses of alternatives. It is used to determine options which provide the best approach to achieving benefits ...
that refers to the value derived by people from a
natural resource
Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest, and cultural value. ...
, a
man-made
Artificiality (the state of being artificial, anthropogenic, or man-made) is the state of being the product of intentional human manufacture, rather than occurring naturally through processes not involving or requiring human activity.
Connotati ...
heritage resource or an
infrastructure
Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and pri ...
system, compared to not having it. It appears in
environmental economics
Environmental economics is a sub-field of economics concerned with environmental issues. It has become a widely studied subject due to growing environmental concerns in the twenty-first century. Environmental economics "undertakes theoretical ...
as an aggregation of the (main function based) values provided by a given
ecosystem
An ecosystem (or ecological system) is a system formed by Organism, organisms in interaction with their Biophysical environment, environment. The Biotic material, biotic and abiotic components are linked together through nutrient cycles and en ...
.
Value classification
The value of an ecosystem can be distinguished as:
#
Use value
Use value () or value in use is a concept in classical political economy and Marxist economics. It refers to the tangible features of a commodity (a tradeable object) which can satisfy some human requirement, want or need, or which serves a usef ...
— Can be split into Direct and Indirect use values:
#* Direct use value: Obtained through a removable product in nature (i.e.,
timber
Lumber is wood that has been processed into uniform and useful sizes (dimensional lumber), including beams and planks or boards. Lumber is mainly used for construction framing, as well as finishing (floors, wall panels, window frames). ...
,
fish
A fish (: fish or fishes) is an aquatic animal, aquatic, Anamniotes, anamniotic, gill-bearing vertebrate animal with swimming fish fin, fins and craniate, a hard skull, but lacking limb (anatomy), limbs with digit (anatomy), digits. Fish can ...
,
water
Water is an inorganic compound with the chemical formula . It is a transparent, tasteless, odorless, and Color of water, nearly colorless chemical substance. It is the main constituent of Earth's hydrosphere and the fluids of all known liv ...
).
#* Indirect use value: Obtained through a non-removable product in nature (i.e., sunset,
waterfall
A waterfall is any point in a river or stream where water flows over a vertical drop or a series of steep drops. Waterfalls also occur where meltwater drops over the edge
of a tabular iceberg or ice shelf.
Waterfalls can be formed in seve ...
).
#
Non-use value
Non-use value is the value that people assign to economic goods (including public goods) even if they never have and never will use it. It is distinguished from use value, which people derive from direct use of the good. The concept is most commo ...
— Values for existence of the natural resource. For example, knowing that
tiger
The tiger (''Panthera tigris'') is a large Felidae, cat and a member of the genus ''Panthera'' native to Asia. It has a powerful, muscular body with a large head and paws, a long tail and orange fur with black, mostly vertical stripes. It is ...
s are in the
wild, even though you may never see them.
#
Option value
Option or Options may refer to:
Computing
*Option key, a key on Apple computer keyboards
* Option type, a polymorphic data type in programming languages
* Command-line option, an optional parameter to a command
*OPTIONS, an HTTP request method ...
: Placed on the potential future ability to use a resource even though it is not currently used and the likelihood of future use is very low. This reflects the willingness to preserve an option for potential future use.
#
Bequest value or
existence value
Existence values are a class of economic value, reflecting the benefit people receive from knowing that a particular environmental resource, such as Antarctica, the Grand Canyon, endangered species, or any other organism or thing exists.
Existenc ...
: Placed on a resource that will never be used by current individuals, derived from the value of satisfaction from preserving a natural environment or a historic environment (i.e.,
natural heritage
Natural heritage refers to the sum total of the elements of biodiversity, includes flora and fauna, ecosystems and geological structures. It forms part of our natural resources.
Definition
Definitions:
* Natural heritage refers to natural feat ...
or
cultural heritage
Cultural heritage is the heritage of tangible and intangible heritage assets of a group or society that is inherited from past generations. Not all heritages of past generations are "heritage"; rather, heritage is a product of selection by socie ...
) for
future generations
Future generations are Cohort (statistics), cohorts of hypothetical people not yet born. Future generations are contrasted with current and past generations and evoked in order to encourage thinking about intergenerational equity. The Moral agenc ...
.
Total economic value is the price of the customer's best alternative (the
reference value) plus the
economic value
In economics, economic value is a measure of the benefit provided by a goods, good or service (economics), service to an Agent (economics), economic agent, and value for money represents an assessment of whether financial or other resources are ...
of whatever differentiates the offering from the alternative (the differentiation value).
See also
*
Green accounting
Green accounting is a type of accounting that attempts to factor environmental costs into the financial results of operations. It has been argued that gross domestic product ignores the environment and therefore policymakers need a revised model ...
References
Environmental economics
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