Environmental Valuation Techniques in Water Resource Decision Making

Abstract

Economic valuation of environmental uses of water resources has the potential to bring a more balanced perspective to the allocation and management of water resources. Environmental valuation allows water resource benefits received by nontraditional water users in society to be included in benefit-cost analyses. This allows for a more formal consideration in the decision-making process that is on par with historic uses of water. Some environmental valuation methods follow traditional economic approaches such as estimating the demand curve for recreation as a function of water flow or water quality. Other environmental valuation approaches utilize surveys to create simulated markets for public uses of water resources. These valuation methods are capable of monetizing the economic values of instream flow and water-based recreation as well as the value of preserving habitat for endangered species. Government-agency use of these environmental values and techniques in their resource analyses is presented. Several case studies illustrate how environmental valuation has been used to evaluate hydropower regulation at Glen Canyon Dam, hydropower relicensing, dam removal, and public trust benefits of water versus municipal uses.