Environmental Valuation: Damage Schedules

Increasing concerns over environmental degradation have amplified the role of environmental economics and the valuation of non-pecuniary environmental resources as tools of analysis to facilitate the design of policies. To date, however, environmental valuation methods have continued to be unreliable, misleading and contentious as a guide to resource allocations and damage compensations. Damage schedules, however, offer several advantages over most current post-incident economic valuation methods. One such advantage is predictability by stipulating damage or compensation awards and remedies in advance instead of waiting until the damage has taken place. In this paper, a damage schedule is developed based on the scales of relative importance translated from people’s judgments about values of various environmental damages or losses. The variance stable rank method is applied to the paired comparison responses to obtain the scale values as well as the importance of rankings. Statistical tests of significance are used to determine the level of the agreement among the survey respondents and the degree of correspondence between different respondent groups. This will determine the number of relative importance scales required to adequately represent the responses from all respondents. The scales of relative importance will then be translated into damage schedules.