California's Ocean Economy - California Resources Agency - State ...

NOEP
• Where data for the individual industries are available, users may adjust the sector totals
to suit specific preferences, if desired.
On balance, the strengths of the methodology outweigh the weaknesses. For the most part,
the weaknesses are inherent to either the original data sources used or to the nature of any
taxonomic process or to data availability limitations that cannot easily be overcome. The
NOEP methodology is still under development, and ways must be found to control for both
the upward and downward biases in the data in order to improve the estimates.
A.2 Market and Non-Market Valuation
The ocean, like other environmental assets, may be viewed as a set of natural resources that
provide a stream of valuable services over a period of time (Freeman, 2003). These services
can be direct, like swimming or sunbathing on a beach, boating or recreational fishing. Or
they can be indirect, like ecological preservation or influencing climates. Moreover, these
services may be traded in markets with prices, like overnight camping fees, or fishing
permits. These services can also be available outside traditional markets, like the recreational
value of a day at the beach, or day of recreational fishing. Much of what a beach visitor
values in a “day at a beach” or a surfer values in a “day of surfing” is not bought and sold in
markets, and therefore, the value of these added services is often omitted in traditional
economic valuation/impact studies, or is not directly linked to the natural asset that provides
these services.
The process of determining the economic value of those activities that are not traded in the
market is not the same as calculating the value of something that is traded in the market
place such as purchasing a boat or buying a swim suit. These activities have non-market use
values to those who partake in them, which must be estimated indirectly and somewhat less
precisely than a market activity. Non-market valuation methods have been increasingly used
to estimate that “value “of recreational activities that are not captured by market
transactions, although the methods for determining these values are less precise and still
becoming more sophisticated. Non-market valuation methods can be broadly divided into
two groups: surrogate market techniques and simulated market techniques. Surrogate
market techniques attempt to estimate implicit (substitute) values for environmental goods
and services by means of the price of another good or service that is marketed. These
techniques use actual market prices to value an environmental quality or resource that is not
marketed. The idea behind these methods is that prices for many marketed goods and
services differ across seemingly equal units due to different environmental qualities, scale or
setting, and these price differentials reflect a purchaser’s valuation of the environmental
effects associated with any particular unit. Hedonic Pricing and Travel Cost are the two
most widely used methods under this category. Simulated market techniques are not based
on observed behavior, but on a user’s responses to survey questions, which try to mimic the
actual market. These experimental situations ask users to choose between things, to give
information about the value they place on certain costs or benefits. Contingent Valuation
methods are the most commonly used simulated market techniques.
Estimates of non-market values of ocean-related recreational activities in California are
imprecise and subject to a range of biases. The users’ valuation of beaches, recreational
134