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T6.4 Participatory Economic Valuation (PEV)
Participatory Economic Valuation (PEV) is a technique that allows communities or other stakeholders to
estimate the value of a range of benefits based on their equivalent value to a commonly traded item,
known as the ‘numeraire’. PEV was first known as contingent ranking, since it is a variant of ‘contingent
valuation’ which involves people expressing their willingness to pay (WTP) for a good or service.
Following some early examples in Africa in the 1990s (Campbell et al., 1991, Emerton, 1996), PEV has
been recently adopted by CARE International and partners (Franks, undated). It is a useful way of
ranking a range of benefits, but is not recommended for the estimation of absolute economic values
(e.g., by adding together values derived from PEV) due to various theoretical and methodological
limitations (IIED, 1994; Richards et al., 2003).
Description of Method
Assuming that the various benefits and costs (positive and negative impacts) have been defined in the
earlier SIA stages, the following steps are required:
• Identification of an anchor or ‘numeraire’ value. Participants need to decide on an item with a
well-known value, e.g., a goat, a measure of firewood, etc.
• Participants are then asked to rank all the benefits (and the anchor value) from the least
significant/valuable to the most significant or valuable.
• Participants then perform a proportional piling exercise, allocating a number of counters to each
benefit (it is important that someone records the discussion of how or why a particular score is
decided)
• In order to assess attribution, the respondents can also be asked to divide the counters into two
piles: one pile for the benefits which they think are due to the project, and a second pile which
they think is due to other factors. It is important to capture the reasons behind this division.
• The benefits can then be transformed into a cash amount, based on their scoring relative to the
numeraire or anchor value. The numeraire is thus used to estimate the willingness to pay (WTP)
value of the other goods or services.
• The exercise can be repeated for the costs or negative impacts of the project.
• The exercise should be discussed, including whether people felt it gave a fair reflection of the
benefits and costs.
Social Impact Assessment of Land-Based Carbon Projects (1.0) – Part II | 62