APPENDIX I List Of Submissions - Victorian Environmental ...

COMMENTS ON THE CONSULTANTS’ SOCIAL
AND ECONOMIC APPRAISAL
In submissions and briefings, interest was expressed in the contingent valuation method and the
assumption used by the Consultants to calculate the $ value of environmental attributes for this
Investigation. The consultants’ report discusses in detail the various assumptions made. Their report
refers to the literature that has researched each assumption, and expresses the outcome of that research.
Their conclusions are that contingent valuation methods produce values that are replicable, consistent
with demand theory and consistent with results from other methods such as ‘travel cost’ and ‘hedonic
pricing’. These methods give results with an accuracy of plus or minus 50%, similar to the accuracy of
some estimates of value derived through market prices.
The dollar values determined by the consultants are based on the results of 76 existing studies in the field
of economic research in the United States of America, New Zealand and Australia. Each $ estimate
chosen was the modal (most common) $ value found from numerous studies relevant to particular
environmental characteristics. The relative visitor ‘popularity’ of different rivers was recognised directly
(in the use valuations), and by use of the weighting factor (for the existence valuations). Accordingly, for
this Investigation, it is unlikely that new specific purpose surveys could have improved the relevance of
the results.
In calculating the existence (preservation) values, the consultants were cautious, and used a weighting
factor when applying the ‘preservation values’ (in $ per household-year) to all households in the State.
The factor is based on the relative popularity of regions across the State as reflected in park visitor
numbers, multiplied by 10% (or 30%) to reflect the proportion of those who visit the river corridors. The
factor varies from 0.0014 (Suggan Buggan) to 0.018 (Yarra) for the rivers, and from 0.0007 to 0.0042 for
the essentially natural catchments. The valuations were multiplied by these weighting factors, then by the
number of Victorian households (1 000 000).
Further, rather than simply present a single $ value for the environmental attributes of each river, the
consultants calculated four valuations: total visitor-year (ie recreational user) values, using both10% and
30% of regional visitor numbers; and total existence value household-year values, also using the 10% and
30% levels. Extreme values were excluded, and the lower and higher estimates were listed for each river.
The consultants marked (*) that figure they concluded to be most likely, after reference to actual visitor
numbers for particular rivers.
However, even if the lowest estimates are used, in virtually all cases the $ valuation of environmental
attributes greatly exceeds the foregone resource $ value.
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