Total economic value
Also called: TEV · Topic: Environment and Sustainable Development · NCERT: Beyond NCERT
Meaning
Total economic value (TEV) adds up every way an environmental resource is valuable to people, whether or not markets price it:
TEV = use values (direct + indirect + option) + non-use values (existence + bequest)
- Direct use value comes from using the resource itself, such as timber.
- Indirect use value comes from the services it provides, such as flood control.
- Option value is the value of keeping the choice to use it later. It is a use value.
- Existence value is the value of simply knowing the resource exists.
- Bequest value is the value of leaving it to future generations.
Example
Take a Western Ghats forest. Its timber and fruit are direct use value, and its water supply to rivers is indirect use value. Possible future medicines give option value. People who never visit still value knowing its tigers survive (existence value) and want their grandchildren to have it (bequest value). Counting only the timber would badly undervalue the forest.
Don't confuse with
- Option value vs existence value: option value keeps the chance to use the resource later. Existence value involves no use at all.
Related concepts
- Natural capital
- Ecosystem services
- Contingent valuation
- Hedonic pricing
- Payment for ecosystem services
- Green accounting
- Adjusted net savings
- Ecological footprint
- Earth Overshoot Day
- Carbon footprint