Economic Valuation and Environmental Decision-Making in Europe

Abstract

This paper looks at the way economic valuation has been integrated into decision-making at (i) the pan-European level, using the European Commission as an example, and (ii) the national level within Europe, using the United Kingdom as an example. The focus is on the use of economic valuation for policy-making purposes. A definition of economic valuation is provided, with an overview of its potential uses in decision-making. This is followed by a summary of the various valuation techniques available, and how they are related. Legal developments in Europe and the U.K. affecting economic valuation are reviewed, as is the execution of formal appraisals for policy-making purposes. A retrospective look at the emergence of economic valuation shows that while great advances have been made at the European and U.K. national levels through introducing environmental appraisals in recent years, in the past policy has not always been informed by systematic appraisal techniques. Today, economic valuation is enjoying a revival and is probably more widely used than is realized. However, ideological and practical obstacles still inhibit its wider use, and its implementation lags significantly behind, for example, the United States.