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Concept
Environmental good
Summary
Environmental goods are typically non-market goods, including clean air, clean water, landscape, green transport infrastructure (footpaths, cycleways, greenways, etc.), public parks, urban parks, rivers, mountains, forests, and beaches. Environmental goods are a sub-category of public goods. Concerns with environmental goods focus on the effects that the exploitation of ecological systems have on the economy, the well-being of humans and other species, and on the environment. Users not having to pay an upfront cost and external factors like pollution that can damage environmental goods indefinitely are some of the challenges in protecting environmental goods.
There have been many efforts to place an economic value on environmental goods, but no consensus yet exists on the method of valuation. The challenges in the way of obtaining these economic values include the free-rider problem, difficulties in assigning ownership, and the non-divisibility of environmental goods.
Assigning a willingness to pay to environmental goods is one method that economists use to try to assess their value. Small scale simulated markets have been used in conjunction with contingent valuation methods in order to assess the relative values of economic goods, as well as an attempt to assign them dollar values. Other studies criticize these methods for expecting an unrealistic amount of mental effort on the part of the subjects who are asked to assign values, as well as for introducing framing effects and inherent biases relating to subjects' perceptions of dollar values.
Alternative measures of economic progress, including the Genuine Progress Indicator, Gross National Happiness, and Gross National Well-being factor living environmental wellness, ecological vitality, and the effects of resource depletion and long-term environmental damage into their models. These metrics aim to categorize not only the economical and monetary values of environmental goods and services, but also their effects on the emotional and psychological well-being of individuals within a society.
Official source
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