Indirect opportunity costs
21st Dec 2018
Indirect opportunity costs method
Suitability of the forest ecosystem services to be valued:
Non-marketed ecosystem services
Description of the method:
The method is used to calculate the value of non-market environmental goods when individual labour is involved in harvesting or collection. The opportunity cost method provides quick and straightforward information on the forgone development costs of preservation, but it does not provide an estimate of the social benefits of preservation. The basic assumption of this technique is that the decision to spend time in the collection and harvesting of, for example, non-timber forest product (NTFP) is weighed against alternative productive uses of labour. However, in many cases, it is almost impossible to assess how much labour is used for collecting NTFPs. These “user cost-based techniques” suffer from the same deficiency – what something is worth has no necessary relationship to the costs involved to produce it. The fact that it is hard to estimate the users’ cost to produce, for such joint products as NTFPs in the informal sector, makes this technique somewhat dubious.