Simulated Exchange Value Method: Applying Green National Accounting to Forest Public Recreation

Noviembre 2010
Instituto de Políticas y Bienes Públicos (IPP) CSIC, Working Paper. 2010-16

Jose L. Oviedo, Pablo Campos & Alejandro Caparrós

While applied national accounts are based on market costs and outputs, non-market valuation techniques yield estimates for consumer or Hicksian surplus. To integrate non-market values in national accounts we propose the Simulated Exchange Value method, which simulates the whole market (demand and cost functions) to obtain exchange values. We focus on forest public recreational services because they are relatively close to markets and have been frequently valued using non-market valuation techniques. We apply this method to the public visitor recreational services of the woodlands of Alcornocales Natural Park (southwestern Spain). We estimate the cost function using available data on government costs incurred in the provision of recreational services and we estimate the demand function through contingent valuation. Using both functions, we analyze two potential solutions for the simulated market: monopoly and perfect competition. The results show for monopoly and for perfect competition, respectively, a net operating margin of €0.74/ha and of €0.61/ha, and a total social income of €3.14/ha and of €3.23/ha.