The purpose of this document is to provide practical guidelines for valuing environmental impacts via value transfer. It augments guidance provided by Defra (2007a) in An Introductory Guide to Valuing Ecosystem Services, which seeks to ensure that the true value of ecosystems and the services they provide are taken into account in policy decision-making.
Assessment of the impacts of policies should be consistent and transparent. Cross-Whitehall guidance in The Green Book (HM Treasury, 2003) requires that all new policies, programmes and projects be subject to a comprehensive but proportionate appraisal to ensure that interventions enacted by public sector bodies are in the best interest of society overall. In order to provide a full account as possible of potential outcomes, a key component of appraisal is the comparison of the total benefits of a proposal to the full costs incurred by Government and society. Here The Green Book requires that all relevant costs and benefits be valued in monetary terms and the net benefit or cost of the proposal be calculated.
Costs and benefits related to market goods and services are estimated using market prices. For wider social and environmental costs and benefits, for which no market price is available, monetary evidence from non-market valuation (or ‘economic valuation’) methods are used.
Continued development and application of economic valuation techniques gives rise to a substantial body of evidence on the value of environmental costs and benefits. Value transfer – which is also known as ‘benefits transfer’ – is a process by which readily available economic valuation evidence is applied in a new context for which valuation is required. It is a quicker and lower cost approach to generating economic valuation evidence, compared to commissioning a specifically designed primary valuation study. This advantage of value transfer makes it a practical tool for analysis given the time and resources constraints decision-making regularly faces.
Download the guidelines here.