Valuing the Environment Using the Life-Satisfaction Approach

PEP Working Paper No. 06/03

30 Pages Posted: 25 May 2006

See all articles by Susana Ferreira

Susana Ferreira

University of Georgia

Mirko Moro

University of Stirling

Peter Clinch

University College Dublin

Date Written: May 25, 2006

Abstract

This paper presents a comprehensive theoretical and methodological framework clarifying the relationship between non-market environmental valuation techniques, in particular hedonic and life-satisfaction methods. The paper shows how life-satisfaction scores can be used to test correctly the equilibrium condition in location markets required by the hedonic approach and that in the absence of equilibrium, the life-satisfaction approach is still a theoretically valid valuation technique. Valuation using the life-satisfaction approach suffers from caveats associated with the cardinalisation of utility, however. Using data from Ireland, we apply this framework to the valuation of amenities linked to respondents' dwelling areas using Geographic Information Systems (GIS).

Keywords: environmental valuation, life satisfaction, well-being, subjective well-being, hedonic pricing, location market, climate, air pollution, water pollution

JEL Classification: D1, I31, Q51, Q53, Q54

Suggested Citation

Ferreira, Susana and Moro, Mirko and Clinch, Peter, Valuing the Environment Using the Life-Satisfaction Approach (May 25, 2006). PEP Working Paper No. 06/03, Available at SSRN: https://ssrn.com/abstract=904355 or http://dx.doi.org/10.2139/ssrn.904355

Susana Ferreira

University of Georgia ( email )

Athens, GA 30602-6254
United States

Mirko Moro (Contact Author)

University of Stirling ( email )

Stirling, Scotland FK9 4LA
United Kingdom

Peter Clinch

University College Dublin ( email )

Belfield
Dublin 4, 4
Ireland

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