Most environmental goods and services, such as clean air and water, and
healthy fish and wildlife populations, are not traded in markets. Their economic
value -how much people would be willing to
pay for them- is not revealed in market prices. The only option for assigning
monetary values to them is to rely on non-market valuation methods.
Without these value estimates, these resources may be implicitly undervalued
and decisions regarding their use and stewardship may not accurately reflect
their true value to society.
A fundamental distinction in economics is between market and non-market goods
and services. Goods and Services in a free market economy are sold for prices
that reflect a balance between the costs of production and what people are
willing to pay.
Some environmental goods and services, such as fish and seaweed, are traded in
markets, thus their value can be directly
observed. Conversely, a non-market good or service is something that is not
bought or sold directly. Therefore, a non-market good does not have an
observable monetary value. Examples of this include beach visits, wildlife
viewing, or snorkeling at a coral reef.
