VALUING THINGS THAT DO NOT HAVE VALUE. EXISTENCE VALUE, ECONOMICS AND ENVIRONMENT.

Abstract

Economic thinking has not paid too much attention to those goods and services that are not directly consumed. In his seminar paper, John Krutilla (1967) argued that variables included in a consumer's "utility function" should not be restricted to the amount of effectively consumed goods and services. Existence value can be defined as the portion of the value of a thing that is independent of its use, in the present and/or in the future. Nevertheless, some economists have recommended that estimate of existence value should be abandoned due to theoretical and empirical difficulties. Others have argued that existence value can be very relevant in some situations and must be measured. This paper contributes to this debate, critically reviewing the state-of-the-art literature on the subject. Methodological aspects of valuation of existence value are also discussed. It is argued that it is necessary to estimate the existence value of environmental goods and services.