The Valuation of Environmental Damage Compensation: An Integrated Framework

Environmental resources valuation is a critical issue, mainly when non-market value elements are relevant. The economics literature suggests the total economic value (TEV) approach as being in line with valuing environmental resources, but robust estimates are required of TEV change, when an environmental damage assessment is needed in order to ask for damage compensation in a court. Currently, for environmental damage claims the valuation methods usually proposed are subject to considerable scrutiny and therefore have to be used carefully. This paper aims to: a) analyse the pro and cons of the different valuation methods under the imputed-revealed-stated- preference economic approaches; b) present a matrix-based framework for environmental damage valuation; and c) establish a link between the proposed procedure and the Italian law on environmental damage claim.