Question

Consider a natural resource that eventually runs out, like a river, a national park, or pure air.

Describe how the benefits of the damage function method and one other technique that is not contingent

Answer 1

The damage function method and non-contingent valuation are techniques used to assess the benefits of a natural resource. The damage function method estimates the economic impact of resource depletion, while non-contingent valuation assigns a monetary value to non-market goods. These methods aid in decision-making and resource management.

Step-by-step explanation:

The techniques mentioned in the question, that are used to assess the benefits of a natural resource, are the damage function method and the method of non-contingent valuation. The damage function method is used to estimate the economic impact or cost associated with the depletion or degradation of a natural resource. It helps in quantifying the damage caused to the environment and provides a basis for making informed decisions regarding resource use and conservation.

Non-contingent valuation, on the other hand, is a technique used to assign a monetary value to a non-market good, such as a river or a national park. It involves surveying individuals to determine their willingness to pay for the preservation or protection of the resource. This method helps in understanding the perceived value of the resource by society and can aid in decision-making regarding resource management.

Both these techniques offer insights into the economic aspects of natural resource utilization and conservation. While the damage function method helps in quantifying the costs of resource depletion, the non-contingent valuation method helps in understanding the value placed on the resource by society.