Total economic value refers to the comprehensive assessment of the worth or benefit derived from a particular economic activity, resource, or project. It is a concept used to measure the overall value that an activity or resource contributes to society, taking into account both the tangible and intangible aspects. This valuation approach seeks to capture not only the market price of a good or service but also its broader economic, social, and environmental impacts.
Total economic value consists of two main components:
1. Use value: This refers to the direct economic benefits associated with the utilization or consumption of a resource or activity. It includes the market value of goods or services, such as revenue generated from sales, wages, and profits.
2. Non-use value: This represents the indirect or non-market benefits that are not realized through actual use or consumption. Non-use value encompasses several dimensions, including option value (the value of preserving a resource for future use), existence value (the value people place on knowing that a resource exists, even if they don't directly use it), and bequest value (the value individuals attach to passing a resource on to future generations).
By quantifying both use and non-use values, total economic value provides a holistic understanding of the true worth of an activity or resource, which can inform decision-making processes related to resource allocation, policy formulation, and prioritization. This framework recognizes that economic activities have impacts beyond immediate market transactions and acknowledges the importance of considering long-term sustainability and societal well-being.
