Economic valuation involves putting monetary values on the world’s ecosystems or small parts thereof with the goal of highlighting and communicating the importance of ecosystems. The monetary valuation of ecosystem services is advocated because humans have an intuitive notion of economic value based on the utility derived either directly or indirectly, and whether current or in the future. Economic values can only be defined in terms of some underlying criterion that identifies what is to be considered to be good for an individual. The well-being of an individual is measured through an increase in utility function. The aggregate welfare of the community is measured by adding up all individuals’ utilities. The measurement of welfare function is a very important concept in economic valuation of forest ecosystem services.
The aim of this module is to introduce the concept and theoretical framework of economic valuation of forest ecosystem services. This is to enable the participants to understand the reasons for conducting economic valuations of forest ecosystem species. This theoretical framework is very important, because it provides general guidelines on the methods to be used for particular ecosystem services provided by forests. The valuation methods described in this module help the participants in carrying out forest valuation work in their respective countries or localities.