Historical perspective of economic valuation

Development of economic evaluation of natural resources came from politics and public
authorities. It started in US 60 years ago, when the National Resources Board decided in its
Flood Control Act of 1936 that intangible follow-up impacts of their projects have to be
considered as well .
The conceptual framework for evaluation of non-market services was developed by
Ciriacy-Wantrup (1947). His idea of an estimation of social benefits by questioning the public
(referendum) (for example in contigent valuation method- CVM) was first put into practice by
Davis (1963). In 1950 a report published by the Federal Inter-Agency River Basin Committee
and known as the "Green Book" received widespread attention (Hanemann, 1992). The Green
Book became a guide for economic evaluation of the effects of river basin projects. It
recommends either the use of market prices or, if not possible, the use of alternative methods like
accounting the expenditures of a recreationist or his willingness to pay for a further use of the
recreation facilities (as developed by Ciriacy-Wantrup (1947).
Interest on the valuation methods expanded from water recreation into other public goods
such as wildlife, air quality or human health. However, for the following decades the centre of
development of environmental evaluation remained in the USA (mainly due to supportive
American legislation). In 1981 the National Environmental Policy Act (NEPA) was modified by
the Presidential Executive Order (EO) 12291 which claimed the use of cost-benefit analysis for
new regulations. In addition the Comprehensive Environmental Response, Compensation and
Liability Act (1980) brought environmental damage assessment to court (Hanley and Spash,
1993).