Moran and Pearce (1994) argue that economic value is seen by some as just one of many values that nature can have, while others argue that properly carried out economic valuations encapsulate all societal values. The economic value of ecosystem goods and services should relate to their contribution to human welfare.
Techniques for economic valuation seek to measure people’s perceptions of this contribution. Often this is done in terms of their willingness to pay for getting goods and services or their willingness to accept compensation for losing them. It is important to acknowledge the distinction between price and value in such exercises. Prices are strongly influenced by supply and demand. Thus, diamonds fetch a higher price than water because they are rarer. Consider, though, our willingness to pay if water became scarce, or our willingness to accept compensation for losing our water. Economic assessments should be considered in the context of the comparisons and decisions being made, and care should be exercised in extrapolating beyond that context (Bockstael et al. 2000).