Valuation Methods

In our exhaustive review of diverse resources, we pinpointed various valuation methods relevant to both real assets and ecosystem services valuation (ESV). While certain methods are tailored to one type of asset, a substantial number are versatile, finding utility in both realms.

We started by segregating these methods based on their applicability to either real assets or ESV. However it become clear and should be noted that each discipline has invaluable lessons to impart to the other. Specifically, ESV stands to gain from adopting financial and economic valuation techniques prevalent in real asset assessments. In turn, the realm of real assets could benefit from embracing the qualitative and intrinsic valuation methodologies common in ESV.

This mutual exchange of methods highlights a rich landscape for innovation, leading to more accurate and holistic valuations in both sectors.

Valuation Methods Across Asset Types

Here are the valuation methods used across real-world use cases and literature we reviewed, ranked by the number (#) of frameworks that utilized each approach to value. The full list, by framework, is available in the accompanying RealValue workbook under the "Valuation Methods" sheet.

Real Asset Approaches to Value

Over 25 valuation methods ranked from highest to lowest based on count:

  • Comparable Sales (Market Approach): 4

  • Discounted Cash Flow (DCF): 4

  • Net Asset Value (NAV): 4

  • Option Pricing Models: 2

  • Real Options Valuation: 2

  • Net Present Value (NPV): 2

  • Income Approach: 2

  • Replacement Cost: 2

  • All the following have 1 occurrence each: Cost of Production, Futures Pricing, Inventory Levels, Multiples Method, Public-Private Comparisons, Regulatory Asset Base (RAB), Sensitivity Analysis, Environmental & Social Premium, Market Price, Regulatory Impact, Royalty & Reserve Rates, Automated Valuation Models (AVM), Broker Price Opinion (BPO), Cost Approach, Gross Rent Multiplier, Market Approach, Supply and Demand Dynamics, Spot Pricing.

Ecosystem Services Approaches to Value

Over 100 valuation methods ranked from highest to lowest based on count:

  • Contingent Valuation: 9

  • Hedonic Pricing: 9

  • Replacement Cost: 9

  • Travel Cost: 9

  • willingness to pay (WTP): 5

  • Four occurrences each: Meta-Analysis, Value Function Transfer, Unit Value Transfer, Ecosystem Service Valuation

  • Three occurrences each: Cost-Benefit Analysis: Production Approaches:, Market Price., Total Economic Value, willingness to accept (WTA), Group Valuation (Participatory Valuation)

  • Two occurrences each Net Present Value (NPV), Revealed Preference, Choice Experiments, Stated Preference, Avoided Cost, benefits transfer, Value Transfer (Benefits Transfer), Multi-Criteria Decision Analysis, Opportunity cost, Mitigation/restoration costs

  • One occurrence each: inclusive wealth, intergenerational well-being, morbidity costs, present value, production system, total economic value, Behaviour-based valuation, Biodiversity Inventory, Cost-Based Methods, Deliberative Decision Methods, Deliberative Methods, Delphi Method, Ecosystem Services Mapping, Group Discussions, Integrated Modelling, Integrated valuation, Livelihood Dependence, Participant Observation, Participatory Mapping of Ecological Values, Photo-Series Analysis, Q-Methodology, Scenario Building, Statement-based valuation, conjoint valuation, direct observed behavior, indirect observed behavior, participatory assessment, adjusted unit value transfer, Averting behaviour method, Avoided damage costs, Directly observed values, economic valuation, exchange value method, monetary valuation, Opportunity costs of alternative uses, Prices from economic modelling, Prices from similar markets, Productivity change method, Qualitative methods, Residual value and resource rent methods, Shadow project cost, Simulated Exchange Value (SEV) method, 18 types, Choice Modeling (Choice Experiment), Damage Cost Avoided, Defensive Expenditure, Input-Output Modelling, Net Factor Income (Residual Value), Production Function, Public Pricing, Restoration Cost, Social Cost of Carbon, bequest value, Bio-economic modelling, Consumer surplus, Contingent ranking, Conversion cost, direct use consumptive value, direct use non-consumptive value, existence value, Factor income/Production function Hedonic pricing, indirect use value, insurance value, Market Approach, Net price method, option value, Participatory valuation, Production function/factor income, Public investments, Revealed Preference, Stimulated Valuation, Substitute goods.

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