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Annex I - Glossary

Contingency valuation

A technique for establishing a monetary value for a non-traded environmental "good" or service, e.g., a scenic attraction, by asking respondents to the sum they would be prepared to pay. While successes have been claimed for the method, recent re-assessments suggest it should be used with caution and reinforced with empirical research.

Deposit refund systems

A system where a surcharge is levied on the price of products leading to resource depletion or pollution which is then refunded if the product (or its residuals) are re-cycled.

Hedonic pricing

A valuation technique to determine the value of non-traded environmental 'good' which uses statistical analyses to isolate the environmental values which contribute to differences in product prices, typically price differences in real estate prices. The technique has limited application in dealing with resource valuations in, say, the fisheries sector but is well suited to other aspects of the valuation of coastal resources.

Non-compliance fees

"Additional" prices to be paid for not complying with environmental requirements to meet the social costs arising from environmental damages.

Performance bonds

Similar to a deposit refund system where a bond is placed equal to the estimated social costs of possible environmental damage as a surety for complying with environmental requirements and is forfeit if these requirements are not met.

Tradable permits

A system where rights to discharge pollution or exploit resources can be exchanged through either a free or a controlled "permit" market. Examples include Individual Transferable Quotas in fisheries, tradable depletion rights to mineral concessions and marketable discharge permits for water-borne effluents.

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