Don canvasses non-market valuation strategy for projects

A Professor of Estate Management, Austin Otegbulu, has tasked policymakers to deploy a non-market valuation strategy in deciding the more appropriate project for society through studies on user-demand preferences.

This, according to him, will be a panacea to white elephant projects and in addition, enhance the sustainability of developmental projects in the country.

He also expressed the urgent need to develop a comprehensive curriculum for environmental valuation at both undergraduate and postgraduate levels, as there is currently a dearth of environmental valuers in Nigeria and the whole of Africa.

Otegbulu, who doubles as Chairman of the Board of Trustees (BoT) of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), made the recommendations during his inaugural lecture entitled: “The Mysteries of Bermuda Triangle and Environmental Valuation Missing Gap in Policy Decisions”, at the University of Lagos (UNILAG).

He explained that in the standard valuation practice, values are market-derived based on training of practitioners, who deploy market comparable, investment and cost methods.

He, however, observed that the conventional valuation methods, which are market-driven, are incapable of capturing market values about air and water quality, forest conservation/degradation, value of life, infrastructure quality and pricing, overfishing and damage to health and visual amenity due to gas flaring.

Otegbulu argued that over the years, a variety of non-market valuation methods have been developed by environmental economists for the estimation of values, but surprisingly they are yet to be widely used in most African countries and more particularly Nigeria.

He said it is important that it’s recognised the importance of non-market value of environmental resources in making informed environmental policy decisions taking into consideration their total economic value (TEV).

“Economic valuation of environmental functions is important as it helps to correct the erroneous belief of policy decisions, which treat the environment as if it were a free input resulting in its misuse and not given its consideration in policy decisions.

“Economic valuation of the environment illustrates the damage done to the society through resource depletion and pollution in addition to environmental benefits; integrate the unpriced but variable functions of the natural ecosystem into policy decisions,” Otegbulu said.

He emphasised that all valuations guide informed decision-making and help to improve environmental investment, development and policy decision outcomes, adding that environmental valuation is a veritable tool in environmental policy and decision-making.

“It provides a guide on how to govern the relationship between humans and the environment in a mutually beneficial manner.Value is derived from the utility an asset can provide. Optimum value can only be derived when all the benefits accruing from an asset or resource are captured through consideration of their total economic value, which reflects the value to the owners and the society,” he said.

He further clarified that the undervaluation of the nations’ natural resources encourages their use with prodigality and constitutes a threat to future existence.

He added: “I have shown the challenges experienced by professional valuers in attempting to value non-market goods and services like air and water quality, human life, environmental degradation, and wetland degradation.

“These challenges constitute a mystery to estate surveyors and valuers. Environmental economists have, however, provided a solution with the introduction of total economic value and environmental valuation techniques to resolve the mystery of environmental valuation.”