Option and Non-Use Values of Environmental Assets

It is widely recognized that the value of environmental assets such as biodiversity, unique locations and the atmosphere may be hard to quantify. In particular, option values, quasi-option values and non-use values have been the subject of extensive discussion. We propose here an evaluation of environmental assets based on the option value or shadow price associated with intertemporal welfare maximization under conditions of uncertainty about the future preferences. We show that these values can provide powerful motives for conservation of the goods, and are under certain conditions equivalent to a reduction in the discount rate to be applied to future benefits. We also show that the option value can be bounded below by a function of the degree of risk aversion and parameters of the probability distribution governing the uncertainty about future preferences.