Valuing Externalities of Watershed Restoration and Erosion Control Projects in Mediterranean Basins: A Comparative Analysis of the Contingent Valuation and Replacement Cost Methods

The methodology used for Economic Valuation of the Externalities generated by the Watershead Restoration and Erosion Control Projects in the Hydrographic Basins of the Mediterranean Slope, is based on the Replacement Cost Method. Environmental Economics, however, today offer us other methodological possibilities, whose application to the valuation of this type of project may prove to be of interest. It is the case of the Contingent Valuation Method used for the evaluation of the effects of the Watershead Restoration and Erosion Control Projects of the Aljibe Basin (Almería) Spain, presented here. The results obtained show that, in this case study, application of Contingent Valuation ascribes greater social profitability of the project, with 5.23 % of IRR (Internal Rate of Return), compared to the value obtained using classic methodology of 2.25%, thus enabling us to draw closer to the true socio-environmental value of this type of project. In any case, both possibilities rather than alternatives can be considered as complementary, by focusing on the valuation from different perspectives.