All forest land uses can be characterised in economic terms, although until recently there was no satisfactory way to compare the market and non-market benefits of alternative forest land use options. Recent developments in environmental and resource economics have produced new methods to estimate non-market forest benefits, making comprehensive assessment of land use options possible.
This report aims to review and illustrate the range of methods now available for evaluating the environmental benefits and distributional consequences of alternative forest land use options in the tropics. The report presents a general framework for identifying, estimating and comparing forest values, within the context of cost-benefit analysis. The different valuation techniques used in such assessments are reviewed and their applications are illustrated with examples drawn from the empirical literature. An attempt is also made to identify a set of critical issues and research priorities in the valuation of tropical forests, as a contribution to on-going research efforts.