The economic valuation of social aspects: A multicriteria approach based on input–output models1

Abstract

Decision making on the suitability of public investment projects has traditionally been based on the study of their economic feasibility. Since the end of the 1970s, this has been complemented by a more holistic vision of reality in which social and environmental aspects are explicitly considered alongside economic factors. This paper proposes a new evaluation methodology that allows for the valuation of social and environmental factors in economic terms. The methodology is based on use values (direct, indirect, and potential) and nonuse values (bequest and existence) that are usually studied for an environmental evaluation. The resulting economic value is obtained by the utilization of (a) input–output models to calculate the direct use value in monetary terms and (b) multicriteria techniques (especially the analytic hierarchy process) and comparative models to estimate the remaining use (indirect and potential) and nonuse values (bequest and existence). The methodology is applied to a real-life problem in Aragon.