The method of the Protection Costs:
from Prevention to Restoration
When used in external cost valuation, the aim of the Protection costs method is to approximate the damage value by considering the costs of protection measures. Given its simplicity and the avoidance of complex environmental analysis, the method has historically been one of the first to be implemented in environmental valuation. The method comprises a broad range of techniques, differing with the extent of the “protection” measures:
- Costs of prevention (policies acting on causes in order to avoid the damage)
- Mitigation Costs (policies acting on causes in order to reduce the damage)
- Adaptation Costs (policies acting on effects in order to reduce them)
- Clean Up Costs (policies acting for a clean-up, but not assuring restoration to the ex ante situation)
- Restoration costs (if restoration is technically possible, these are the costs of actions necessary to restore the ex ante situation)
The typical case where all these methods have been applied is climate change costs.
The method presents a severe limit when used for damage valuation.
The method doesn’t measure the final costs of impact pathways linked to the activity; indeed it measures the cost of protection measures taken at the various stages of the impact chains. The implicit assumption is that protection costs are at least equal to the environmental damage, an hypothesis which is very difficult to defend. Even assuming a mix of prevention and restoration costs measures, “holes” in valuation remain:
- many environmental damages cannot be restored
- when possible, restoration usually occurs many years after the beginning of the damaging events: in this intermediate period (between pollution and restoration) the occurring costs are paid by society in various forms
The development of damage valuation methodologies in the last decade has reduced the interest towards the application of this method in environmental valuation. Indeed the method is consistent when applied for its original purpose: i.e. to evaluate the costs of environmental policies, for examples in cost-benefit analysis.