The overall objective of socio-economic assessment is to maximize the benefits of future investment in an enterprise in a sound and sustainable way. This chapter provides a review of various techniques that have been developed overtime for evaluating socio-economic benefits of non tradable good and services and ends with a discussion on how one of the techniques was utilized in evaluating the socio-economic benefits of cattle in the present study. The chapter comprises of three sections. The first section highlights various techniques for evaluating socio-economic benefits, situations under which each of the techniques are utilized, their advantages and disadvantages. The second section of the chapter provides a review of past studies that have attempted to evaluate non-marketed benefits of livestock. It also explains the method each of the study utilized, the findings and conclusion. The third and final section of this chapter concludes with how the present study differs from past studies and its likely contribution to literature.

2.1 Socio-economic valuation techniques

Overtime economists have developed techniques to determine the value of goods and services that are not tradable. These techniques have been categorized broadly into revealed preference techniques, stated preference techniques and ex ante assessment (Dofonsou et. al., 2008). Revealed preference techniques rely on values being inferred from people’s behavior in markets that are in some way connected to the socio-economic value. Revealed-preference methods exploit the relationship between some forms of individual behavior and associated environmental attributes to estimate value. Their main example includes hedonic pricing (HPM) and travel cost method (TCM). Ex-ante assessment measure the trade-offs resulting from a change to an existing management of a resource (Campbell et. al., 2003). An example of ex-ante assessment technique is the cost benefit analysis (CBA).

Revealed preference methods

The HPM is used in estimating economic values of an ecosystem or environmental services that directly affect market prices. It is often applied to estimate variations in housing prices that reflect the value of local environmental attributes (Taylor, 2003). HPM can be used to estimate economic benefits and costs associated with environmental quality (air pollution, water pollution, noise), or environmental amenities (aesthetic views, proximity to recreational sites). The basis of HPM is that the price of a marketed good is a function of its characteristics. To apply HPM, the following information must be collected: a measure or index of the environmental amenity of interest; data on property values and household characteristics for a well-defined market area for example distance to an environmental amenity, such as a view of the ocean.

HPM has several advantages which includes; it is useful in estimating values based on revealed preferences, property markets can be good indicators of value because they respond reasonably well to information, property records are reliable, and data on property sales and characteristics are easily available and the method is versatile and can be adapted to consider possible interactions between market goods and environmental quality. The disadvantages of HPM includes: the scope of environmental benefits that can be valued are limited to attributes related to housing prices, it only captures people’s WTP for perceived differences in environmental attributes and their direct consequences, data requirement are substantial, requires a high degree of statistical expertise and its results depend on model specification.

The travel cost method (TCM) is used to estimate the value of recreational benefits derived from ecosystems (Parsons, 2003). It assumes the value of the site, or its recreational services, is a function of peoples’ WTP to get to the site. It uses actual behavior (revealed choices) to infer values. The travel cost method is useful in estimating economic benefits or costs generated by changes in