Last edited 10 Apr 2020

Replacement cost valuation

RICS Insight Paper ‘Value of natural capital - the need for chartered surveyors’ published by the Royal Institution of Chartered Surveyors in 2017 suggests that replacement cost valuation is a revealed preference method that draws on the revealed preferences of stakeholders.

Replacement cost valuation assesses: ‘the cost of replacing a natural benefit that has or may be lost with a man-made replacement. For example, the cost of water treatment to deal with peat degradation following drainage might represent the minimum ‘value’ of the original environment that has been lost or may be lost. This method illustrates the dangers of a common language as replacement cost, and in particular depreciated replacement cost, would also be a familiar method to property valuers but in a different guise – the replacement of like with broadly like rather than with a substitute.’

Other revealed preference methods include:

Approaches other than the revealed preference method include:

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