The Nature of Value and the Value of Nature

The rules governing appraisal of real estate in the United States are set by the Appraisal Foundation and these rules determine the economic value of environmental features on land as well as the ‘fair market value’ of conventional real estate and natural resources.

In 2013, the Sonoran Institute convened the Asset Management Research Roundtable for State Trust Land Managers, during which appraisal methodology emerged as a core area of interest. Questions were raised regarding the effect of appraisal standards and practices on a variety of land uses, such as conservation or provision of ecosystem services. This working paper provides a summary of the issues affecting determination of fair value for environmental attributes of individual land parcels, and some suggestions for further engagement to update appraisal standards and practices such that they would better incorporate conservation in financial valuation decisions.