Valuing the Environmental Damage or Improvement: Based on the Happiness Method

In addition to standard methods of environmental valuation, a new method has emerged which models individuals´ self-reported happiness as a function of their incomes and the environmental quality. The estimated method is used to calculate the trade-off that people would be willing to make between income and environmental conditions, i.e. the increase in income is a necessary compensation to individuals for any given decline in environmental conditions. The happiness method is introduced by both the theoretical and empirical aspects in this paper.