Criticism on elasticity-sensitivity coefficient for assessing the robustness and sensitivity of ecosystem services values

V.G. Aschonitis, M. Gaglio, G. Castaldelli and E.A. Fano

Ecosystem Services, 2016, vol. 20, issue C, 66-68

Abstract: The Coefficient of Sensitivity CS (or coefficient of elasticity) is used to determine the sensitivity and robustness of prices (coefficients) in the analysis of Ecosystem Services (ESs). The common CS approach is applied based on a specific % change of an ES coefficient keeping constant the coefficients of the remaining ESs. This approach assumes that when CS value is >1 then the estimated ES value is non-robust because it is elastic. The aim of this study is to show that the common approach of CS used in ESs studies is erroneously applied and interpreted. A simplistic calculus is provided which shows that the CS values of ESs a) are always in the range between 0 and 1 leading always to the conclusion that the applied coefficients by the users are robust, and b) are always independent by the % change of an ES coefficient defined by the user. Other reasons which question the validity of the common approach are that the CS values a) are always positive which is unrealistic in real market since it always violates the “law of demand” and b) can be manipulated by the user by changing the boundaries of the study area.

Keywords: Elasticity coefficient; Sensitivity analysis; Robustness of ecosystem services values (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecoser:v:20:y:2016:i:c:p:66-68

DOI: 10.1016/j.ecoser.2016.07.004

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