The risks of environmental valuation in developing countries: Between monetary interests and capital degradation

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Abstract

Policymakers increasingly aim to integrate nature’s value into economic decisions, encouraging organizations to recognize “natural capital” — a challenging goal, especially in developing countries. These nations face greater difficulty than developed ones in valuing environmental resources, raising the risk of irreversible environmental degradation. This study examines the risks and challenges of economic and financial valuation of environmental resources in developing countries, focusing on Iran. A systematic review of Iranian literature from 2000 to 2024 identified 324 articles, narrowed to those addressing valuation methods and empirical applications. Findings reveal that estimated values for natural resources often fall short of their true worth, with urban parks frequently assigned higher value than significant natural or historical sites. Factors such as inadequate valuation methods and limited public awareness of natural resources’ real value contribute to this disparity. Even high, sometimes exaggerated, estimates based on market valuations for natural resources rarely rival industrial revenues, such as those from petrochemicals. Even when similarly valued, natural resources often lose out to industrial alternatives due to delayed returns and intangible benefits, leading to the prioritization of resource-based industries over environmental protection. This study advocates moving beyond valuation-centrism toward a holistic approach integrating ecological, social, and ethical considerations essential for sustainable development.

Keywords: Environmental Valuation, Financial and Economic Valuation, Developing Countries, Capital Exploitation Risks, Sustainability

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: Q51, Q56, Q57, G32, G38, M41

Received: 27.10.2024
Revised: 09.03.2025; 11.06.2025
Accepted: 27.06.2025
Published online: 01.07.2025

How to cite this paper: Tavakolnia. E. (2025). The risks of environmental valuation in developing countries: Between monetary interests and capital degradation. Risk Governance & Control: Financial Markets & Institutions, 15(3), 22–40. https://doi.org/10.22495/rgcv15i3p2