Total economic value (TEV) is a concept in cost benefit analysis that refers to the value derived by people from a natural resource, a man-made heritage resource or an infrastructure system, compared to not having it. It appears in environmental economics as an aggregation of the (main function based) values provided by a given ecosystem. Those include use and non-use values.
Use Value – Direct: Obtained through a removable product in nature (i.e. timber, fish, water).
Use Value – Indirect: Obtained through a non-removable product in nature (i.e. sunset, waterfall).
Option value: Placed on the potential future ability to use a resource even though it is not currently used and the likelihood of future use is very low. This reflects the willingness to preserve an option for potential future use.
Bequest value or existence value: Placed on a resource that will never be used by current individuals, dervied from the value of satisfaction from preserving a natural environment or a historic environment (i.e., natural heritage or cultural heritage) for future generations.
Total economic value is the price of the customer's best alternative ( the reference value) plus the economic value of whatever differentiates the offering from the alternative ( the differentiation value).