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Abstract
Option values may be an important component of non-use values when development
options for environmental assets are considered. These are values that the community
might hold for maintaining options to make future choices about allocating resources.
However, option values are very difficult to define, at both theoretical and practical
levels, and there has been a retreat over the past decade to the more inclusive concept of
option prices. In the present paper, estimates of option values are reported for retaining
unallocated water in reserve rather than using it for current development. The use of
option values rather than option prices is justified on the basis that the focus is on nonuse
values, and demand and supply uncertainties have been minimised. These values
have been assessed through a series of nine choice modelling surveys that have been
conducted over a 3-year period in the Fitzroy River Basin in central Queensland. The
results are then extrapolated to the case study areas within the basin to assess whether
unallocated water should be held in reserve or used for development.