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A Review of the Use of Contingent Valuation Methods in Project Analysis at the Inter-American Development Bank

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  • Sergio Ardila
  • Ricardo Quiroga
  • William J. Vaughan
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    Abstract

    This paper (ENV-126) was originally presented at a National Science Foundation Workshop on Alternatives to Traditional Contingent Valuation Methods in Environmental Valuation, held at Vanderbilt University, Nashville Tennessee, on October 15-16, 1998. This paper reviews the past ten years of the Inter-American Development Bank's experience with stated preference methods, concentrating on their use in the cost-benefit analysis of projects supplying sewer service and improving ambient water quality in Latin America and the Caribbean. It reports the range of willingness to pay estimates involved, and comments on some of the most important economic analysis issues that appear to have arisen. Among these are the effect that alternative econometric specifications of the choice model can have on our estimates of average (or median) household willingness to pay derived from referendum CV surveys, the need to match what any investment project purports to achieve in a CV survey to what it will actually achieve in practice, and the role of sensitivity analysis in portraying the distribution of expected gross and net project benefits.

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    Bibliographic Info

    Paper provided by Inter-American Development Bank in its series IDB Publications with number 33298.

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    Date of creation: Dec 1998
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    Handle: RePEc:idb:brikps:33298

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    Related research

    Keywords: Investment projects; Sanitation; Water quality; Water management; Environmental Policy; environment; emerging needs;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Haab, Timothy C. & McConnell, Kenneth E., 1997. "Referendum Models and Negative Willingness to Pay: Alternative Solutions," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 251-270, February.
    2. William J. Vaughan & Sergio Ardila, 1993. "Economic Analysis of the Environmental Aspects of Investment Projects," IDB Publications 25438, Inter-American Development Bank.
    3. Adamowicz, Wiktor L. & Boxall, Peter C. & Williams, Michael & Louviere, Jordan, 1995. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments versus Contingent Valuation," Staff Paper Series, University of Alberta, Department of Resource Economics and Environmental Sociology 24126, University of Alberta, Department of Resource Economics and Environmental Sociology.
    4. Bente Halvorsen & Kjartan SÅ“lensminde, 1998. "Differences between Willingness-to-Pay Estimates from Open-Ended and Discrete-Choice Contingent Valuation Methods: The Effects of Heteroscedasticity," Land Economics, University of Wisconsin Press, vol. 74(2), pages 262-282.
    5. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
    6. Timothy C. Haab & Kenneth E. McConnell, 1998. "Referendum Models and Economic Values: Theoretical, Intuitive, and Practical Bounds on Willingness to Pay," Land Economics, University of Wisconsin Press, vol. 74(2), pages 216-229.
    7. Kenneth E. McConnell, 1995. "Issues in Estimating Benefits with Non-Market Methods," IDB Publications 6813, Inter-American Development Bank.
    8. Wiktor Adamowicz & Peter Boxall & Michael Williams & Jordan Louviere, 1998. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments and Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 80(1), pages 64-75.
    9. Stephen K. Swallow & James J. Opaluch & Thomas F. Weaver, 1992. "Siting Noxious Facilities: An Approach That Integrates Technical, Economic, and Political Considerations," Land Economics, University of Wisconsin Press, vol. 68(3), pages 283-301.
    10. Niklitschek+, Mario & Leon+, Javier, 1996. "Combining Intended Demand and Yes/No Responses in the Estimation of Contingent Valuation Models," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 387-402, November.
    11. Kenneth E. McConnell, 1995. "Issues in Estimating Benefits with Non-Market Methods," IDB Publications 25298, Inter-American Development Bank.
    12. repec:fth:inadeb:308 is not listed on IDEAS
    13. Alan Randall, 1997. "The NOAA Panel Report: A New Beginning or the End of an Era?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 79(5), pages 1489-1494.
    14. Creel, Michael, 1998. "A Note on Consistent Estimation of Mean WTP Using a Misspecified Logit Contingent Valuation Model," Journal of Environmental Economics and Management, Elsevier, vol. 35(3), pages 277-284, May.
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    Cited by:
    1. Gomez-Lobo, Andres & Foster, Vivien & Halpern, Jonathan, 2000. "Information and modeling issues in designing water and sanitation subsidy schemes," Policy Research Working Paper Series 2345, The World Bank.

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