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Valuing the Environment through Contingent Valuation

  • W. Michael Hanemann
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    Contingent valuation is now used around the world to value many types of public goods, including transportation, sanitation, health, and education, as well as the environment. The author describes how researchers go about making such surveys reliable, mentioning recent innovations in sampling, questionnaire design, and data analysis, including formulating the valuation as a closed-ended question about voting in a referendum to raise taxes for a particular purpose. He addresses various objections that contingent valuation results are incompatible with economic theory. Even without a market, there still exists a latent demand curve for nonmarket goods; contingent valuation represents a way to tease this out.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.8.4.19
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    Article provided by American Economic Association in its journal Journal of Economic Perspectives.

    Volume (Year): 8 (1994)
    Issue (Month): 4 (Fall)
    Pages: 19-43

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    Handle: RePEc:aea:jecper:v:8:y:1994:i:4:p:19-43
    Note: DOI: 10.1257/jep.8.4.19
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    1. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
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    4. Carson, Richard T. & Hanemann, W. Michael, 2006. "Contingent Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 17, pages 821-936 Elsevier.
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    11. Barbara J. Kanninen, 1993. "Optimal Experimental Design for Double-Bounded Dichotomous Choice Contingent Valuation," Land Economics, University of Wisconsin Press, vol. 69(2), pages 138-146.
    12. Seip, K. & Strand, J., 1990. "Willingness To Pay For Environmental Goods In Norway: A Contingent Valuation Study With Real Payment," Memorandum 12/1990, Oslo University, Department of Economics.
    13. Juster, F. Thomas & Stafford, Frank P., 1990. "The Allocation of Time: Empirical Findings, Behavioural Models, and Problems of Measurement," Working Paper Series 258, Research Institute of Industrial Economics.
    14. Boyle Kevin J. & Welsh Michael P. & Bishop Richard C., 1993. "The Role of Question Order and Respondent Experience in Contingent-Valuation Studies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages S80-S99, July.
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    18. Harrison, Glenn W., 1992. "Valuing public goods with the contingent valuation method: A critique of kahneman and knetsch," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 248-257, November.
    19. Alan Randall, 1994. "Difficulty with the Travel Cost Method," Land Economics, University of Wisconsin Press, vol. 70(1), pages 88-96.
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    21. Richard T. Carson & Nicholas E. Flores & Kerry M. Martin & Jennifer L. Wright, 1996. "Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods," Land Economics, University of Wisconsin Press, vol. 72(1), pages 80-99.
    22. Carson, R.T. & Mitchell, R.C. & Hanemann, W.M. & Kopp, R.J. & Presser, S. & Ruud, P.A., 1992. "A Contingent Valuation Study of Lost Passive Use Values Resulting From the Exxon Valdez Oil Spill," MPRA Paper 6984, University Library of Munich, Germany.
    23. Helen R. Neill & Ronald G. Cummings & Philip T. Ganderton & Glenn W. Harrison & Thomas McGuckin, 1994. "Hypothetical Surveys and Real Economic Commitments," Land Economics, University of Wisconsin Press, vol. 70(2), pages 145-154.
    24. David M. Cutler & Douglas W. Elmendorf & Richard J. Zeckhauser, 1993. "Demographic Characteristics and the Public Bundle," NBER Working Papers 4283, National Bureau of Economic Research, Inc.
    25. Smith, V. Kerry & Osborne, Laura L., 1996. "Do Contingent Valuation Estimates Pass a "Scope" Test? A Meta-analysis," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 287-301, November.
    26. Bettman, James R & Zins, Michel A, 1977. " Constructive Processes in Consumer Choice," Journal of Consumer Research, University of Chicago Press, vol. 4(2), pages 75-85, Se.
    27. Bengt Kristrom & Pere Riera, 1996. "Is the income elasticity of environmental improvements less than one?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 7(1), pages 45-55, January.
    28. Brookshire, David S, et al, 1982. "Valuing Public Goods: A Comparison of Survey and Hedonic Approaches," American Economic Review, American Economic Association, vol. 72(1), pages 165-77, March.
    29. F. Thomas Juster, 1964. "Anticipations and Purchases: An Analysis of Consumer Behavior," NBER Books, National Bureau of Economic Research, Inc, number just64-1.
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