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Valuing the Environment through Contingent Valuation

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  • W. Michael Hanemann

Abstract

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.

Suggested Citation

  • W. Michael Hanemann, 1994. "Valuing the Environment through Contingent Valuation," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 19-43, Fall.
    • 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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    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • A10 - General Economics and Teaching - - General Economics - - - General

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