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Valuing the Environment through Contingent Valuation

  • W. Michael Hanemann

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. Alan Randall, 1994. "Difficulty with the Travel Cost Method," Land Economics, University of Wisconsin Press, vol. 70(1), pages 88-96.
  2. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
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  8. 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.
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  27. 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.
  28. Smith, V. Kerry, 1992. "Arbitrary values, good causes, and premature verdicts," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 71-89, January.
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