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Why Economic Valuation Does Not Value the Environment: Climate Policy as Collective Endeavour

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  • Nicholas Bardsley
  • Graziano Ceddia
  • Rachel McCloy
  • Simone Pfuderer

Abstract

Economics takes an individualistic approach to human behaviour. This is reflected in the use of ‘contingent valuation’ surveys to conduct cost benefit analysis for economic policy evaluation. An individual's valuation of a policy is assumed to be unaffected by the burdens it places on others. We report a survey experiment to test this supposition in the context of climate change policy. Willingness to pay for climate change mitigation was higher when richer individuals were to bear higher costs than when, as is usual, no explicit information was provided about cost distribution. This result is inconsistent with the usual interpretation of contingent valuation data. It also suggests that the data may be biased indicators of policy acceptance. Additional survey questions suggest that a collective mode of reasoning is common.

Suggested Citation

  • Nicholas Bardsley & Graziano Ceddia & Rachel McCloy & Simone Pfuderer, 2022. "Why Economic Valuation Does Not Value the Environment: Climate Policy as Collective Endeavour," Environmental Values, , vol. 31(3), pages 277-293, June.
    • Handle: RePEc:sae:envval:v:31:y:2022:i:3:p:277-293
    DOI: 10.3197/096327121X16081160834740
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    References listed on IDEAS

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    2. Michael Bacharach, 2006. "The Hi-Lo Paradox, from Beyond Individual Choice: Teams and Frames in Game Theory," Introductory Chapters, in: Natalie Gold & Robert Sugden (ed.),Beyond Individual Choice: Teams and Frames in Game Theory, Princeton University Press.
    3. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931, Decembrie.
    4. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
    5. Elisabetta Strazzera & Margarita Genius & Riccardo Scarpa & George Hutchinson, 2003. "The Effect of Protest Votes on the Estimates of WTP for Use Values of Recreational Sites," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(4), pages 461-476, August.
    6. Richard C. Bishop & Thomas A. Heberlein, 1979. "Measuring Values of Extramarket Goods: Are Indirect Measures Biased?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(5), pages 926-930.
    7. Beilei Cai & Trudy Cameron & Geoffrey Gerdes, 2010. "Distributional Preferences and the Incidence of Costs and Benefits in Climate Change Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(4), pages 429-458, August.
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    Cited by:

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