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Contingent Valuation: A Comparison of Referendum and Voluntary Contribution Mechanisms

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  • Johnston, Marie

Abstract

Contingent valuation methods (CVM) are integral in valuating non-market environmental issues. Numerous mechanisms have been proposed and analysed, as well as numerous studies on willingness to pay (WTP) and willingness to accept (WTA) discrepancies. Despite the concentrated and persistent focus on achieving efficient mechanisms, controversies and limitations remain. This paper applies an open-ended approach to the referendum (majority voting) method for contingent valuation as advised by Green et al. (1998). This is undertaken via economic experiments with induced values, and by comparison of two novel majority voting mechanisms and one widely accredited voluntary contribution mechanism. The preliminary findings show the majority voting mechanism induce more incentive compatible values and reduce WTP WTA discrepancy compared to the voluntary contribution method. Thus, given promising results, this paper recommends further investigation into the novel open-ended referendum method, termed the undisclosed cost voting mechanism (UCVM).

Suggested Citation

  • Johnston, Marie, 2014. "Contingent Valuation: A Comparison of Referendum and Voluntary Contribution Mechanisms," 2014 Conference (58th), February 4-7, 2014, Port Maquarie, Australia 165843, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare14:165843
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    Keywords

    Willingness-To-Pay; Willingness-To-Accept; Provision Point Mechanism; Undisclosed Cost Voting Mechanism; Random Price Voting Mechanism; Environmental Economics and Policy; Research and Development/Tech Change/Emerging Technologies;

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