Referendum Design and Contingent Valuation: The NOAA Panel's No-Vote Recommendation

In 1992 the National Oceanic and Atmospheric Administration (NOAA) convened a panel of prominent social scientists to assess the reliability of natural resource damage estimates derived from contingent valuation (CV). The product of the Panel's deliberations was a report that laid out a set of recommended guidelines for CV survey design, administration, and data analysis. One of the Panel's recommendations was that CV surveys should employ a referendum approach. This method describes a choice mechanism that asks each respondent how they would vote if faced with a particular program and the prospect of paying for the program through some means, such as higher taxes. The Panel also recommended that CV referendum questions which commonly use only "for" or "against" answers should be expanded to explicitly offer an "I would-not-vote" response. The purpose of this paper is to consider the effects of such a "would-not-vote" option. In developing the test, we followed the important elements of the NOAA Panel guidelines for the design and administration of a CV survey and use what was acknowledged(by the Panel) as the most carefully developed CV questionnaire to that time, that is, the State of Alaska's study of the Exxon Valdez oil spill. Our findings suggest that when those selecting the "would-not-vote" response are treated as having voted "against" the offered program, offering the option does not alter: (a) the distribution of "for" and "against" responses, (b) the estimates of WTP derived from these choices, or (c) the construct validity of the results.