Abstract
Participatory Value Evaluation (PVE) is a new survey method which elicits citizens' preferences over the allocation of public budgets as well as their private income. In a PVE, citizens are asked to choose the best portfolio of projects given a governmental and a private budget constraint. First, this paper aligns PVE with the traditional Kaldor-Hicks welfare economics framework underlying many Cost-Benefit Analyses. Second, this paper positions PVE against other valuation methods. Third, this paper applies the PVE method to evaluate the impacts of projects mitigating flood risks in the Netherlands. This empirical application reveals that Dutch citizens indicate a preference for projects that combine strengthening dikes and give space to the river to flood safely, particularly when such projects positively influence biodiversity and recreational opportunities.
Highlights
In virtually all western countries, Cost-Benefit Analysis (CBA) is nowadays considered the gold standard for supporting public decision-making [1]
We compare Participatory Value Evaluation (PVE) with other valuation methods. In this discussion we focus on the quantification of consumer surplus measures and primarily Willingness-to-Pay (WTP) which is considered to form the theoretical underpinning of most CBA studies [17]
The fixed budget PVE survey format – which concerns the optimal allocation of public budget – allows deriving the Compensating Tax Reallocation (CTR) measures as obtained from Bergstrom et al [13]’s Willingeness-To-Allocate Public Budget (WTAPB) experiments
Summary
In virtually all western countries, Cost-Benefit Analysis (CBA) is nowadays considered the gold standard for supporting public decision-making [1]. In various countries, such as the United Kingdom, the Netherlands and Sweden, CBA is mandatory when national funding is required for large transport projects [2]. CBA is widely applied to governmental decisions on environmental policies, safety regulation and water management [3,4,5]. CBA has been used to inform policies regarding flood protection, marine protection, water quality management, biodiversity and environmental conservation in the United Kingdom [5]. The conversion of positive and negative social impacts of government projects into monetary units relies on willingness to pay (WTP) and willingness to accept (WTA) estimates
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