The NOAA Panel Report: A New Beginning or the End of an Era?

Abstract

an account of the prospective contribution of some proposed project or policy to the satisfaction of human preferences. The central focus on preference satisfaction led BC analysts to be concerned with economic surpluses and the values of nonmarketed goods and amenities, matters that took the inquiry well beyond the prices and quantity changes that first attracted the analysts' attention. CV was specifically designed for enlisting survey research methods, with their broad scope of potential applications, to obtain benefit estimates consistent with a rigorous welfare change measurement framework. Samuelson's model for valuing public goods, in which individual valuations were rigorously defined and aggregated to obtain the social value, was applied directly. In early CV applications (i.e., through the 1970s), the objective was to define a baseline or default situation and a proposed project and to ask respondents to report a valuation that would leave them indifferent between implementing the proposal or defaulting to the baseline situation. For proposed projects that would improve things, but at a cost, respondents were asked to announce their maximum willingness to pay (WTP). Alternatively, to make sure that the full consumer's surplus was identified, iterative bidding was used to drive the respondent all the way to the point of indifference. The market analogy, with only minimal concessions to the public goods context, dominated the language of CV survey format and of communication among CV researchers. These early excursions into CV encountered skepticism from economists, who have traditionally argued--despite the isolation paradox that undermines markets in public goods-that real transactions are much more reliable indicators of value than self-reported behavioral intentions. Many social scientists were skeptical or even hostile to CV for reasons quite different from those that worried economists. They recognized that there are many different philosophical systems of valuing and many different institutions beyond the market for providing public amenities. To these social scientists, it seemed perverse to force the richness and diversity of human ways of valuing and providing public amenities into the rigid molds of BCA and CV.1