Was the NOAA Panel Correct about Contingent Valuation

Abstract

The past few years have seen a highly charged debate about whether contingent valuation (CV) surveys can provide valid economic measures of people's values for environmental resources. In an effort to appraise the validity of CV measures of economic value, a distinguished panel of social scientists, chaired by two Nobel laureates, was established by NOAA, to critically evaluate the validity of CV measures of nonuse value. The Panel provided an extensive set of guidelines for CV survey construction, administration, and analysis, and distinguished a subset of items from their guidelines for special emphasis and described them as burden of proof requirements. Of particular interest was the Panel's requirement that CV surveys demonstrate responsiveness to the scope of the environmental insult. That demonstration has come to be called a scope test. The paper reports the findings from the first CV study that adheres to the NOAA Panel's guidelines and includes a formal scope test.