Validity Of Contingent Valuation Research Articles

Divergent Validity of Contingent Valuation Responses in a Wildlife-Related Application

Assessments of the construct validity of contingent valuation (CV) rarely explore divergent validity. The unique structure of the Colorado elk and deer hunting seasons allowed the authors to assess divergent validity aspects of CV. A CV survey was designed that asked willingness to purchase an elk license only, a deer license only, both an elk and deer license, or neither at randomly assigned fee increases. Economic theory suggests when both fees are low, respondents would purchase both licenses; as one fee increases in relation to the other, respondents would be more likely to purchase the lower priced license only; when both fees are high, respondents would be more likely to purchase neither. Results for both residents and nonresidents support the hypothesized purchase patterns, suggesting respondents were considering the bid amount in relation to their value of the hunt, the price of substitute species hunts, and seriously considering the CV question.

Sequencing and the Adding-up Property in Contingent Valuation of Endangered Species: Are Contingent Non-Use Values Economic Values?

This paper presents tests of the theoretical validity of the contingent valuation (CV) method. The validity of CV is especially a concern when involving environmental goods with a predominant non-use value. One test of theoretical validity is the adding-up property that implies that a specific good should be equally valued irrespectively of it is being valued directly or built-up sequentially. In this CV study four independent sub-samples stated willingness to pay for the same composite good, or package, using different sequences. One sub-sample valued the composite good directly, while two sub-samples faced built-up sequences valuing first subsets of this composite good. A fourth sub-sample valued the composite good from a dividing-out approach, facing first the valuation of a larger multi-package. Theoretically expected sequencing effects were observed; the subset goods obtained higher values earlier in a sequence, and the dividing-out approach decreased the stated value for the composite good. Most importantly, these CV data did pass the tests of the adding-up property.

A comparison of alternative contingent valuation elicitation treatments for the evaluation of complex environmental policy

Attempts to evaluate the economic benefits associated with complex environmental policies, using the contingent valuation (CV) method, have been dogged by controversy. In particular, debate has centred on the influence of embedding and related effects on the validity of CV willingness-to-pay (WTP) estimates. This paper discusses these effects in the context of identifying the most appropriate WTP elicitation treatment to evaluate the willingness to pay for the various elements of a multi-dimensional environmental policy. The findings of an empirical experiment demonstrate that a top-down allocation treatment, which uses independent sub-samples for individual policy components, provides the most reliable treatment to value all aspects of a multi-dimensional policy, whilst also overcoming embedding bias problems.

Modelling Winners and Losers in Contingent Valuation of Public Goods: Appropriate Welfare Measures and Econometric Analysis

Contingent valuation is now the most widely used method for valuing non-marketed goods in cost-benefit analysis. Yet, despite the fact that many externalities manifest themselves as costs to some and benefits to others, most studies restrict willingness to pay to being non-negative. This can result in significant errors in policymaking. This paper examines the importance of this, explores appropriate welfare measures for assessing losses and gains, demonstrates how these can be elicited explicitly, highlights the sensitivity of the results of such studies to the econometric specification employed and suggests ways of dealing with it. Finally, the implica- tions for policy are examined. assessment, including passive-use values', this technique has become the most widely used method for placing values on non-marketed goods. This paper examines some outstanding issues in relation to the validity of the method as a basis for policy-making. In particular, most studies ignore the fact that many externalities manifest themselves as costs to some and benefits to others. In addition, the results of contingent valuation studies are often quite sensitive to the econometric specification assumed. The significance of these issues is examined, techniques for their resolution are outlined, and the implications for public policy are highlighted. The importance for economists of the debate on the validity of contingent valuation was emphasised in a series of papers from a symposium on the contingent valuation method (CVM) published in the Journal of Economic Perspectives in 1994. In his paper, Portney (1994) predicted that, whether the economics profession liked it or not, the CVM would inevitably play a role in public policy formulation and, therefore, it was important that economists be aware of the controversies and have their say on the topic. Portney's prediction was correct and contingent valuation has become a routine approach to valuing environmental goods with hundreds of studies being produced each year.1 The CVM places a value on a change in the provision of a public good by asking households in a survey how much they are willing to pay for the change or the minimum compensation they would require if the change were not to happen. The role that contingent valuation studies play in public policy is

Planning and Contingent Valuation: Some Observations from a Survey of Homeowners and Environmentalists

A fundamental problem in the application of benefit-cost analysis to planning problems has been the lack of suitable methods for quantifying the value of public goods. The contingent valuation (CV) method has been institutionalized as a method for coping with this problem. This paper is about the validity of CV and issues planners encounter in applications. The results of a survey of homeowners and environmentalists are used to 1) counter critics who argue that CV estimates are inherently implausible, 2) refute the argument that respondents consciously refuse to participate in CV surveys because they object to the idea of valuing the environment, and 3) add to evidence that CV surveys can provide data useful for decision making. An example of how planners might use CV data to inform decision making is provided.