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  • Cited by 1
  • Print publication year: 2006
  • Online publication date: June 2012

33 - Valuing Environmental Resources: A Constructive Approach

Summary

INTRODUCTION

Contingent valuation (CV) has been used by economists to value public goods for about 25 years. The approach posits a hypothetical market for an unpriced good and asks individuals to state the dollar value they place on a proposed change in its quantity, quality, or access. Development of the CV concept has been described in reviews by Cummings, Brookshire, and Schulze (1986) and Mitchell and Carson (1989). The approach is now widely used to value many different goods whose quantity or quality might be affected by the decisions of a public agency or private developer. Environmental goods have received particular attention, because they are highly valued by society and entail controversial tradeoffs (e.g., manufacturing costs vs. pollution, urban development vs. wetlands protection) but are not usually sold through markets (Bromley, 1986).

The visibility of CV methods has greatly increased following the 1989 interpretation of the Comprehensive Environmental Response, Compensation, and Liability Act of 1986 (CERCLA) by the District of Columbia Circuit Court of Appeals (in Ohio v. United States Department of the Interior). This decision (a) granted equal standing to expressed and revealed preference evaluation techniques (with willingness to pay measures preferred in all cases), (b) accepted nonuse values as a legitimate component of total resource value, and (c) recognized a “distinct preference” in CERCLA for restoring damaged natural resources, rather than simply compensating for the losses (Kopp, Portney, & Smith, 1990).

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