Improving Contingent Valuation Methods

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Recent Federal legislation has increased the importance of the contingent valuation(CV) method for valuing goods, particularly environmental amenities, not sold in markets. The method is now widely used but is subject to several theoretical and applied problems that have led to lively debates among economists as well as extensive litigation in the courts. This proposal outlines two studies designed to improve CV methods and, specifically, the use of expressed willingness to pay(WTP) measures of resource value. The first study examines how much, and what kind of, information should be provided to respondents as part of a CV study. The second study explores linkages between CV methods and the multiattribute utility approaches commonly used in the decision sciences. This study has as its core the belief that preferences are constructive and that determinations of total resource values can arise only through an understanding of the component parts. By helping to resolve these two vexing problems currently facing CV researchers, results of the proposed studies will improve the defensibility of an important approach to estimating economic value.