Contingent Valuation

The valuation fixes quotas for is an econometric technique of Sondage intended to reveal the value allotted to certain goods or resources, like historic buildings or natural sites. The consumption of these goods provides a Utilité, but it is impossible to assign a Prix to them, and, therefore, a value of market. For example, we appreciate to see the Mont Fuji, but is difficult to say to which monetary amount that would be equivalent. The studies in contingent valuation constitute a technique to measure this type of value indirectly.

History

The first theoretical approaches of the studies in valuation fixes quotas for were proposed by S.V. Ciriacy-Wantrup (in 1947) to obtain an evaluation of the goods except market. The technique itself was applied for the first time in 1963 to study the value allotted to a particular natural space by the hunters and the tourists. The study compared the result of a survey near the people concerned with evaluations based on the costs of transport, and highlighted good a Corrélation of the two results.

This method was more largely employed as from the years 1980, when the government agencies of the the United States accepted the possibility of bringing actions for damages against the people damaging the environmental resources managed by these agencies. The judgment Ohio v Department off the Interior , granted the possibility to them of requiring repairs for the loss not only of the Practical value, but also of simple the Valeur of existence. It is for the evaluation of the latter that the investigations in valuation fixes quotas for were employed. The lawsuit following the catastrophe of the tanker Exxon Valdez in Alaska was the first case where these evaluations were used with large scales.

Use

Fields

This technique became a reference in the fields of the environmental economics and of the economy of the culture to determine the investment appropriateness certain (to acquire a given portion of littoral), subsidies (for the restoration or maintains it a historic building) or to decide between two competitor projects on the same site (between a nautical base and a fishing preserve).

Limits

The use of declarations of propensities to pay by the agents themselves is prone to guarantee, particularly in the fields where the contingent valuation is employed. Even in an anonymous investigation, people hesitate to say that it would be indifferent for them that the Musée of firm Louvre. Thus, the first investigations question opened, type “Which compensation monetary would you ask in exchange of the destruction of such monument put? ” or “How much would you be ready to pay for the safeguarding of such natural zone? ”. Such questions receive answers influenced by strategic considerations (to answer in-on this side its true evaluation, for fear the investigation is not used to evaluate the amount of a tax for this purpose), of social status (it is badly seen to grant little value to the environment) or being unaware of the budgetary constraint (Diamond and Hausman, 1994). Thus, in studies proposing various protection plans of the environment, the value allotted to the whole of the plans is regularly lower than the sums of the values allotted to each plan, these last thus reflecting before a a whole preference for the environmental expenditure. As much as possible, it is preferable to use revealed Préférences by the prices within the framework of true commercial transactions (like the costs of transport or the costs of entry).

How to quantify the value of one liter air? whereas for that which is victim of a beginning of asphyxiation its value would tend towards more the infinite one. When it is known that the oxygen which is vital for us is entirely produced by the plant, i.e. depends on the biodiversity. Can one for as much giving a value to the plant or the biodiversity?

Commission NOOA

These investigations having important financial stakes, the National Oceanic and Atmospheric Administration set up in 1993 a commission directed by the “Nobel Prize” of economy Kenneth Arrow and Robert Solow to develop guiding lines for the control of these investigations. In its recommendations, published in 1995, the commission recommended an special attention in the design of such investigations, which had with the difficulties inherent in the fact of making emerge from the reliable monetary evaluations by methods of survey. The essential recommendations are the following ones:

the investigation must rest on individual talks, in opposition to the surveys by mail or telephone (which present strong skews of participation).
the questions must take the form of a referendum, where inquired has only the choice to accept or refuse a tax specifically dedicated to a well specified use.
surveyed must receive the most detailed possible information concerning the resource question and the protection measures considered. This information must include the threats on the resource (with the most optimistic assumptions and the pessimistic folds), a scientific evaluation of its importance (ecological, cultural, etc) as well as the possible consequences of the protection measures.
the effects of such a tax on the income must be well underlined, in order to render comprehensible with inquired that what one seeks to measure is their provision to be paid for only the question resources, and not for the environment or the culture in general.
Of the subsidiary questions must be posed to check that the principal question and the data elements given were indeed included/understood.

The essential principle is that the investigator must satisfy an important burden of proof before its results can be regarded as significant. Such investigations are very expensive, and it commission proposed the control of investigations of reference which could be used as point of comparisons for the future investigations. The commission also estimated that it was to better be based on the low estimates, and thus to prefer the evaluations in terms of provision to be paid for the protection of a resource rather than in terms of compensation to be received in exchange of the destruction of the resource.

See too

Bibliographical sources

W. Michael Hanemann, “Valuing the Environment Through Contingent Valuation” The Newspaper off Economic Prospects , vol. 8, No 4. (Fall, 1994), pp. 19-43
Peter A. Diamond; Jerry A. Hausman, “Contingent Valuation: Is Some Number better than No Number?” The Newspaper off Economic Prospects , vol. 8, No 4. (Fall, 1994), pp. 45-64
Paul R. Portney, “Contingent The Valuation Debate: Why Economists Should Care” The Newspaper off Economic Prospects , vol. 8, No 4. (Fall, 1994), pp. 3-17
Carson, Richard T; Wilks, Leanne; Imber, David " Valuing the Safeguarding off Australia' S Kakadu Zone" Conservation; (1994) does Oxford Economic Papers , vol. 46 (0), pp. 727-49
Martin Angel, “Nature have a price? Critical of the monetary evaluation of the goods not-merchants”, Editions Presses of the École des Mines, Paris, 1999

External bonds

NOAA carryforward
Ecosystem Valuation information
Environmental Valuation and Cost-Benefit News

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