A Hedonic Approach
New Horizons in Environmental Economics series
Chapter 6: Comparison with Contingent Valuation Method
MEANING OF COMPARISON In this chapter, we compare the value estimated by the hedonic price method and the values estimated by another method. As we discussed in the previous chapters, hedonic price measures should give us accurate information from theoretical and empirical viewpoints. However, it is diﬃcult to ascertain the real values using only one method because each method has its shortcomings. We shall explain these cases by comparing the values of environmental goods obtained using the hedonic and the contingent valuation method. There has been little previous research on such a comparison. The most notable example is Brookshire et al.’s (1982) air pollution work, and there are other examples concerning earthquake risk in California, in the United States. We carried out a comparison study using an example of water environment in Japan (Hiramatsu and Hidano, 1989). The hedonic approach has already been accepted by major economists as a powerful tool for evaluating local public goods. Comparisons between the diﬀerent valuation methods have, in the past, mainly been carried out in an attempt to justify the stated preference approach, rather than to justify the hedonic approach. The CVM value may include biases, which have been fully discussed by many authors, including Mitchell and Carson (1989), Hanley and Spash (1993), Garrod and Willis (1999), Hidano (1999), and Bateman and Willis (1999) and we should therefore take care when discussing the CVM results. A careful comparison of the hedonic with the CVM results should employ the ranges of the hedonic...
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