Chapter 4: The Use of Contingent Valuation in Benefit–Cost Analysis
4 The use of contingent valuation in beneﬁt–cost analysis John C. Whitehead and Glenn C. Blomquist 4.1 Introduction Beneﬁt–cost analysis is policy analysis that identiﬁes whether a government project or policy is eﬃcient by estimating and examining the present value of the net beneﬁts (PVNB) of the policy, PVNB ϭ ͚ (1t ϩ r)tt, tϭ0 T B ϪC where Bt are the social beneﬁts of the policy in time t, Ct are the social costs of the policy in time t, r is the discount rate and T is the number of time periods that deﬁne the life of the policy. If the present value of net beneﬁts is positive, then the program yields more gains than losses and the program is more eﬃcient than the status quo. The contingent valuation method (CVM) is a stated preference approach for measuring the beneﬁts, or, in the case of beneﬁts lost, the costs of the policy. The purpose of this chapter is to provide an overview of the role the contingent valuation method plays in beneﬁt–cost analysis. We begin with a brief discussion about the role of beneﬁt–cost analysis in policy making, the steps of a beneﬁt–cost analysis, and how contingent valuation ﬁts into this framework (see Boardman et al., 2001 and Johansson, 1993 for introductory and advanced treatments). Next, we discuss a range of issues for which the contingent valuation method is an...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.