Valuing Complex Natural Resource Systems

Valuing Complex Natural Resource Systems

The Case of the Lagoon of Venice

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Anna Alberini, Paolo Rosato and Margherita Turvani

In complex natural resource systems, modifications or disruptions tend to affect many and diverse components of the ecological system, settlements and groups of people. This book uses the Lagoon of Venice – a unique natural resource, wildlife habitat, centre of cultural heritage and recreational site – as an example of one such system that has been heavily affected by human activities, including the harvesting of natural resources and industrial production. The contributors explore the Lagoon’s potential for regeneration, examining public policies currently under consideration. The aim of these policies is to restore island coastlines and marshes, fish stocks, habitat and environmental quality, defend morphology and landscape through the strict control of fishing practices, and to protect the islands from high tides.

Chapter 1: Valuing Environmental Resources Using Stated Preferences

Anna Alberini and Alberto Longo

Subjects: economics and finance, environmental economics, valuation, environment, environmental economics, valuation


Anna Alberini and Alberto Longo 1.1 THE METHOD OF CONTINGENT VALUATION Contingent Valuation is a method of estimating the value that a person places on a good. The approach asks people to directly report their willingness to pay (WTP) to obtain a specified good, or willingness to accept (WTA) to give up a good, rather than inferring them from observed behaviors in regular market places. Because it creates a hypothetical marketplace in which no actual transactions are made, contingent valuation has been successfully used for commodities that are not exchanged in regular markets (for example improvements in water or air quality, national parks, reductions in the risk of death, days of illness avoided or days spent hunting or fishing), or when it is difficult to observe market transactions under the desired conditions. Contingent Valuation (CV) remains the only technique capable of placing a value on commodities that have a large passive-use1 component of value. Much controversy surrounds the use of CV when most of the value of the good derives from passive use, as has been typical in litigation over the damages to natural resources and amenities caused by releases of pollutants. Critics of contingent valuation allege that the quality of stated preference data is inferior to observing revealed preferences, consider contingent valuation a ‘deeply flawed method’ for valuing non-use goods and point at the possible biases affecting contingent valuation data (Hausman, 1993). Despite these criticisms, CV has formed the basis for a significant amount of policymaking in the US...

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