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Chapter 6: Testing the Robustness of Contingent Valuation Estimates of WTP to Survey Mode and Treatment of Protest Responses
John Loomis, Armando González-Cabán and Joseph Champ1 INTRODUCTION Over the past four decades the contingent valuation method (CVM) has become a technique frequently used by economists to estimate willingnessto-pay (WTP) for improvements in environmental quality and protection of natural resources. The CVM was originally applied to estimate recreation use values (Davis, 1963; Hammack and Brown, 1974) and air quality (Brookshire et al., 1982; Randall et al., 1974). In the second decade the CVM was extended to valuing the general public’s option and existence values of environmental improvements (Walsh et al., 1984). As part of this evolution, the overall design of CVM studies now attempts to construct a market for the public good (Carson, 1991). As such, a typical CVM survey describes the public good to be valued, how the good will be paid for (that is, payment vehicle), the WTP question format (that is, open ended or closed ended) and a rule for deciding whether the good will be supplied (for example, majority rule in a referendum or total benefits exceed total cost). Each of these design elements has received substantial testing to determine whether the CVM WTP estimates are sensitive to the payment vehicle or WTP question format (Boyle, 2003). The key concern of CVM regarding the validity of the WTP estimates has also received extensive testing from the early days of CVM (Bishop and Heberlein, 1979) to the more recent (Murphy et al., 2005). Survey Mode The CVM relies more heavily on survey research than many...
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