Despite myriad methodological shortcomings, some economists continue to advocate for the use of contingent valuation (CV) and other survey methods to estimate non-use values of natural resources. Federal regulatory agencies also continue to explore these methodologies, although both the OPA and CERCLA regulations strongly disfavor their application, and no court has actually relied upon a CV or a similar study to determine the value of natural resource damages. Indeed, several courts have refused to admit CV studies into evidence, ruling that the studies were not an accurate or reliable measure of actual loss. The better and more reliable approach for valuing natural resource loss, from both a legal and policy perspective, is based on the cost of projects needed to repair, replace, or return injured natural resources to baseline conditions where practicable, and compensate for the temporary or interim loss of resources until restoration is complete.
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Brian D. Israel, Jean Martin, Kelly Smith Fayne and Lauren Daniel
James Burrows, Powell Dixon and Hiu Man Chan
Michael Kemp, Edward Leamer, James Burrows and Powell Dixon
This chapter presents findings from a study exploring a variety of tactics intended to enhance respondent awareness of budget constraints in answering CV questions, including methods that value a composite good and allocate a total value across different parts of the composite. The research used, as a test bed, a prominent 1995 survey concerning the prevention and remediation of marine oil spills off the central California coast (the “COS study”). Approximately 2400 California households were surveyed online in 2014. Analysis of the responses to split-sample variants of the questionnaire produced the following conclusions: (1) the study evidenced a very marked lack of sensitivity to a huge scope difference (between the COS good and a much larger composite good); (2) the composite good estimate of WTP allocated to marine oil spills was markedly smaller than the single-focus estimate; (3) sizeable proportions of respondents reported various types of cognition difficulties in their responses, and the resulting WTP estimates are sensitive to those difficulties; (4) respondents presented a single-focus COS referendum after completing a budget allocation exercise were slightly less favorable to COS than those not given the budget exercise; (5) a sizeable proportion of respondents experienced cognition difficulties with part-whole relationships; and (6) within-questionnaire “wording additions” intended to enhance budget awareness had a relatively small effect on WTP estimates.