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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.

Open access

Brian D. Israel, Jean Martin, Kelly Smith Fayne and Lauren Daniel

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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Edited by Daniel McFadden and Kenneth Train

Open access

Harry Foster and James Burrows

Open access

James Burrows, Rebecca Newman, Jerry Genser and Jeffrey Plewes

This chapter focuses on a key test of rational choice in CV studies: do estimates of WTP for environmental amenities derived from split-sample (external) tests in CV studies increase as the amount of the good (or the number of goods) increases (i.e., as scope increases), and, if so, are the WTP estimates “adequately” responsive to scope? For the 111 studies of environmental non-use and mixed use/non-use environmental amenities in our study, after fractional allocation of mixed results and appropriate weighting of studies based on common underlying data, more studies fail (54 percent of the total) than pass (46 percent). Contrary to expectations, the percentage of studies failing scope has increased over time: over the 1987–2001 period, 49 percent of the studies failed a scope test vs 59 percent for the 2001–2016 period. We also find that even the scope tests that “pass” often do not exhibit “adequate” scope sensitivity. For the 21 studies that lend themselves to appropriate quantitative analysis, nine have scope elasticities less than 0.10 and 12 have scope elasticities less than 0.2; only three have scope elasticities above 0.5. The high frequency of no or limited scope elasticities documented in this study suggests that warm glow is an important element of measured WTP for non-use environmental amenities.