Edited by Anna Alberini and James R. Kahn
Chapter 2: Fifty Years of Contingent Valuation
V. Kerry Smith*, † 2.1 Introduction Econometric analyses and testing of economic models began during the last 50 years. Contingent valuation (CV) developed over the same time period.1 CV uses survey questions to elicit information that allows economic values for non-market resources to be estimated. Today contingent valuation occupies a strange position in economics. A signiﬁcant component of the CV research, in both the USA and Europe, has been conducted to evaluate policy alternatives (see Carson, 2003). Little of this work has been associated with litigation. Yet in considering the relevance of CV estimates, the US Oﬃce of Management and Budget’s (2003) draft guidance for preparing beneﬁt–cost analysis as part of the evaluation of regulations reiterates several of the criteria for a reliable study that were recommended by the National Oceanic and Atmospheric Administration’s (NOAA) Panel. The NOAA Panel was charged, in the early 1990s, with responsibility for evaluating contingent valuation for use in natural resource damage assessments.2 Current research on contingent valuation has pursued methodological issues in the structure of choice and open-ended valuation questions (Cameron et al., 2002), experimental design (Kanninen, 2002), interrelationships between public goods (Bateman et al., 2004), as well as numerous policy issues ranging from estimating the willingness to pay for reductions in risk of premature death (Krupnick et al., 2002 and Alberini et al., 2001) to managing waste from large-scale hog operations (Mansﬁeld and Smith, 2002). Many of the issues raised in early contingent valuation surveys have been ‘rediscovered’ under...
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