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Handbook on Contingent Valuation

Edited by Anna Alberini and James R. Kahn

The Handbook on Contingent Valuation is unique in that it focuses on contingent valuation as a method for evaluating environmental change. It examines econometric issues, conceptual underpinnings, implementation issues as well as alternatives to contingent valuation. Anna Alberini and James Kahn have compiled a comprehensive and original reference volume containing invaluable case studies that demonstrate the implementation of contingent valuation in a wide variety of applications. Chapters include those on the history of contingent valuation, a practical guide to its implementation, the use of experimental approaches, an ecological economics perspective on contingent valuation and approaches for developing nations.
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Chapter 7: An Introduction to Choice Modeling for Non-market Valuation

Steven Stewart and James R. Kahn


Steven Stewart and James R. Kahn 7.1 Introduction Critical to the ongoing social assessment of environmental policy is a need for estimates of individuals’ values for environmental (public) goods and services relative to private goods and services. We can easily observe individuals’ valuation for private goods (homes, candy bars, dry cleaning, etc.) because these goods are exchanged in markets where goods have prices and the quantities traded can be observed. In general, a private good confers benefits only to the individual consuming it (or the individual’s family, friends). In contrast, public goods confer benefits (or costs) to many members of society. Public goods and services such as national parks, ecosystem services, scenic views, and weather or climate forecasts are not generally traded in markets, thus it is difficult to determine how people value them. We believe that multi-attribute elicitation mechanisms such as choice modeling offer powerful tools to analyse the values that individuals place on public goods. While society relies on markets to make many choices about resource allocation such as whether to use a forest for timber production or housing, purchase a new car or a used one, or pursue a career as an economist or schoolteacher, many important resource allocation decisions, such as those related to environmental assets, are not captured by market transactions. However, even environmental choices involve tradeoffs. Sometimes these tradeoffs can be easily measured in dollars such as the choice between leaving water instream for species protection at the...

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