Handbook On Contingent Valuation

Book Preface

The process of valuing environmental resources has never been a straightforward process. Although the valuation methodologies have been contributing to an understanding of the social benefits of environmental improvement (or costs of environmental change) for 50 years, the process of environmental valuation remains controversial, and in many ways divides the environmental economics profession. Additionally, the process of environmental valuation is questioned by anywho approach the environmental decision-making process from the perspective of other academic disciplines, or from different stakeholder positions. Since the Exxon Valdez oil spill, and the resulting controversy over valuation methods, many eminent researchers have contributed to the process of developing a better understanding of valuation methods, how to reduce biases associated with their measurement, and how to better employ these estimates in the environmental decision-making process.1

This book represents a further attempt to contribute to the process of reducing these conflicts by improving valuation methods, reducing biases associated with estimates, and developing an improved understanding of the strengths and weaknesses of contingent valuation and associated methodologies. Despite the progress of others in recent years, this process of refinement and development must be continued. One important reason for this is that the valuation process has become more difficult at the same time it has become more crucial. The question of the times has shifted from the need to measure the damages associated with a specific environmental accident or specific impact on a local environmental resource to more of a focus on system-wide environmental change.

The Exxon Valdez spill generated a flurry of research in valuation methods and in contingent valuation specifically, which significantly contributed to the further development of these techniques.However, while we recognize that much progress was made, in some ways the process was analogous to a nation’s military preparing to fight the last war rather than the war of the future. For the most part, research in the 1990s was focused on the development of better estimates for natural resource damage assessment, even though this decade saw system-wide change become more pronounced (or even alarming) with the increased awareness of atmospheric change, loss of biodiversity, collapse of coral reefs, extensive tropical deforestation, desertification, and global climate change.

At the same time the parameters of environmental change increased thedifficulty of producing valid estimates of value, the need for valid estimates also increased. Throughout the world, but particularly in the United States, the political process has dismissed the results of scientific investigation with imprecise conjecture, pseudo science, and political spin. If wellestablished results such as the relationship between increased atmospheric concentrations of greenhouse gases and mean global temperature, or the impact of increased arsenic concentrations on human health are dismissed by political spin, where does that leave value estimates based on hypothetical survey questions and statistical analysis of these responses? If the results of contingent valuation and other valuation estimation techniques are to have any possibility of influencing the policy process, they must be sufficiently robust so that they will stand up to both scientific and political contest.