¥ Contingent valuation is enormously
flexible in that it can be used to
estimate the economic value of virtually anything. However, it is
best able to estimate values for goods and services that are easily identified and understood by
users and that are consumed in
discrete units (e.g., user days of recreation), even if there is no observable behavior available to deduce values
through other means.
¥ Though the technique requires competent
survey analysts to achieve
defensible estimates, the nature of CV studies
and the results of CV studies are
not difficult to analyze and describe. Dollar values can be presented in terms of a
mean or median value per capita or
per household, or as an aggregate value for the affected population.
¥ CV has been widely used, and a great
deal of research is being
conducted to improve the methodology, make results more valid and reliable, and better
understand its strengths and limitations.
Issues and Limitations of the Contingent Valuation Method:
¥ Although the contingent valuation method
has been widely used for the past
two decades, there is considerable controversy over whether it adequately measures
people's willingness to pay for environmental quality.
¥ People have practice making choices with
market goods, so their purchasing
decisions in markets are likely to reflect
their true willingness to pay. CV
assumes that people understand the good in question and will reveal their
preferences in the contingent market just
as they would in a real market. However,
most people are unfamiliar with placing dollar values on
environmental goods and services. Therefore,
they may not have an adequate
basis for stating their true value.
¥ The expressed answers to a willingness
to pay question in a contingent
valuation format may be biased because
the respondent is actually
answering a different question than the surveyor had intended. Rather than expressing
value for the good, the respondent
might actually be expressing their feelings about the scenario or the
valuation exercise itself. For example, respondents may express a positive willingness
to pay because they feel good
about the act of giving for a
social good (referred to as the Òwarm glowÓ effect), although they believe that the good
itself is unimportant. Respondents may state a positive willingness to pay in order to signal
that they place
importance on improved
environmental quality in general.
Alternatively, some respondents
may value the
good, but state that they are not willing to pay for it, because they are protesting some aspect of the scenario, such as
increased taxes or the means of
providing the good.