Do scenario context and question order influence WTP? The application of a model of uncertain WTP to the CV of the morbidity impacts of air pollution

This paper presents a general framework for modelling responses to contingent valuation questions when respondents are uncertain about their ‘true’ WTP. These models are applied to a contingent valuation data set recording respondents’ WTP to avoid episodes of ill-health. Two issues are addressed. First, whether the order in which a respondent answers a series of contingent valuation questions influences their WTP. Second, whether the context in which a good is valued (in this case the information the respondent is given concerning the cause of the ill-health episode or the policy put into place to avoid that episode) influences respondents’ WTP. The results of the modelling exercise suggest that neither valuation order nor the context included in the valuation scenario impact on the precision with which respondents answer the contingent valuation questions. Similarly, valuation order does not appear to influence the mean or median WTP of the sample. In contrast, it is shown that in some cases, the inclusion of richer context significantly shifts both the mean and median WTP of the sample. This result has implications for the application of benefits transfer. Since, WTP to avoid an episode of ill-health cannot be shown to be independent of the context in which it is valued, the validity of transferring benefits of avoided ill-health episodes from one policy context to another must be called into question

Administering Contingent Valuation Surveys in Developing Countries

In this paper I discuss some of the issues that have arisen and some of the lessons learned over the last ten years about administering CV surveys in developing countries. The discussion is organized around five distinct issues: (1) ethical problems in conducting contingent valuation surveys; (2) explaining what a contingent valuation study is all about; (3) interpreting responses to contingent valuation questions; (4) setting referendum prices; and (5) constructing joint public-private CV scenarios. This list is not meant to be exhaustive, but it will hopefully provide the reader with insights into some of the issues involving in conducting CV surveys in developing countries.Contingent valuation survey

State Tameness: A New Approach for Credit Constrains

We propose a new definition for tameness within the model of security prices as It\^o processes that is risk-aware. We give a new definition for arbitrage and characterize it. We then prove a theorem that can be seen as an extension of the second fundamental theorem of asset pricing, and a theorem for valuation of contingent claims of the American type. The valuation of European contingent claims and American contingent claims that we obtain does not require the full range of the volatility matrix. The technique used to prove the theorem on valuation of American contingent claims does not depend on the Doob-Meyer decomposition of super-martingales; its proof is constructive and suggest and alternative way to find approximations of stopping times that are close to optimal.arbitrage, pricing of contingent claims, continuous-time financial markets, tameness

VALIDATING CONTINGENT VALUATION WITH SURVEYS OF EXPERTS

Contingent-valuation estimates for white-water boating passengers are compared with Likert ratings by river guides. The approach involves asking whether passengers and their guides ordinally rank alternative flows the same. The National Oceanic and Atmospheric Administration's Contingent Valuation Panel (1993) suggested "one might want to compare its (contingent-valuation's) outcome with that provided by a panel of experts." River guides constitute a counterfactual panel of "experts." For commercial trips, optimum flows are 34,000 cfs and 31,000 cfs for passengers and guides, and the comparable figures for private trips are 28,000 cfs and 29,000 cfs. In the NOAA Panel framework, passengers can evaluate the consequences of various river flows and translate this into contingent-valuation responses.Resource /Energy Economics and Policy,

The Provision Point Mechanism and Scenario Rejection in Contingent Valuation

The provision point mechanism mitigates free-riding behavior in economic experiments. In two contingent valuation method surveys, we implement the provision point design. We ask respondents for their perceptions about the success of the provision point mechanism. We find that respondents who believe that the provision point would not be met are more likely to say no to a contingent valuation dichotomous choice question. The scenario rejection that arises may result in biased willingness-to-pay estimates.provision point mechanism, contingent valuation, willingness to pay, public goods, Environmental Economics and Policy,

Better than their reputation - A case for mail surveys in contingent valuation

Though contingent valuation is the dominant technique for the valuation of public projects, especially in the environmental sector, the high costs of contingent valuation surveys prevent the use of this method for the assessment of relatively small projects. The reason for this cost problem is that typically only contingent valuation studies which are based on face-to-face interviews are accepted as leading to valid results. Especially in countries with high wages face-to-face surveys are extremely costly considering that for a valid contingent valuation study a minimum of 1,000 completed face-to-face interviews is required. In this paper we try a rehabilitation of mail surveys as low-budget substitutes for costly face-to-face surveys. Based on an empirical contingent valuation study in Northern Thailand we show that the validity of mail surveys can be improved significantly if so-called citizen expert groups are employed for a thorough survey design.contingent valuation; Environmental Valuation; Equity

The Effect of Uncertainty on Contingent Valuation Estimates: A Comparison

We examine the impact of uncertainty on contingent valuation responses using (1) a survey of Canadian landowners about willingness to accept compensation for converting cropland to forestry and (2) a survey of Swedish residents about willingness to pay for forest conservation. Five approaches from the literature for incorporating respondent uncertainty are used and compared to the traditional RUM model with assumed certainty. The results indicate that incorporating uncertainty has the potential to increase fit, but could introduce additional variance. While some methods for uncertainty are an improvement over traditional approaches, we caution against systematic judgments about the effect of uncertainty on contingent valuation responses.respondent uncertainty, willingness to accept, contingent valuation

Generalized Estimation Methods for Non-i.i.d. Binary Data: An Application to Dichotomous Choice Contingent Valuation

We challenge the assumption of i.i.d random utility across alternatives embedded in typical applications of logit models to dichotomous choice contingent valuation data. Using a Gumbel mixed distribution which nests a number of traditional models, we show that the logistic distribution is not a suitable distribution for contingent valuation analysis.Research Methods/ Statistical Methods,

Contingent Valuation Methods.Possibilities and Problems

Valuation of external costs created from transport is important to undertake in order to improve the decision-making basis for transport policy. In particular, this information could be utilised with respect to policy measures for the internalisation of external costs as well as with respect to appraisal of specific transport investment projects. A number of methods towards the valuation of external costs have appeared in recent years in parallel with the increased awareness about the environmental problems created by transport. These methods include approaches based on assessing the resources required to reduce the costs as well as utility-based approaches. In particular, the so-called contingent valuation method has been put forward as a way to determine the willingness to pay for various environmental goods/functions for a sample of individuals. This method has been applied in a wide range of empirical context in the last two decades. This paper will provide a critical assessment of contingent valuation methods. In particular, the paper will consider the theoretical and empirical possibilities and problems provided by this method. The paper will include the following sections. Section 1 will identify the need to valuate external costs. In section 2 an overview of contingent valuation methods will be given. This will be followed in section 3 by an examination of the possibilities and problems involved in this method. Section 4 concludes with final remarks and suggestions for further research to improve the method.Externality valuation, Monetarisation, Contingent valuation method