Theoretical and Practical Aspects of Environmental Goods Valuation
The controversy over the validity of the contingent valuation method raises serious issues with regard to the economic theory, as well as major questions regarding environmental policy analysis. Although a properly designed survey can overcome many detected weaknesses of contingent valuation, it appears that inherent problems in survey choice questions referring to public goods cannot be solved in the frame of the standard economic theory of choice, e.g., the systematic disparity between WTA and WTP valuations. Important aspects of environmental policy are also involved in this debate. If, for example, the passive use value cannot and, hence, should not be included into cost-benefit analyses and compensatory damages measurements, many major environmental projects and policies will be rejected. We conclude that if we want to make more accurate estimations of the total value of environmental goods and services, an appropriate theory for the individual choice must be developed, but until its emergence decisions based only on estimates of the use value may lead to environmental deterioration.
Keywords: Contingent Valuation, Passive Use Value, Public Goods, WTA, WTP
Dr. K. P. Anagnostopoulos
Associate Professor, Department of Production and Management Engineering, Democritus University of Thrace