Contingent valuation , economic value

The Stated preferences method is a controversial method and well debated between economists. The main criticism towards the Contingent Valuation (CV) method is that the elicited values and people s WTP is based on hypothetical answers and not real economic decisions and thereby meaningless because people are not facing real payments or a real budget constraint [18]. 

Over the past half century, the held of economics has developed a rich and extensive literature that advances the theory and methodology of estimating values associated with the myriad unmarketed yet economically valuable benefits provided by nature. While the literature is vast, the number of approaches available to estimate the economic value of ecosystem services remains limited to only a handful, each with its own strengths and weaknesses (for comprehensive reviews, see Mitchell and Carson, 1989 Freeman, 1993 Smith, 2000 Mathis et al., 2003). These include replacement costs and avoided costs analysis, factor income analysis, hedonic pricing, contingent valuation, and travel costs analysis. A discussion of these approaches follows later in this section. Although there is often considerable debate about the methods used and the accuracy of the values derived, there is little doubt that the unpriced economic value of ecosystem services is enormous.9... 

Hanemann, W. M. (1994). Valuing the environment through contingent valuation. Journalof Economic Perspectives, 8,19-43. 

McClelland, G. H., Schulze, W. D., Lazo, J. K., Waldman, D. M., Doyle, J. K., Elliot, S. R. and Irwin, J. R. (1992). Methods for measuring non-use values a contingent valuation study of groundwater cleanup. (Mimeo) Center for Economic Analysis, University of Colorado. USEPA no. CR-815183. 

The SLCC may also include externalities or external costs as defined by environmental economics and external costs which are usually borne by society as shown in Fig. 2. Such costs can be assessed using the preference theory of economic valuatirMi methods (e.g., hedonic pricing and contingent valuation) that are based on the market and nonmarket values (e.g., the willingness-to-pay survey) (Rebitzer and Hunkeler 2003). 

Cummings, R.G. and Taylor, L.O. 1999. Unbiased value estimates for environmental goods A cheap talk design for the contingent valuation method. American Economic Review, 89, 649-665. 

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