sensitivity to scale in contingent valuation the importance of the budget constraint the possible insensitivity of willingness to pay wtp values to changes in scale continues to cause concern within the contingent valuation cv literature although several reasons for this phenomenon have been suggested empirical evidence both supports and refutes insensitivity this paper presents data that suggest that insensitivity may be significantly determined by the individual s budget constraint the higher the proportion of income the expressed wtp represents the greater the insensitivity of that wtp to changes in the scale of the good irrespective of changes in underlying marginal utility the methodological implication for cv studies in health care is outlined

the role of ignorance in the emergence of redistribution abstract our study investigates the emergence of redistribution societies when individuals vote on distribution rules with their feet the choice of a distribution rule is a strategic decision since individuals differ in the productivity of their investments and hence total income depends on the types of individuals who have chosen the same distribution rule in our laboratory experiment we find that compared to full information the amount of redistribution increases if individuals face uncertainty about their productivity at the time they choose a distribution rule moreover we find a coexistence of libertarian and redistributive societies as well as imperfect segregation for all degrees of uncertainty so that heterogeneous redistribution societies turn out to be sustainable throughout

individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

precision of dichotomous choice contingent valuation welfare measures some simulation results the purpose of this research is to examine the roles of individuals heterogeneous economic factors and model misspecification in dichotomous choice contingent valuation welfare measurement willingness to pay for an improvement of environmental quality is studied simulation results indicate that the precision of welfare estimates increases with individuals income levels and decreases with the price of the quality related good the dependence of the consumption of the quality related good on the environmental quality also affects the reliability of welfare estimates

consumer demand for green power and energy efficiency abstract this article examines reported willingness to pay for electric utility investments in renewable energy and energy efficiency resources using the results of deliberative polls conducted by electric utilities in texas 1 age education and salary tend to affect reported willingness to pay for utility investments in these resources intensive exposure to information about energy resource issues led to an increase in the number of respondents interested in paying a modest premium to support investments in both renewable energy resources and energy efficiency however average reported premiums actually declined following the polls as very high outlier responses moved to more reasonable values following the polls these results support the contention that informed dialogue about energy alternatives will result in broader interest in providing a modest level of support for these resources

using labels to investigate scope effects in stated preference methods insufficient sensitivity to scope variations in the scale of the environmental good on offer remains a major criticism of stated preference methods and many studies fail a scope test of some sort across a range of existing explanations for insensitivity to scope commodity mis specification embedding warm glows there seems to exist no clear conclusion on how to deal with the problem this paper provides an alternative explanation for insufficient sensitivity to scope based on re definition of the determinants of value for environmental goods within an attributes based choice model in the proposed framework respondents willingness to pay need depend not only on physical characteristics of a good but may also depend on the label under which the environmental good is sold in the hypothetical market to investigate this problem a choice experiment study of biodiversity was conducted we find that controlling for the effects of a label in this case national park designation leads to significant increase in the scope sensitivity of welfare measures

do contingent valuation estimates pass a scope test a meta analysis abstract this paper considers the scope test proposed to judge the internal consistency of contingent valuation estimates the test is shown to be quite sensitive to the maintained hypotheses required to derive fairly precise expectations for the properties of wtp functions and therefore a different approach may be needed in gauging the reliability of cv this paper describes an approach that relies on a weight of the evidence criterion and uses meta analysis to develop a systematic appraisal of what the economic values of changes in amenity resources are the approach is illustrated for the case of estimating people s willingness to pay for improving or maintaining visibility at the national parks

characterizing the effects of valuation methodology in function based benefits transfer abstract meta analyses have demonstrated that willingness to pay wtp estimates vary systematically according to methodological factors the benefits transfer literature provides little guidance with regard to the treatment of such effects transfers are typically conducted by ignoring such effects using ad hoc adjustments or otherwise suppressing information regarding the sensitivity of wtp to methodological attributes this paper illustrates a means to characterize methodological effects within benefits transfer based on an application of the common bootstrap drawing from meta analysis the approach characterizes the sampling distribution of wtp with respect to patterns of methodological variation present in underlying studies results provide a means to characterize the extent of variation associated with predefined groups of methodological attributes providing transparent information on the sensitivity of wtp not typically available in benefits transfer

the impact of the bird flu on public willingness to pay for the protection of migratory birds abstract in this paper we present the results of a unique time series analysis of contingent values and models for migratory bird protection based on an identical contingent valuation cv survey carried out over a three year time period since the first bird flu outbreak in 2003 although there exists no scientific evidence for a direct relationship migratory birds are believed to play an important role in spreading the bird flu virus worldwide the time series analysis allows us to test the temporal stability of stated preferences for migratory bird protection and at the same time examine indirectly the possible impact of increased media attention and public awareness levels regarding the bird flu we test the impact of the bird flu on public willingness to pay wtp for migratory bird protection in the final 2005 survey whilst accounting for procedural variance introduced by sequencing and question ordering effects but we are unable to demonstrate a direct negative relationship a novelty of the study presented here is that respondents in the cv surveys are given the opportunity to pay an annual money amount or a one time off lump sum annual wtp values appear to be significantly higher than one time off wtp values suggesting a negative implicit discount rate self selection bias is an important reason for the observed differences we find that respondents who agree to pay annually differ significantly from respondents who wish to pay a lump sum in terms of their underlying preferences and motivations towards migratory bird protection

contingent valuation a practical alternative when prices aren t available a person may be willing to make an economic tradeoff to assure that a wilderness area or scenic resource is protected even if neither that person nor perhaps anyone else will actually visit this area this tradeoff is commonly labeled passive use value contingent valuation studies ask questions that help to reveal the monetary tradeoff each person would make concerning the value of goods or services such surveys are a practical alternative approach for eliciting the value of public goods including those with passive use considerations first i discuss the exxon valdez oil spill of march 1989 focusing on why it is important to measure monetary tradeoffs for goods where passive use considerations loom large although discussions of contingent valuation often focus on whether the method is sufficiently reliable for use in assessing natural resource damages in lawsuits it is important to remember that most estimates from contingent valuation studies are used in benefit cost assessments not natural resource damage assessments those working on benefit cost analysis have long recognized that goods and impacts that cannot be quantified are valued implicitly by giving them a limitless value when government regulations preclude certain activities or giving them a value of zero by leaving certain consequences out of the analysis contingent valuation offers a practical alternative for reducing the use of either of these extreme choices i put forward an affirmative case for contingent valuation and address a number of the concerns that have arisen

welfare magnet hypothesis fiscal burden and immigration skill selectivity in this paper we investigate the effect of welfare state generosity on the difference between skilled and unskilled migration rates and the role of mobility restriction in shaping this effect we utilize the free labor movement within the european union plus norway and switzerland eur and the restricted movement from outside the eur in order to compare the free migration regime to the restricted migration regime we find strong support for the magnet hypothesis under the free migration regime and the fiscal burden hypothesis under the restricted migration regime even after controlling for differences in educational quality and returns to skills in source and host countries

household willingness to pay for expanding fuel cell power generation in korea a view from co2 emissions reduction abstract the fuel cell fc is accepted as the state of the art instrument for reducing co2 emissions in the field of power generation in korea therefore the korean government has planned to expand fc power generation from 565 gwh in 2013 to 13 449 gwh by 2027 this article aims to assess the public value or acceptability of this expansion in terms of reducing co2 emissions to this end we derive the public s additional willingness to pay wtp for the expansion using a contingent valuation survey of 1000 korean households for the purpose of mitigating the response effect in eliciting their wtp and increasing statistical efficiency in analyzing the wtp data we employ a one and one half bounded dichotomous choice question format furthermore we use the spike model so as to model zero wtp responses the mean additional monthly wtp for the expansion is computed to be krw 1407 usd 1 37 per household expanding the value to the national population gives us krw 310 5 billion usd 304 4 million per year we can conclude that korean households are ready to shoulder some of the financial burden of expanding fc power generation to reduce co2 emissions

just luck an experimental study of risk taking and fairness choices involving risk significantly affect the distribution of income and wealth in society this paper reports the results of the first experiment to our knowledge to study fairness views about risk taking specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes we find that even though many participants focus exclusively on ex ante opportunities most favor some redistribution ex post many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices these findings apply to both stakeholders and impartial spectators

how reliable are meta analyses for international benefit transfers meta analysis has increasingly been used to synthesise the environmental valuation literature but only a few test the use of these analyses for benefit transfer these are typically based on national studies only however meta analyses of valuation studies across countries are a potentially powerful tool for benefit transfer especially for environmental goods where the domestic literature is scarce we test the reliability of such international meta analytic transfers and find that even under conditions of homogeneity in valuation methods cultural and institutional conditions across countries and a meta analysis with large explanatory power the transfer errors could still be large further international meta analytic transfers do not on average perform better than simple value transfers averaging over domestic studies thus we question whether the use of meta analysis for practical benefit transfer achieves reliability gains justifying the increased effort however more meta analytic benefit transfer tests should be performed for other environmental goods and other countries before discarding international meta analysis as a tool for benefit transfer

wind power externalities a meta analysis this study presents the first quantitative meta analysis of the non market valuation literature on the external effects associated with wind power production a data set of 60 observations drawn from 32 studies is constructed the relative economic values of different types of externalities as well as the impact of various methodological and sample characteristics on welfare estimates are examined the results indicate a significant effect of visual externalities on welfare estimates in both directions i e a positive effect of visual improvements and a negative effect of deteriorations this finding corresponds to predictions of the importance of visual impacts in the social science literature external effects of wind power on biodiversity mainly birds do not affect welfare estimates indirect externalities caused by conventional sources of electricity that can be avoided by wind power such as a the reduction of air pollution do neither have a significant impact on welfare measures methodologically we find substantial but inelastic income effects and for choice experiments clear evidence of sensitivity to scope from a policy point of view our results suggest that a policy mix combining a promotion of wind turbines with another green policy facilitates expansion of wind energy

earmarking conservation further inquiry on scope effects in stated preference methods applied to nature based tourism abstract the way people assign value to nature conservation policies has important implications for management choices economic valuation surveys are affected by individual behavioural patterns that are not exhaustively explained by traditional sources of bias such as embedding flagship species fixed budget commodity misspecification and warm glows through a contingent valuation study of alpine wildlife we use an external scope test to evaluate the difference in willingness to pay among tourists for conservation policies targeted either to the ibex alone or to the four ungulates populating the gran paradiso national park in northwest italy ibex red deer roe deer chamois we find that park users are willing to contribute significantly more to policies protecting one of the four ungulates than all four of them a result that we argue should be ascribed to pure aversion to less specific policy objectives i e to a preference for punctual earmarking of resources devoted to conservation

good bye lenin or not the effect of communism on people s preferences preferences for redistribution as well as the generosities of welfare states differ significantly across countries in this paper we test whether there exists a feedback process of the economic regime on individual preferences we exploit the experiment of german separation and reunification to establish exogeneity of the economic system from 1945 to 1990 east germans lived under a communist regime with heavy state intervention and extensive redistribution we find that after german reunification east germans are more in favor of redistribution and state intervention than west germans even after controlling for economic incentives this effect is especially strong for older cohorts who lived under communism for a longer time period we further find that east germans preferences converge towards those of west germans we calculate that it will take one to two generations for preferences to converge completely

a little fairness may induce a lot of redistribution in democracy we use a model of self centered inequality aversion suggested by fehr and schmidt 1999 to study voting on redistribution we theoretically identify two classes of conditions when an empirically plausible amount of fairness preferences induces redistribution through referenda we test the predictions of the adapted inequality aversion model in a simple redistribution experiment and flnd that it predicts voting outcomes far better than the standard model of voting assuming rationality and strict self interest

diagnosing insensitivity to scope in contingent valuation sensitivity to scope is considered a desirable property of contingent valuation studies and often treated as a necessary condition for validity we first provide an overview of scope insensitivity explanations put forth in the environmental valuation literature then we analyze data from a contingent valuation survey eliciting willingness to pay to prevent oil spills of four different magnitudes in arctic norway in the baseline analysis the scope inference is ambiguous there is only statistical difference in willingness to pay to avoid a very large versus small oil spill nok 1869 and nok 1086 respectively however further explorations show that several confounding factors suggested in the literature influence the scope inference the scope sensitivity improves when we control for subjective probabilities of amenity provision exclude respondents based on the debriefing questions take into consideration the sample sizes and impose diminishing marginal utility overall the analysis supports an emerging view in the contingent valuation literature suggesting that statistical scope insensitivity is not a sufficient reason for deeming a study invalid

choosing justice in experimental democracies with production we examine in a laboratory setting how direct participation in choosing a principle of distributive justice and a tax system impinges on subjects attitudes and subsequent productivity when they participate in a task produce income and then experience losses or gains according to the tax system experience with a redistributive principle and its associated taxation system in a production environment does not detract from overall acceptance of the distributive principle particularly for subjects who participate in choosing the principle participation in discussion choice and production increases subjects convictions regarding their preferences for these subjects especially recipients of transfers productivity rises significantly over the course of the experiments no such effect is evident for subjects who do not participate in setting the regime under which they are to labor the results implications for questions of democratic participation and the stability of income support programs are drawn

meta analysis benefit transfer and methodological covariates implications for transfer error meta regression models in the valuation literature demonstrate that willingness to pay estimates vary according to methodological factors neither theory nor characteristics of policy sites dictate the treatment of associated covariates within benefit transfer however and the literature provides few insights into potential impacts of common empirical treatments this paper introduces a method to systematically characterize the impact of methodological variables on transfer error using a repeated leave one out convergent validity framework the analysis contrasts errors for a hypothetical ideal case in which correct methodological covariate treatments are known to the realistic case in which the correct treatment is unknown results indicate that the common assumption of mean values for methodological covariates leads to only a modest increase in mean transfer error relative to that found in the hypothetical ideal case

individual preferences for political redistribution what drives people s support of governmental reduction of income inequality we employ data from a large international survey in order to evaluate the explanatory power of three competing forces referred to as the homo oeconomicus effect the public values effect and the social rivalry effect the empirical analysis reveals that at the aggregate level all three effects play a significant role in shaping individual preferences for political redistribution attitudes of citizens in formerly socialist countries turn out to differ from those of western citizens in a systematic way 2002 elsevier science b v all rights reserved

choice modeling and tests of benefit transfer choice modelling cm is a stated preference technique that is increasingly being used to generate estimates of non market values in cm applications respondents to a survey are presented with several sets of options which contain common attributes but at varying levels and are asked to select their preferred alternative from each set the information provided by respondents choices is used to estimate marginal rates of substitution and hence estimates of value in this paper the results from three separate cm applications are presented estimates are made of the value of improving the quality of wetlands the first two applications focused on the gwydir wetlands in new south wales australia one survey was conducted in sydney a major urban centre and the second was conducted in moree a rural centre close to the gwydir wetlands the third survey which was also conducted in sydney focused on the macquarie marshes another wetland in new south wales an objective of the study was to test the suitability of using cm derived estimates for benefit transfer both across different populations and across different wetlands cm is potentially suited to benefit transfer because it is possible to allow for differences in environmental improvements between sites as well as differences in socio economic characteristics between respondent populations several tests aimed at determining the validity of transfers using cm across sites and populations are presented these include tests of the equality of models implicit prices and estimates of compensating surplus

part whole bias in contingent valuation will scope effects be detected with inexpensive survey methods the purpose of this paper is to test for scope effects with the contingent valuation method we use data from a telephone survey focusing on water quality improvements in the albemarle and pamlico sounds in north carolina we find that the willingness to pay estimates are sensitive to the scope of the policy these results suggest that the use of inexpensive survey methods may not be the cause of the failure to detect scope effects in some recent contingent valuation studies

marginal valuation of charismatic species implications for conservation most contingent valuation studies focus on total willingness to pay wtp as a measure of welfare change for policy involving species preservation however it is important to distinguish between the benefits of preventing a species from going extinct and the benefits of preserving numbers above the minimum viable population mvp level once mvp is exceeded marginal wtp becomes relevant these propositions are illustrated for the case of one charismatic species whose management is much debated minke whales in the northeast atlantic ocean it is shown that for a given estimate of total preservation value strict conservation and extinction can both be optimal this finding highlights the importance of collecting marginal values in contingent valuation surveys

decision structuring to alleviate embedding in environmental valuation abstract embedding is the widely observed phenomenon that a good is assigned a higher value if evaluated on its own rather than as part of a more inclusive set embedding is considered a serious problem affecting the quality of many environmental management and health risk policy judgments this paper presents the results of an experiment involving of a structured small group approach for conducting environmental policy evaluations it focuses on eliciting problem specific values and discussion among participants about the pros and cons of multiple project alternatives in the context of tradeoffs between fisheries production and electricity generation from dams study results show a significant reduction in embedding which is viewed as an improvement in the quality of the preference judgments compared with a standard contingent valuation cv approach

contingent valuation controversies and evidence contingent valuation cv has become one of the most widely used non market valuation techniques cv s prominence is due to its flexibility and ability to estimate total value including passive use value its use and the inclusion of passive use value in benefit cost analyses and environ mental litigation are the subject of a contentious debate this paper discusses key areas of the debate over cv and the validity of passive use value we conclude that many of the alleged problems with cv can be resolved by careful study design and implementation we further conclude that claims that empirical cv findings are theoretically inconsistent are not generally supported by the literature the debate over cv however has clarified several key issues related to nonmarket valuation and can provide useful guidance both to cv practitioners and the users of cv results

public preferences for alternative electricity mixes in post fukushima japan abstract using representative household survey data from japan after the fukushima accident we estimate peoples willingness to pay wtp for renewable nuclear and fossil fuels in electricity generation we rely on random parameter econometric techniques to capture various degrees of heterogeneity between the respondents and use detailed regional information to assess how wtp varies with the distance to both the nearest nuclear power plant and to fukushima compared to fossil fuels we find a positive wtp for renewable and a negative wtp for nuclear fuels these effects in absolute terms increase with the proximity to fukushima

economic valuation of biodiversity a comparative study abstract in recent years an intensive debate on the economic valuation of biodiversity has entered the environmental economics literature the present paper seeks to offer first a critical review of key concepts that are essential for a proper understanding of such evaluation issues particular attention is given here to various monetary valuation approaches and to comparative i e meta analytical methods from the perspective of conservation and sustainable use of biodiversity several illustrative examples are presented in order to highlight the usefulness of the various approaches discussed next an attempt is made to infer general findings and lessons from past applied research by means of meta analysis in this context a multi dimensional technique originating from the field of artificial intelligence is deployed it allows us to identify the most important variables responsible for changes in economic estimates of biodiversity

meritocracy egalitarianism and the stability of majoritarian organizations we gratefully acknowledge support from the severo ochoa programme for centres of excellence in r d sev 2011 0075 barbera and bevia acknowledge support from grants consolidated group c eco2008 04756 and feder and sgr2014 515 ponsati acknowledges support from grants eco2012 37065 and sgr2009 1142

measuring future grandparents preferences for equality and relative standing individuals aversion to risk and inequality and their concern for relative standing are measured through experimental choices between hypothetical societies it is found that on average individuals are both fairly inequality averse and have a strong concern for relative income the results are used to illustrate welfare consequences based on a utilitarian swf and a modified crra utility function it is shown that the social marginal utility of income may then become negative even at income levels that are far from extreme

adequate responsiveness to scope in contingent valuation the standard test for scope sensitivity in contingent valuation studies determines whether the response to changes in scope is statistically significant it does not address whether the magnitude of response is appropriate given the specified changes in scope we examine contingent valuation studies that implemented scope tests to determine what they imply about the adequacy of response to scope we find that in the vast majority of studies the magnitude of response cannot be assessed only three studies permit such an assessment samples and hollyer 1990 diamond et al 1993 and chapman et al 2009 the first two papers find that responses to their surveys did not vary adequately with scope the third study passed the standard scope test but we show that the magnitude of response in this study is inadequate by straightforward methods of assessment and cannot be explained by diminishing marginal utility or substitution more research is needed on this issue including wider application of adding up tests on incremental parts as well as the development of other methods that permit an assessment of the magnitude of response or other tests of rationality

redistribution and market efficiency an experimental study abstract we study the interaction between competitive markets and income redistribution that reallocates unequal pre tax market incomes away from the rich to the poor majority in one setup participants earn their income by trading in a double auction da with exogenous zero or full redistribution in another setup after trading they vote on redistributive tax policies in a majoritarian election with two competing candidates this results in virtually full redistribution even when participants have the opportunity to influence taxes by transferring money to the candidates we find that the high redistribution reduces trading efficiency but not as much as predicted if market participants trade randomly this is because rather than capitulating to the much lower trading incentives many participants respond to redistribution by asking and bidding more conservatively in the da and in this way help to prevent further efficiency losses

assessing the importance of tiebout sorting local heterogeneity from 1850 to 1990 this paper argues that long run trends in geographic segregation are inconsistent with models where residential choice depends solely on local public goods the tiebout hypothesis we develop an extension of the tiebout model that predicts as mobility costs fall the heterogeneity across communities of individual public good preferences and of public good provision must weakly increase given the secular decline in mobility costs these predictions can be evaluated using historical data we find decreasing heterogeneity in policies and proxies for preferences across i a sample of u s municipalities 1870 1990 ii all boston area municipalities 1870 1990 and iii all u s counties 1850 1990

finding sensitivity to scope in nonmarket valuation summary data limitations frequently prevent using actual consumer behavior in determining natural resource values so stated preference methods are used whether value estimates show sensitivity to the scope of resource valued is a key test for their validity which several studies fail developing a correlated panel mixed logit model of households water quality valuations in california we show that false negatives in scope tests can result when individual preference variation and correlation are ignored and split sample comparisons are used monte carlo simulations further demonstrate potentially prevalent false rejections of scope sensitivity even when within subject comparisons of willingness to pay portray strong scope sensitivity copyright 2013 john wiley sons ltd

on the derivation of monetary policy shocks should we throw the var out with the bath water this paper considers an alternative econometric approach to the standard var methodology for identifying and estimating the effects of monetary policy shocks the alternative approach makes more reasonable assumptions about economic agents information set by 1 restructuring the var variables according to what data are actually observable in each point in time and 2 augmenting the var model with available measures of market participants expectations of various economic variables thus increasing the assumed information set should we throw the var out with the bath water unfortunately the results of this paper are somewhat inconclusive the expectations measures prove to be quite valuable the variances of all innovations are reduced by at least one half compared to the standard var innovations nevertheless the innovations monetary policy shocks and impulse responses for both methods are fairly similar indeed they are similar enough that the standard var approach cannot be rejected out of hand but dissimilar enough that the standard approach cannot be validated

do stated preference methods stand the test of time a test of the stability of contingent values and models for health risks when facing an extreme event abstract this paper focuses on the temporal stability of dichotomous choice dc contingent values and models and the implication of time related aspects for benefits transfer as a viable valuation method from a practical point of view time plays an important role in benefits transfer results are used from studies often carried out years ago and the obvious question is to what extent the estimated values and models stand the test of time in the case of value function transfer this implies testing the robustness of the estimated coefficient estimates over time the novelty of the temporal stability work presented here is that two identical dc contingent valuation cv studies of the health risks associated with bathing water quality were carried out before and during extreme weather conditions causing the closure of bathing locations for public health reasons differences in contingent values and models before and during the extreme event are tested the extreme event causes the seasonal good in question to become temporarily scarcer and marginal wtp is therefore expected to be higher during the extreme event than before but not that underlying preferences have changed hence basically two things are tested the effect of time on stated preferences for a seasonal good and the effect of the extreme event on these preferences wtp values before and during the event appear to be robust also when accounting for substitution effects the results before and during the extreme event remain transferable when accounting for theoretically expected factors in a simple multivariate transfer model however when introducing additional and contextual ad hoc factors in the model the estimated models and their random components become significantly different and hence not transferable suggesting that unobserved preferences may not have been randomly distributed across the two surveys after all

contingent valuation theoretical advances and empirical tests since the noaa panel beyond a simple cost effectiveness role and for many policy issues where all the goods or impacts at issue are not readily priced in the market the relevance of economics depends to a large degree on the ability to use contingent valuation cv and other closely related stated preference approaches the government s use of cv as a tool to place a monetary value on damages from the exxon valdez oil spill brought forth strong industry objections to the use of cv in response the national oceanic and atmospheric administration noaa one of the trustee agencies in the exxon valdez case commissioned a blue ribbon panel chaired by kenneth arrow and robert solow to review the use of cv in natural resource damage assessment proceedings the panel s report arrow et al and transmittal letter to the noaa general counsel concluded cv studies can produce estimates reliable enough to be the starting point for a judicial or administrative determination of nat

the case for diminishing marginal existence values abstract this study addresses the debate over sensitivity of existence values measured by contingent valuation to scope tests we reconcile much of the debate within one theoretical model if marginal wtp for existence goods is diminishing then a study that tested for sensitivity to scope over a range for which marginal wtp is high would be more likely to detect sensitivity to scope than a study that focused on a range for which marginal wtp is much lower an empirical model demonstrates this point for existence value of remote wilderness parks these results have significant implications for future contingent valuation work