Contingent valuation can be simply explained as a valuation assignment to a non-market good, such as personal health and safety or environmental protection, through a direct method, such as a survey, to determine willingness to pay to mitigate or willingness to travel to utilize a national park. By application of this definition any environmental problem would be candidate for valuation by survey. however, some areas are more applicable to the approach than others.
The preservation and protection of a riparian habitat area is an excellent environmental issue of concern that is conducive to quantification through contingent valuation. The habitat is a public good that’s economic valuation can determined by consumer willingness to pay to preserve, maintain or restore the area. Also, public willingness to pay to utilize the amenities through a survey based on distance willing to travel and an acceptable price of entrance. Such a survey was conduct area use of the area around the San Pedro River in southern Arizona, and concluded that the affected public placed a valuation on the riparian habitat.
http://www.redorbit.com/news/science/176665/visitor_values_and_local_economic_impacts_of_riparian_habitat_preservation/
The value of clean air is another environmental area of concern that can be evaluated through contingent valuation by virtue of the fact that clean air does not have a direct market value assigned to it. Take the scenario, if a tax to fund a traffic reduction strategy, which could result in a reduction of urban smog, through a 30 percent reduction in peak time traffic along the I-10 interchange, was proposed for the Ahwatukee area. Public buy-in to this plan could readily be determined through surveys in the area as well as commuters on the freeway.
Public willingness to pay to mitigate the urban heat island effect would be an excellent application of a contingent valuation survey. Specifically because the negative impact could be subjective and in most cases indirectly correlated such as increased energy cost because of increased nighttime air conditioner usage.
Environmental issues not particularly conducive to contingent valuation have a specific impact that can be measured directly through a quantitative analysis.
Mitigation of an oil spill in a river that would result in direct damage to a surface water treatment facilities’ process, which can be measured in terms of monetary value would not be appropriate for as contingent. Public willingness to pay for such a project may hold value for informational purposes, but would have little impact as to whether a cleanup would actually occur. I could be argued that a public survey would hold value as to what means the enforcement body would pursue reimbursement.
Another area that would not be conducive to contingent valuation is the mitigation of a contaminated groundwater aquifer. There is also a direct valuation that can be determined and mitigation would not be based on public willingness to pay. Mitigation strategy such as abandonment, treatment or alternative supply source would be based on cost benefit analysis.
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It is interesting that you conclude that CV might not be best used in mitigation by an oil spill. In March 1989, when the Exxon Valdez spilled in Alaska 11 million gallons of crude oil into the sea, the Department of Interior used CV in determining the cost associated with the spill, including out-of-pocket losses to fisherman, resort owners, tour guides, recreationist and others (Portney, pg 7).
ReplyDeleteHowever, you are right; measurement does not translate to action or cleanup.
Rick,
ReplyDeleteI agree that contingent valuation would not be applicable to something on a larger scale, such as a tanker oil spill. The amount of potential damage to the environment is to vast to be trusted to public knowledge. I do believe that there would be no hurt in conducting a contingent evaluation survey, just as long as it wasn't the basis for monetary reimbursement.
Ryan
They discussed that in the reading. My rational was that the application of CV would not be necessary as an actual dollar and sense amount could be attached to those items. I do see the arguement for loss of recreational amenities, but those were all lost and incurred regardless of public willingness to pay.
ReplyDeleteMy selection of that choice was specific to the decision assoicated with the mitigation of the damage too.
CV can be applied to almost any environmental issue because environment can be contrued as a non-market public good.
My use of the word sense is applied to the rational that a CV survey sometimes may not always be a rational choice.
ReplyDeleteThus regardless of that determination EV would be mitigated and the loss still occured.
You agree that there is a loss of recreational amenities, additionally loss of productivity by fisherman and tours and such. Do you think that revenue loss should somehow be used to determine CV. An oil spill could gravely damage the industry of a small community, would it make it peoples willingness to pay greater?
ReplyDeleteI believe that with revenue loss an appropriate valuation can be assigned through othermeans, and with the grave damage to the community their willingness to pay would be evident and an intervention unavoidable. This renders a CV unnecessary as the course of action would most likely not change regardless of the results.
ReplyDeleteI realize that all of this could be argued though.
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