Valuing Environmental Resources: A Constructive Approach

Contingent valuation (CV) has been used by economists to value public goods for about 25 years. The approach posits a hypothetical market for an unpriced good and asks individuals to state the dollar value they place on a proposed change in its quantity, quality, or access. Development of the CV concept has been described in reviews by Cummings, Brookshire, and Schulze (1986) and Mitchell and Carson (1989). The approach is now widely used to value many different goods whose quantity or quality might be affected by the decisions of a public agency or private developer. Environmental goods have received particular attention, because they are highly valued by society and entail controversial tradeoffs (e.g., manufacturing costs vs. pollution, urban development vs. wetlands protection) but are not usually sold through markets (Bromley, 1986).