Contingent Valuation Of The Environment

CONTINGENT VALUATION OF THE ENVIRONMENT BY ARCHIBONG UBONG

OVERVIEW • Contingent Valuation is a stated preference survey method used to estimate economic values for all kinds of ecosystem and environmental services. • It can be used to estimate both use and non-use values. • Most widely used method for estimating non-use values • Survey asks how much people are willing to pay or willing to accept to maintain the existence of or compensated for the loss of an environmental feature such as

HISTORY OF CONTINGENT VALUATION • Contingent Valuation was propounded in theory by S.V CiriacyWantrup in 1947 as a method for market valuation of a non-market good. • Technique was applied practically for the first time in 1963 when Davis used surveys to estimate the value hunters and tourists placed on a particular wilderness area.

GROWTH OF CONTINGENT VALUATION • This method became popular in the 1980`s in the United States when agencies were given power to sue for damage to environmental resources which were managed by them. • Following a famous judgment by the DC Court of Appeals(State of Ohio vs Department of the Interior),the types of values they were able to recover included non-use or existence values. • This had an implication for Exxon because of the wrecking of the oil tanker,the Exxon Valdez off the coast of Alaska that led to oil spillage in 1989, since much of the environmental damage was passive(damage to wildlife and a pristine,fragile ecosystem) as opposed to actual use values. • The Exxon Valdez oil spill is the first case where contingent valuation surveys were used in

ILLUSTRATION:WILLINGNESS TO PAY BY KENT UNIVERSITY

ILLUSTRATION:WILLINGNESS TO PAY BY KENT UNIVERSITY • The table in the previous slide is the result of a survey I carried out on campus(14th February,2009) through personal interview to find out the willingness to pay to enter a zoo or park. • E10 was the bid vehicle and I asked each student Assuming the entrance fee to a park in Canterbury is E10,how much are you willing to pay to enter the park? • Out of a total population of 17,000 Kent University Students I interviewed a sample size of 16 students;13 female students and 3 male students.11 of the female students were willing to pay E10 to enter a Park while 2 of the female students said they would pay E5 each to enter the park.2 of the male students interviewed said they would pay nothing to enter the park except it is free while one of the male students said He would pay E7.50.

ILLUSTRATION:WILLINGNESS TO PAY BY KENT UNIVERSITY • The mean willingness to pay for the 16 students interviewed is E7.968. • Multiplying it by the total population of 17,000 we have E135,456. • This shows that on the average based on the survey carried out by me, the willingness to pay to enter a park in Canterbury by Kent University Students is E135,456.

ADVANTAGES OF THE CONTINGENT VALUATION Very flexible technique in that it can be applied in an extremely wide range of situations,fromthe benefits of preserving a global biodiversity,to the benefits of improving a City’s air quality or protecting a local wetland. Most widely accepted method for estimating total economic value(Use and nonuse value).

CRITIQUE OF THE CONTINGENT VALUATION METHOD • Measures what people say they would do which may be different from what they would actually do. • Results have been criticized because it depends on the information the researcher gives to the respondents. • Expensive and time consuming due to extensive pre-testing and survey work.

SUMMARY • This study has made a bold attempt to describe Contingent valuation,its merits and demerits. • Furthermore it used a hypothetical scenario to depict the willingness to pay for an environmental good or service by the total polpulation of students through a sample size.

RECOMMENDATION • Contingent Valuation is prone to bias since the result of the investigation is based on the information the respondents receive.Tocorrect this anomaly it is recommended that respondents should be given adequate,unbiased information on the environmental good and its hypothetical market to enable them make an informed judgment.

REFERENCES • Dennis M.King,Marissa J. Mazotta (2000),Ecosystem Valuation. • Nick Hanley,Jason F.Shogren and Ben White (2001),Introduction to Environmental Economics. • Wikipedia website • EVRI website