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Unformatted text preview: Environmental and Resource Economics 25: 257286, 2003. 2003 Kluwer Academic Publishers. Printed in the Netherlands. 257 Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill RICHARD T. CARSON 1 , ROBERT C. MITCHELL 2 , MICHAEL HANEMANN 3 , RAYMOND J. KOPP 4 , STANLEY PRESSER 5 and PAUL A. RUUD 3 1 University of California, San Diego, USA; 2 Clark University, USA; 3 University of California, Berkeley, USA; 4 Resources for the Future, USA; 5 University of Maryland, USA Accepted 31 March 2003 Abstract. We report on the results of a large-scale contingent valuation (CV) study conducted after the Exxon Valdez oil spill to assess the harm caused by it. Among the issues considered are the design features of the CV survey, its administration to a national sample of U.S. households, estimation of household willingness to pay to prevent another Exxon Valdez type oil spill, and issues related to reliability and validity of the estimates obtained. Events influenced by the studys release are also briefly discussed. Key words: natural resource damage assessment JEL classification: Q26 1. Introduction On the night of 24 March 1989, the Exxon Valdez left the port of Valdez, Alaska and was steaming through the Valdez Narrows on its way to the open waters of Prince William Sound. The tanker left the normal shipping lanes to avoid icebergs from the nearby Columbia Glacier and ran into the submerged rocks of Bligh Reef; its crew failed to realize how far off the shipping lanes the tanker had strayed. 1 Oil compartments ruptured, releasing 11 million gallons of Prudhoe Bay crude oil into the Prince William Sound. It was the largest tanker spill in U.S. waters and to the public it was one of the major environmental disasters in U.S. history. Prior to the Exxon Valdez oil spill, the estimation of passive use value (Carson, Flores and Mitchell 1999) or as it has often been previously termed, nonuse or existence value, was an area of economic research not well known to many economists working outside the area of benefit cost analysis of projects involving environmental amenities and health risks. However, based on a belief that the State of Alaska and the Federal Government intended to litigate a natural resource damage claim for lost passive use value, the attention paid to the conceptual 258 RICHARD T. CARSON ET AL. underpinnings and estimation techniques for passive use value changed rather abruptly. Further sparking the rapidly growing interest in passive use values was an important 1989 court opinion, Ohio v. U.S. Department of the Interior , 2 which remanded back to the Department of the Interior (DOI) various components of its regulations for conducting natural resource damage assessments under the Clean Water Act and the Comprehensive, Environmental Response, Compensation and Liability Act (CERCLA), commonly known as Superfund....
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