xid-8428232_2 - Thurs Oct 27 Valuation cont 1 Stated...

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Thurs, Oct 27 Valuation, con’t. . 1. Stated Preference Approaches: Contingent Valuation Method (CVM) I n these cases, economists simply ask people for their valuation. The most common technique is contingent valuation (CV) . Environmental policy history: The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) gave government the right to sue for damages to natural resources for which they are responsible. In 1986, the Department of Interior said nonuse (largely existence) values were recoverable if use values were not measurable. 1989: federal court of appeals directed the Department of the Interior to redraft its regulations with equal weight on use and nonuse values. After the Exxon Valdez crash in March of 1989, DOI regulations meant that Exxon would have to pay for non-use damages. CV estimate of damages: $3 billion In response to the Exxon Valdez, Congress passed the Oil Pollution Act of 1990. How contingent valuation works: Ask questions to elicit valuation by survey - questions have 'what if' , or contingent, characteristic. As estimate of WTP or WTA. Steps: a. Describe environmental problem or situation b. Then, question - would you vote to require oil companies to begin overhaul of tanks immediately (yes/no/don't know). c. Ask people their willingness to pay (WTP) to bring about a specific environmental improvement. The problem/situation must describe a realistic situation Types of questions: open-ended -- ask respondents for maximum WTP. close-ended
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  • Fall '11
  • Staff
  • Exxon Valdez oil spill, Revealed preference, Contingent valuation, stated preference, Contingent Valuation Method

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xid-8428232_2 - Thurs Oct 27 Valuation cont 1 Stated...

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