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Environmental Valuation: Some Problems of Wrong Questions and Misleading Answers1

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  • Jack L. Knetsch

Abstract

Contingent valuation of people's willingness to pay has rapidly become the method of choice to value all manner of environmental damages. The correct measure is, however, the sum people require to compensate them for such losses, an amount which will normally be far larger than their willingness to pay. And on present evidence, responses to contingent valuation questions are not likely to represent any measure of economic values. The results of these valuation practices will, therefore, bias environmental policies and distort incentives.

Suggested Citation

  • Jack L. Knetsch, 1994. "Environmental Valuation: Some Problems of Wrong Questions and Misleading Answers1," Environmental Values, , vol. 3(4), pages 351-368, November.
    • Handle: RePEc:sae:envval:v:3:y:1994:i:4:p:351-368
    DOI: 10.1177/096327199400300404
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    References listed on IDEAS

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    1. Knetsch, Jack L, 1989. "The Endowment Effect and Evidence of Nonreversible Indifference Curves," American Economic Review, American Economic Association, vol. 79(5), pages 1277-1284, December.
    2. Kachelmeier, Steven J & Shehata, Mohamed, 1992. "Examining Risk Preferences under High Monetary Incentives: Experimental Evidence from the People's Republic of China," American Economic Review, American Economic Association, vol. 82(5), pages 1120-1141, December.
    3. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
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