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Valuation of Environmental Goods: Correcting for Bias in Contingent Valuation Studies Based on Willingness-to-Accept

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  • Bishwanath Goldar
  • Smita Misra

Abstract

The willingness-to-accept (WTA) measure of value is often subject to a systematic, large bias, making it unsuitable for use in contingent valuation studies. However, for the valuation of environmental goods, in many cases WTA rather than the willingness-to-pay (WTP) is the relevant measure. The paper proposes that, by using a composite-error model for the estimation of the valuation function, a correction can be made for the bias in reported WTA. To illustrate the proposed methodology, it is applied to the data of the Brookshire-Coursey (1987) study of alternative tree density in Troutman Park, Fort Collins. Copyright 2001, Oxford University Press.

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  • Bishwanath Goldar & Smita Misra, 2001. "Valuation of Environmental Goods: Correcting for Bias in Contingent Valuation Studies Based on Willingness-to-Accept," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 150-156.
    • Handle: RePEc:oup:ajagec:v:83:y:2001:i:1:p:150-156
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    File URL: http://hdl.handle.net/10.1111/0002-9092.00143
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    Cited by:

    1. Maria Loureiro & Justus Lotade, 2005. "Interviewer Effects on the Valuation of Goods with Ethical and Environmental Attributes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(1), pages 49-72, January.
    2. Halstead, John M. & Huang, Ju-Chin & Stevens, Thomas H. & Harper, Wendy, 2002. "Tinkering With Valuation Estimates: Is There A Future For Willingness To Accept Measures?," 2002 Annual meeting, July 28-31, Long Beach, CA 19724, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Damigos, D. & Tourkolias, C. & Diakoulaki, D., 2009. "Households' willingness to pay for safeguarding security of natural gas supply in electricity generation," Energy Policy, Elsevier, vol. 37(5), pages 2008-2017, May.
    4. Halstead, John M. & Stevens, Thomas H. & Harper, Wendy & Hill, L. Bruce, 2004. "Electricity Deregulation and the Valuation of Visibility Loss in Wilderness Areas: A Research Note," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 34(1), pages 1-11.
    5. Silva, Andres & Nayga, Rodolfo M., Jr. & Campbell, Benjamin L. & Park, John L., 2011. "Revisiting Cheap Talk with New Evidence from a Field Experiment," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), pages 1-12, August.
    6. Devkota, Nirmala & Paudel, Krishna P., 2009. "Production Termination As An Alternative To Mitigate Nutrient Pollution," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46826, Southern Agricultural Economics Association.

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