Contingent Valuation Methodology in the Natural Resource Damage Regulatory Process: Choice Theory and the Embedding Phenomenon

In their most recent article on the use of Contingent Valuation Methodology ("CVM") in the natural resource damages assessment ("NRDA") process, the authors take issue with the CVM components of the National Oceanic and Atmospheric Administration's ("NOAA") proposed NRDA rules. In particular, the authors argue that NOAA's proposed NRDA process does not comport with basic tenets of choice theory and that the CVM safeguards created by NOAA are not adequate to address the inherent, and perhaps irreconcilable, flaws in CVM assessments. To illustrate their arguments, the authors examine and criticize NOAA's treatment and general disregard of the embedding phenomenon. The author's argue that the existence of the embedding phenomenon in CVM valuations demonstrates the inappropriateness of CVM as a regulatory tool in the NRDA process.