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Contingent valuation and economic valuation are both methods that reveal the willingness of people or firms...

Contingent valuation and economic valuation are both methods that reveal the willingness of people or firms to pay for pollution controls.

Describe which of these is the best valuation method for the environmental phenomenon. Select between revealed preferences and stated preferences. Post the process you would use for determining which of these preferences is best and possible alternative or additional methods.

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Answer #1

Contingent valuation is best method to determine willingness of people to pay for pollution controls as this method incorporates surveys to determine economic value which further helps to identify cost benefits analysis.

Stated preference is best method for contingent valuation since people havr very poor understanding of what they really value and how much willing they are which can be generated only best through surveys and not any other form of economic valuation like in revealed preference where actual decisions are accounted for.

A combination of conjoint analysis and discrete analysis within stated preference will give best results in determining value.

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