Question

just brief discussion please

4. Describe the contingent valuation method, what the advantage is of using this method, and what some of the problems might be in using this method (such as different biases). Discuss the example from class of using contingent valuation for valuing reduction of greenhouse gas emissions contributing to climate change and valuing the reduction in the local smell from the wastewater. Comment on the differences between the class results and the reported results from Dr. Israel's survey of ISU students. Comment on the differences between the valuation of the local versus global environmental quality.

Answer 1

Contingent Valuation is a method of estimating the value that a person places on a good. The approach asks people to directly report their willingness to pay (WTP) to obtain a specified good, or willingness to accept (WTA) to give up a good, rather than inferring them from observed behaviours in regular market places.

Because it creates a hypothetical marketplace in which no actual transactions are made, contingent valuation has been successfully used for commodities that are not exchanged in regular markets, or when it is difficult to observe market transactions under the desired conditions.

Although it is certainly possible to employ contingent valuation for commodities available for sale in regular marketplaces, many applications of the method deal with public goods such as improvements in water or air quality, amenities such as national parks, and private non-market commodities such as reductions in the risk of death, days of illness avoided or days spent hunting or fishing.

Contingent valuation has proven particularly useful when implemented alone or jointly with other valuation technique for non-market goods, such as the travel cost method or hedonic approaches. It remains the only technique capable of placing a value on commodities that have a large non-use¹ component of value, and when the environmental improvements to be valued are outside of the range of available data.

Advantages of the Contingent Valuation Method:

• Contingent valuation is enormously flexible in that it can be used to estimate the economic value of virtually anything. However, it is best able to estimate values for goods and services that are easily identified and understood by users and that are consumed in discrete units (e.g., user days of recreation), even if there is no observable behavior available to deduce values through other means.
• CV is the most widely accepted method for estimating total economic value , including all types of non-use, or “passive use,” values. CV can estimate use values , as well as existence values , option values , and bequest values .
• Though the technique requires competent survey analysts to achieve defensible estimates, the nature of CV studies and the results of CV studies are not difficult to analyze and describe. Dollar values can be presented in terms of a mean or median value per capita or per household, or as an aggregate value for the affected population.
• CV has been widely used, and a great deal of research is being conducted to improve the methodology, make results more valid and reliable, and better understand its strengths and limitations.

The main problems and controversies concerning CVM, namely, the involvement of non-use value into cost-benefit analysis, and validity and reliability of the results. According to the turning point in CVM studies after 1993, tests of validity and reliability are specially illustrated. A concluding remark is then presented and further study areas put it forward. It is believed that even in developing countries like China, CVM is still a promising method to value environmental goods, on the premise of extremely careful and proper conduction of the survey including questionnaire design, survey administration and data processing.

When assessing the impacts of the emissions it is necessary to assess first the fate of the substances emitted, then the exposure of receptors, and finally the damage from the exposure. The pollutants are dispersed in the atmosphere, and resulting concentrations depend i.a. on distance from the incineration plant, topography, wind speed and direction, and other climatic conditions, as well as the stability of the substance and its residence time in the atmosphere. In ExternE, two types of models were used to model the transportation and transformation of air emissions4 : 1. Gaussian Plume Models (GPM) for distances less than 50 km from the source. 2. Trajectory Models (TM) for distances greater than 50 km from the source. For short distances, the chemical reactions in the atmosphere only have a limited influence on the concentrations of the primary pollutants. However, the atmospheric conditions, especially wind conditions and vertical turbulence, have a great influence on the transportation. The GPM are commonly used to describe local air pollution effects. These models take into account the distance from the source, emission height, average wind speed and distribution of wind direction, turbulence conditions and topography, and they are therefore used to assess the transportation over short distances.

It was found that the willingness-to-pay estimates calculated in the Israel study were reasonable and that the methodology is able to adapt to the special nature of the health care commodity while adhering to the conditions for reliability and validity in a contingent-valuation study

The paper examines this issue in two ways. First, the authors consider the diversity of referents which accompany the concept of the environment in aca- demic, policy, business and lay discourses. Second, they discuss some of the ways in which individuals who encounter environmental change at the local level employ the concept of the environment' differently in order to achieve political ends. The discussion and the data upon which it is based are used to indicate the ways that 'global' environmental concepts are localised in specific contexts of action. Finally, the authors argue that the complexity of the discursive frameworks, together with the absence of enduring, coherent environmental value systems within which to situate perspectives on environmental change, implies that frameworks for environ- mental understanding and action cannot be imposed from outside of the contexts in which goals, values and motives are embedded.