Valuing Environmental Commodities: Some Recent Experiments

Abstract

A general model of consumer behavior is proposed to assess six recent experiments that have attempted to reveal preferences for environmental goals. Each experiment used a mix of both the techniques and the theory of demand for non-market commodities, and each was designed to estimate a non-market attitude associated with the environment and to analyze potential biases in the techniques. The six cases show some consistency in results. The linkage within the contingent market between the environmental attribute, institutional setting, and the bidding instrument must be realistic and accepted by the respondent to avoid biased results. Possibly the most-important result is the replication of results using a traditional property-value study and a contingent bidding approach. All evidence obtained to date suggests that hedonic studies of property values or wages, travel costs, and survey techniques all yield values well one order of magnitude in accuracy. 41 references, 2 tables.