Contingent valuation

Contingent valuation is the survey-based economic technique for a valuation of non-market resources, such(a) as environmental preservation or the affect of externalities like pollution. While these resources do render people utility,aspects of them score not hold a market price as they are non directly sold – for example, people receive good from a beautiful conviction of a mountain, but it would be hard to improvement using price-based models. Contingent valuation surveys are one technique which is used to degree these aspects. Contingent valuation is often indicated to as a stated preference model, in contrast to a price-based revealed preference model. Both models are utility-based. Typically the survey asks how much money people would be willing to pay or willing to accept to maintained the existence of or be compensated for the waste of an environmental feature, such as biodiversity.

Current status

As presentation by Mundy in addition to McLean 1998, contingent valuation is now widely accepted as a real estate appraisal technique, especially in contaminated property or other situations where revealed preference models i.e. transaction pricing fail due to disequilibrium in the market. McLean, Mundy, together with Kilpatrick 1999the acceptability of contingent valuation in real estate efficient testimony, and the current standard for usage of contingent valuation in litigation situations is allocated by Diamond 2000.

The technique has been widely used by government departments in the US when performing cost-benefit analysis of projects impacting, positively or negatively, on the environment. Examples increase a valuation of water breed and recreational opportunities in the river downstream from Glen Canyon dam, biodiversity restoration in the Mono Lake and restoration of salmon spawning grounds inrivers. The technique has also been used in Australia to value areas of the Kakadu National Park as well as trophy property in the United States, and is recognized as a valuable tool in the appraisal of brownfields.