Misleading Quantification: The Contingent Valuation of Environmental Quality Robert K. Niewijk

Introduction  Cato Institute  Katten Muchin & Zavis  Agrees with polluter pays principle  How to value without market?  Contingent valuation  Use in Superfund laws 1986  NOAA 1994  Environmental Protection Agency  Bias  Academic literature  Experimental evidence

Sources of Bias  Unfamiliarity  Time to assimilate information  Preconceived notions  Preexisting values for a resource  Strawberries  Substitutes  Information

Assessments of Contingent Valuation's Validity  Consistency  Exxon Valdez litigation  not credible  whooping cranes  Household

Different CV Surveys Measuring the Same Resource  Referendum vs Open end  Vs. Top Down Disaggregation  Embedding

Real Values?  Sensitivity  “CV results strongly violate fundamental principles of the economic theory on which they are based, CV does not measure people's economic preferences for natural resources, and no amount of survey refinement or data adjustment will produce an accurate number”

What does CV Actually Measure?  Support for the environment – Warm Glow  Well-defined values  Support other similar programs

Implications  Not use CV  “bet the company" proposition  Raise costs  Exclusion?  Exxon Conference Studies  survey valuing the deaths

Government  EPA  “Stringent" guidelines  Discount Factor  CV Surveys as Surrogate Referenda  Conclusion