TINKERING WITH VALUATION ESTIMATES: IS THERE A FUTURE FOR WILLINGNESS TO ACCEPT MEASURES?



Tinkering with Valuation Estimates: Is There a Future for Willingness to Accept
Measures?

The contingent valuation method (CVM), conceived in the 1940s and brought into wide
use in the 1970s and 1980s, has been used by economists to value a wide variety of non-market
goods and services, especially those with public good and non-use characteristics. Carson
(2002) notes that over 5,000 contingent valuation studies have been performed. These studies
have employed either willingness to pay (WTP) or willingness to accept (WTA) measures (in
some cases, both) to elicit valuation measures.

The choice of WTP or WTA (and the compensating and equivalent variation measures
which underlie them) is indicative of the implied property rights scheme for the good in question;
for example, if a respondent has to pay to avoid pollution damages, the implication is that he or
she does not have the right to the “cleaner” scenario, and must pay to retain it. However, while
one measure may be preferred to the other in a given situation due to the “correct” specification
of property rights, empirical estimates of WTA and WTP have tended to differ considerably.
This begs the question as to which yields the “truer” valuation estimates.

In this paper, we derive both WTP and WTA contingent value estimates for a public
good, visibility in the Great Gulf Wilderness in New Hampshire. Our estimates were obtained
from a mail survey of a random sample of 1,000 residents of New Hampshire, Vermont, and
Maine and on- and off-site personal surveys in New Hampshire and Massachusetts. Visibility at
the study area, which is about one quarter mile northeast of the Mt. Washington summit, is
commonly impaired by regional haze that is largely a product of fossil fuel energy production.
We review the WTP/WTA debate in the next section, followed by a description of the surveys
and the data. The final section discusses the outcomes of these experiments and speculates on



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