ABSTRACT
CVM measures value directly by asking respondents’ their willingness to pay, using a specified payment vehicle (e.g., a change in the electric bill or in taxes), to avoid or obtain a particular change. The question format could be open-ended (i.e., how much are you willing to pay . . . ?) or dichotomous-choice (i.e., would you be willing to pay $X amount: yes or no?). Mitchell and Carson
describe CVM as a “versatile tool for directly measuring a range of benefits for a range of goods consistent with economic theory.” Unlike revealed preference techniques, which are limited to valuing existing goods at existing quantity and quality levels, CVM can be used to measure both use and nonuse values of goods that may not presently exist. As a result of compensation claims associated with the Exxon Valdez oil spill in Prince William Sound, Alaska, the National Oceanic and Atmospheric Administration (NOAA) convened a panel to conduct hearings on the validity of CVM.
