ABSTRACT
Estimating the potential benefits from proposed changes to environmental policies may require the use of survey techniques, particularly when the public’s preferences for these goods are significantly driven by non-use values. The contingent valuation (CV) method is a survey technique in which respondents supply information about their willingness to pay (WTP) for proposed policy options after receiving a description of how the policy changes are likely to affect such environmental goods as air quality, water quality, or amount of open space available. Often, questions about willingness to pay are phrased in the form of hypothetical referendum questions, such as, “If your cost of program X were $D, would you vote for program X?” Referendum questions have the advantage of cognitive simplicity and a market-like “take-it-or-leave-it” setting that is familiar to the respondent. The use of referendum questions in CV surveys was also recommended by the National Oceanic and Atmospheric Administration’s (NOAA) Panel on Contingent Valuation. In addition to the cognitive reasons cited above, the panel cited the presumed lack of incentive for subjects to strategically misrepresent their preferences as a reason for recommending their use (Arrow et al., 1993).
