Rethinking the rithmetic of damage assessment
Journal Article
·
· Journal of Policy Analysis and Management; (United States)
In what may be the largest privately sponsored evaluation of an economic methodology, the Exxon Corporation commissioned research on using contingent valuation (CV) to estimate people's willingness to pay for specific types of environmental resources. This article considers one aspect of this research-using [open quotes]multiplication[close quotes] to gauge the plausibility of CV estimates of people's values for environmental resources. Multiplication is simply approximate aggregation. For example, suppose one estimates an [open quotes]average[close quotes] household's willingness to pay (WTP) for avoiding oil spills off the coast of Washington. One approach for measuring the aggregate WTP can be derived by multiplying the per-household estimate by the number of households in the population intended to be represented by the original average. Nothing in this approach to aggregation is unique to contingent valuation. It is commonplace in the benefit transfers that frequently provide aggregate benefit measures for benefit-cost analyses involving what are often regarded as public goods provided (or protected) by the policy being evaluated. The unique feature of this strategy is its appeal to the magnitude of a number as a gauge for plausibility. The author argues that such calculations provide no basis for judging the plausibility of an estimate of what a representative individual (or household) would be willing to pay for some change in an environmental resource.
- OSTI ID:
- 6164749
- Journal Information:
- Journal of Policy Analysis and Management; (United States), Journal Name: Journal of Policy Analysis and Management; (United States) Vol. 12:3; ISSN 0276-8739; ISSN JPAMD7
- Country of Publication:
- United States
- Language:
- English
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