Natural Resources: Assessing Nonmarket Values through Contingent Valuation

This report provides background on the nonmarket value of natural resources and the strengths and weaknesses of contingent valuation for estimating such values.Nonmarket values are increasingly being recognized as important in natural resource damage assessments and decisionmaking.This report describes contingent valuation, a survey technique often used to estimate nonmarket values, and examines its strengths and weaknesses.This report will not be updated. Natural Resources: Assessing Nonmarket Values through Contingent Valuation SummaryThe role of nonmarket values in natural resource damage assessments and decisionmaking is being increasingly recognized.Numerous statutes direct federal agencies to provide goods and services efficiently, often necessitating a measure of nonmarket values.However, legislative issues have focused on damage assessment under Superfund, because the tax authorization under this law expired at the end of 1996, and thus Congress may debate its reauthorization.Including nonmarket values in damage assessment and decisionmaking can be highly controversial.Proponents assert that excluding (not estimating) such values understates total values affected, often substantially, and biases decisions in favor of development.Critics counter that the measurement methodology is weak, and that such measures are not comparable to traditional measures of utilitarian values, because resource use generates economic and social benefits beyond those measured by price and volume (the traditional measures of utilitarian value).Thus, they argue that including nonmarket values can lead to arbitrary assessments of damage.