Valuing non-market goods using contingent valuation

Contingent valuation is a technique being developed by economists for the valuation of environmental commodities not traded in markets. This paper discusses the major problem areas associated with this method of value estimation. These comprise bias (strategic, hypothetical and design biases); the discrepancy between willingness-to-pay and compensation demanded; the aggregation procedure; the choice of question format; and non-use values. Some evidence from comparative studies is reported, and comments made on the accuracy of contingent valuation answers, Finally, the conditions under which contingent valuation seems to operate best are set out