Rehabilitating the willingness to accept measure in contingent valuation research

Contingent valuation is a method for assigning a monetary value to goods that are not traded in the market, and which therefore do not posses “market value” in the strict sense of the term. The method involves the use of survey questionnaires to elicit respondents' “ willingness to pay” (or “willingness to accept ” payment) for goods, services, programs and policies. The most common and important use of contingent valuation has been for estimating the value of public goods—especially environmental resources.; Early in the development of contingent valuation methods, influential researchers in the field recommended that contingent valuation studies should be conducted using questions phrased in terms of willingness to pay rather than willingness to accept. This recommendation has remained intact since 1986, and nearly all subsequent studies have measured WTP in spite of the fact that WTA is regarded as the appropriate measure for most environmental damage assessments. To the extent they yield different estimates of value, the current preference for using WTP rather than the WTA questions is a source of pernicious bias in contingent valuation research.; This paper seeks to test the notion that questions phrased in the WTA format should not or cannot be used successfully in contingent valuation research. The argument is developed in three stages. First, a meticulous re-examination of the recommendation to avoid WTA questions in contingent valuation research will show that the decision was made hastily and based on inadequate theory and evidence. Next, the viability of WTA questions in contingent valuation research is discussed in light of current (1) theoretical and then (2) empirical evidence.; The research presented in this paper indicates that WTA is as accurate a subjective measure of value as WTP, and that carefully designed WTA questions can be used successfully in contingent valuation research. This holds important implications for public policy, especially environmental policy since selecting the appropriate measure and interpreting the results correctly is fundamental to assessing the value of an environmental resource, or redress for damage done. The current practice is causing the value of environmental (and possibly other) assets to be seriously understated.