Environmental and Resource Economics

, Volume 9, Issue 2, pp 225–238 | Cite as

Do existence values for cost benefit analysis exist?

  • M. Common
  • I. Reid
  • R. Blamey
Article

Abstract

The use of the contingent valuation method to generate estimates of existence value for input to cost benefit analysis requires that individuals have utility functions defined over the relevant arguments. The validity of the assumption that the required utility functions generally exist has been questioned. It has been argued that some individuals will respond on the basis of lexicographic preference orderings. It has also been argued that some individuals do not consider that market, or individual willingness to pay, criteria are appropriate where existence value type issues are at stake. The paper considers survey evidence bearing upon these arguments. It is concluded that the evidence is consistent with the view that it is incorrect to proceed on the assumption that individuals generally satisfy the assumptions required for the existence of existence values for use in cost benefit analysis.

Key words

existence values contingent valuation utility functions lexicographic preferences 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. ABARE (1991)Valuing Conservation in the Kakadu Conservation Zone: Submission to the Resource Assessment Commission, Australian Government Publishing Service, Canberra.Google Scholar
  2. Arrow, K., R. Solow, E. Leamer, P. Portney, R. Radner and H. Schuman (1993), ‘Report of the NOAA Panel on Contingent Valuation’,Federal Register Vol. 58, No. 10, pp. 4601–4614, Washington DC.Google Scholar
  3. Bennett, J. W. (1984), ‘Using Direct Questioning to Value the Existence Benefits of Preserved Natural Areas’,Australian Journal of Agricultural Economics 28, 136–152.Google Scholar
  4. Blamey, R. K. (1994), ‘Consumer versus Citizen Responses in Environmental Valuation Surveys: Clarification and Empirical Evidence’. Mimeo, Centre for Resource and Environmental Studies, Australian National University, Canberra.Google Scholar
  5. Blamey, R. K., M. Common and J. Quiggin (1995), ‘Respondents to Contingent Valuation Surveys: Consumers or Citizens?’,Australian Journal of Agricultural Economics 39, 263–88.Google Scholar
  6. Blamey, R. K. and M. Common (1994), ‘Sustainability and the Limits to Pseudo Market Valuation’, in J.C.J.M. van den Bergh and J. van der Straaten, eds,Concepts and Methods for Sustainable Development: Critique and New Approaches, Island Press, New York.Google Scholar
  7. Blamey, R. K. and M. Common (1995), ‘Symbols and Attitude Expression in Contingent Valuation Responses’,First Conference of the Australia New Zealand Society for Ecological Economics, Coffs Harbour.Google Scholar
  8. Brennan, G. and L. Lomasky (1993),Democracy and Decision: The Pure Theory of Electoral Preference, Cambridge University Press, Cambridge.Google Scholar
  9. Deaton, A. and Muellbauer, J. (1980),Economics and Consumer Behaviour, Cambridge University Press, Cambridge.Google Scholar
  10. Edwards, S. F. (1986), ‘Ethical Preferences and the Assessment of Existence Values: Does the Neoclassical Model Fit?’,Northeastern Journal of Agricultural and Resource Economics 15, 145–159.Google Scholar
  11. Edwards, S. F. (1992), ‘Rethinking Existence Values’,Land Economics 68, 120–122.CrossRefGoogle Scholar
  12. Hanley, N. and Spash, C. (1992),Cost Benefit Analysis and the Environment, Edward Elgar, Aldershot.Google Scholar
  13. Kirchgässner, G. and W. W. Pommerehne (1993), ‘Low-Cost Decisions as a Challenge to Public Choice’,Public Choice 77, 107–115.CrossRefGoogle Scholar
  14. Mitchell, R. and R. Carson (1989),Using Surveys to Value Public Goods: The Contingent Valuation Method, Resources for the Future, Washington D.C.Google Scholar
  15. Quiggin, J. (1991), ‘Referendums and Pseudo-Referendums in Contingent Valuation’, Mimeo, Department of Economics, Research School of Social Sciences, Australian National University, Canberra.Google Scholar
  16. Reid, I. (1993), ‘An Investigation into the Appropriateness of Consumer Demand Theory as the Basis of Contingent Valuation’. Honours Thesis, School of Resource and Environmental Management, Australian National University, Canberra.Google Scholar
  17. Sagoff, M. (1988),The Economy of the Earth, Cambridge University Press, Cambridge.Google Scholar
  18. Spash, C. L. and N. D. Hanley (1995), ‘Preferences Information and Biodiversity Preservation’,Ecological Economics 12, 191–208.CrossRefGoogle Scholar
  19. Stevens, T. H., J. Echeverria, R. J. Glass, T. Hager and T. A. More (1991), ‘Measuring the Existence Value of Wildlife: What Do CVM Estimates Really Show?’,Land Economics 67, 390–400.CrossRefGoogle Scholar

Copyright information

© Kluwer Academic Publishers 1997

Authors and Affiliations

  • M. Common
    • 1
    • 2
  • I. Reid
    • 3
  • R. Blamey
    • 4
  1. 1.Centre for Resource and Environmental StudiesAustralian National UniversityCanberraAustralia
  2. 2.Department of Environmental Economics and Environmental ManagementUniversity of YorkYorkAustralia
  3. 3.Division of Entomology, Commonwealth Scientific andIndustrial Research OrganisationCanberraAustralia
  4. 4.Bureau of Tourism ResearchForrestAustralia

Personalised recommendations