Immeasurable Metrics for Irrational Decisions: Expanding the Usage of Contingent Valuation

29 Pages Posted: 7 Mar 2013 Last revised: 9 Mar 2013

Date Written: March 6, 2013

Abstract

Resource scarcity underlies all environmental policy. We need to prioritize the finite manpower and dollars available for preservation and restoration of species and their habitats. And, as climate change continues, the need for more exact measurements in order to make more informed decisions will likely increase. This will be even while our legal and governmental systems will be increasingly stressed by exigent circumstances and other pressing problems. Much of environmental law and policy has to do with things that aren’t necessarily bought, sold, or consumed in markets. For example, no one buys or sells the cleanliness of a stream. The fish in that stream are a good that might be bought or sold, and therefore their value (to humans) can be readily measured. To those interested in the economics of ecosystems, this is called the fish’s “use-value”. But the stream’s cleanliness, as an independent fact -- and the accompanying threat to the fish were that cleanliness to disappear -- are not so easily measured. These and other “non-use values” are a vital, if somewhat mystical, fact of environmental policy. People undoubtedly perceive and recognize such value. And so it becomes important to use a valuation method wherein you can approximate the “non-use” value of such things. Contingent valuation (“CV”, hereafter) is one such method of valuation. This paper makes the case for CV as a key tool for environmental law and policy refinement and reform, suggesting an expanded role for CV.

Keywords: contingent valuation, environmental law

JEL Classification: K32, Q29, K00

Suggested Citation

Morenz-Harbinger, Mark A., Immeasurable Metrics for Irrational Decisions: Expanding the Usage of Contingent Valuation (March 6, 2013). Available at SSRN: https://ssrn.com/abstract=2229311 or http://dx.doi.org/10.2139/ssrn.2229311

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