The Contingent Valuation Method 



The remainder of this chapter is designed to present an 

 accessible discussion of the contingent valuation method of 

 welfare calculation and the estimation of confidence intervals 

 around welfare estimates. 



The two most widely used methods for estimating net willingness 

 to pay for outdoor recreation are the contingent valuation method 

 (CVM) and the travel cost model (TCM) . These are also the two 

 general methods recommended by the U.S. Water Resources Council 

 (1983) for valuing recreation in federal cost benefit analysis. 



In the CVM approach individuals are directly surveyed as to their 

 willingness to pay for the services of a given resource 

 contingent on the existence of a hypothetical market situation. 

 This flexible technique has been applied to a wide range of 

 environmental and resource issues including air and water quality 

 changes, scenic beauty, and wildlife (Cummings, Brookshire and 

 Schultze, 1986) . The only limitation of the method is the 

 ability of the researcher to frame understandable questions and 

 the ability and willingness of the respondents to accurately 

 value the good or service. Bishop and Heberlein (1985) have 

 described six key methodological choices in a CVM application: 1) 

 target population, 2) product definition, 3) payment vehicle, 4) 

 question format, 5) method of analysis and 6) supplemental data. 

 The target population for this study is the direct users of 

 waterfowl hunting resources (Montana hunting license and 

 waterfowl stamp holders) while the product definition is a 

 waterfowl hunting trip. 



It is necessary to specify a payment vehicle. Mitchell and 

 Carson (1981) suggest two criteria for an appropriate vehicle: 

 realism and neutrality. For this study increases in waterfowl 

 hunting trip costs were used as the payment vehicle. This 

 vehicle presented respondents with a realistic and emotionally 

 neutral (as opposed to increases in taxes) payment method. 



The question format used in the CVM in large part also determines 

 the method of analysis to be used. The question format can be one 

 of three basic types. First, the open-ended CVM is the simplest 

 approach: respondents are asked their maximum willingness to pay 

 for the use of a given resource. This approach can be 

 administered at a low cost and is relatively easy to interpret. 

 A widely used alternative to the open-ended format is the 

 iterative bidding game where interviewers ask respondents for a 

 yes or no response to a specified bid amount. If the respondent 

 is willing to pay that amount the bid is raised in increments 

 until the persons maximum willingness to pay is reached. 

 Iterative bidding is a costly question format which requires face 

 to face or telephone contact between interviewers and 

 respondents . 



