Threatened and Endangered Species Valuation: Literature Review and Assessment

Excerpt

Economic valuation of threatened or endangered (T&E) species has produced value estimates for over forty species, consisting primarily of mammals, fish, and birds. Because the economic value of T&E species cannot be reflected by a market price, the majority of these studies have relied on the contingent valuation (CV) method. The CV method estimates the economic value of a T&E species by placing survey respondents in a hypothetical market setting created for a particular species, or suite of species, and asking them their willingness to pay to either avoid a total loss of a population (prevent extinction) or increase the population’s size. Respondents pay for, or pay to prevent, the population change described in the hypothetical market through a specified payment vehicle. Often the payment vehicle is a contribution to a preservation or trust fund, though other payment vehicles include increased taxes, increased commodity prices, lifetime memberships to an organization, and increased park fees. Additionally, the frequency of payment and the payment amount are specified in the hypothetical market. Some studies ask respondents an open-ended question concerning their maximum willingness to pay, while other studies use a dichotomous choice format, asking respondents to say yes or no to a specified bid amount(s). While estimating value through hypothetical markets and unobserved behavior is not without critics (see Diamond and Hausman 1994 for a critical review of the CV method), contingent valuation has been upheld by the US District Court of Appeals (Department of Interior 1989), and has been approved for use in cost-benefit analyses (US Water Resources Council 1983). In addition, the NOAA Panel on Contingent Valuation (Arrow et al. 1993) found the method to produce credible value estimates when specific survey development and implementation protocols are followed. (Click here for the paper)

Source : Not published.