Monetary Valuation of the Environment

In this chapter, we first give an overview of the idea and methods of monetary valuationMonetary valuation of the environment and provide the related microeconomic foundations. In the following discussion, we focus on the contingent valuation methodContingent valuation method (CVM) through which agents’ preferences for environmental quality are elicited by surveySurvey questions. The chapter discusses the conceptual and practical problems of CVM studies, focusing on the many decisions that evaluators have to make in designing such studies. The limitations of this technique are pointed out, and it is shown how the quality and validity of CVM studies can be improved by observance of some thoughtful guidelines.