Experimental contingent values for reducing environmental damage from oil spills

Abstract

Recently, government agencies, acting as trustees for natural resources, have sought substantial claims from potentially responsible parties for natural resource damages resulting from oil spills. Often, non-use damages, which involve losses suffered by people who never use the injured resources, constitute large components of these damage claims. To date, the only method used for measuring these non-use damages is contingent valuation (CV), which uses survey questions to elicit respondents expressed values for non-market goods. Because CV is the only method available for measuring non-use damages, its estimates need to accurately reflect the true damages. Our results indicate that CV does not provide accurate estimates of these values, which implies that CV is not sufficiently reliable for assessing non-use damages from oil spills. (As part of the same study, we conducted another experiment on valuing different levels of protection for migratory water-fowl in the central flyway, the results of which also indicate that CV does not yield accurate estimates of non-use values for damage assessments.).