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Building with Nature Guideline > Toolbox > Environmental Economics > Contingent Valuation Method for Nature Valuation

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Contingent Valuation Method for Nature Valuation

Type: Method

Project Phase: Initiation, Planning and Design

Purpose: Creating a market-price for the valuation of an ecosystem through people's willingness to pay

Requirements: Experience with survey-development and -analysis

Relevant Software: Statistical Programme

About

Contingent Valuation is a survey-based, economic technique for the valuation of non-market resources, such as environmental preservation or the impact of contamination. In this methodology people's willingness to pay is determined via a hypothetical market mechanism. With the contingent valuation method for nature validation, non-financial values in BwN-projects can be expressed in monetary terms in order to include them in a Socio-economic Cost Benefit analysis (SCBA). This is important as a SCBA gives a strong argument to start a project when the benefits for society exceed the costs. 

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How to Use

The Contingent Valuation Method (CVM) can be used to determine the non-use value of nature. This method is not new, as it is has been applied in a variety of studies all over the world. In this tool description a short introduction of the CVM is given, indicating the applicability of this method for valuating the non-use value of nature. The most important difficulties in applying the method are discussed, including the lessons learned from the ‘practical application’ in the Tidal flat nourishment - Galgeplaat, NL case.

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Practical Application

As part of the Building with Nature programme, the willingness to pay (WTP) has been determined by means of CVM for the Eastern Scheldt sand deficit case (Ter Haar, 2011). The overall goal of the thesis was to obtain the average willingness to pay (WTP) of people for different strategies to cope with the effects of the sand deficit. Secondary goals were to find out if:

  • the imitation of a market situation is an effective strategy;
  • distance-decline in the willingness to pay can be abstracted;
  • (cost-effective) internet survey yields to reliable results.

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References

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