n South African Journal of Economic and Management Sciences - Is there a need to audit CVM applications to the environment? : environmental and ecological economics




It is well known to economists that the contingent valuation method (CVM) fills an important gap in valuation technology with respect to managing public environmental goods and services. Currently acceptable CVM practice requires many challenging steps to be followed. One of these important steps is that of assessing the theoretical validity of the household willingness to pay (WTP) finding, but it is far from being a sufficient basis for reaching conclusions as to the credibility predicted community willingness to pay for environmental services. This paper reviews the step of testing for theoretical validity and challenges its importance relative to other more fundamental assessments of the credibility of the predicted household and societal WTP. This paper then deduces that an external "audit" assessment may be necessary, in addition to an internal one, for these values to attain credibility in the determination of public choices.


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