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.
The Contingent Valuation Method
CVM is a method in which respondents are asked, via a carefully formulated survey, how much they are willing to pay for conservation of a natural, cultural or environmental good, under hypothetically created market circumstances (de Boer et al, 1997). The survey has to be set out carefully, according to the NOAA guidelines (National Oceanic and Atmospheric Administration) and should consist of:
- A short list of questions which can be answered easily and help to clarify the subject for the respondent.
- A detailed description of questions regarding knowledge and experience on the change in nature or environment that has to be valued.
- A description of the future situation in which the respondent can clarify how much a certain change in nature is worth to him or her. From this series of questions the willingness to pay can be derived.
- A series of questions on features of the respondent, such as common values, recreational use of nature, income, family situation, level of education, age, membership of nature NGOs.
The NOAA guideline (Arrow et al, 1993) is an international guideline for the application of CVM. The guideline drescribes pre-testing of the questionnaire, personal clarification and abstraction of the results and reporting of the characteristics of the population, including the type of bidders (bidders, non-bidders or protest bidders that do not agree on this type of research).
CVM can be applied to several goods and services, provided that they meet the following criteria:
- the good or service has to be easily recognisable to the respondent;
- the respondent has to feel responsible for the good or service that he/she is asked to pay for;
- the good or service has to be marked (in terms of time and space) in order to create a proper definition/ picture;
- the number of people that are willing to pay has to be known in advance, or should be abstracted in the questionnaire.
Pros and cons of CVM
The most important benefit of including non-use values of nature by means of CVM is that they get included in the monetised overall cost-benefit analysis. This can contribute to nature-friendly (BwN) solutions. Yet, there are some problems in practically applying this method in the assessment of different projects:
- Does the questionnaire reflect a proper market situation for nature values?
For a respondent it is really difficult to estimate what a certain ecosystem in a marked project area is worth to him/ her (although existing CVM studies are based on these estimates). It gets easier for the respondent to define his/ her willingness to pay, however, when he/ she knows what amount of money is needed to preserve or develop these nature values. This approach is elaborated in the practical applications described below.
- How many people are willing to pay for certain nature values?
What is the maximum distance to the project area? And how does this relate to the scale of the project (area)? This is a common problem when trying to apply existing CVM results to new project situations. The CVM method focuses on the price tag and not on the number of households that are willing to pay. In the practical applications, the distance-decline function of the willingness to pay is determined. This can help to estimate the number of households.
- Can the results of previous questionnaires be transferred to other project areas? How does this relate to differences in project scale, regional diversity, and project definitions?
This problem is difficult to overcome. In principle, it can be overcome by building up a large database with all different ecotypes, ecotype quality indicators and project scales. In the framework of the development of this tool it was not possible to build up such a database. In the practical applications it was found out that an internet survey can be used in the application of the CVM technique. This can reduce the research effort to a large extent and speed up the implementation of the method.
- Does the method incorporate a proper distinction between the nature values at stake?
The nature values of existing CVM studies mostly concern nature types and do not value quality aspects. Also in the ‘practical applications’ study the latter was not done in detail. This was partly because detailed information about nature values was not yet available. But it was also because it is quite difficult to communicate nature quality aspects in a questionnaire. Including nature quality aspects is not easy, it requires background knowledge that is lacking among (quite a large) part of the population, whereas everybody should be able to fill in the questionnaire in order to get a proper representation of the population. CVM therefore seems to be less suitable for projects focusing on nature quality aspects. An alternative method to be used in those cases is the ‘Including natural value in decision-making – Nature Index’ tool, as there are indications that the willingness to pay (WTP) for non-use nature values is strongly linked to the conservation of biodiversity indicated by the nature points that result from the nature index tool. In other words, the amount of nature points indicates the non-use value of nature. This leaves nature values still non-monetised, which makes them difficult to include in an overall SCBA. They can be included as a quantified ‘pro memori’ (p.m.) post. If the nature points are the only effect that is not monetised, the results can be presented via an analysis of the cost-efficiency of generating nature values, expressed, for instance, in euro/ nature point.