Contingent Valuation of Environment in Developing Regions

Contingent Valuation is often used to measure the worth of environmental resources. A contingent market is a hypothetical market which assumes that the respondents will behave as they would in a real market, and asks them directly what they are willing to pay (WTP) for a change in the provision of an environmental good or service or what they are willing to accept (WTA) to forego the change. If respondents were to clearly understand the change being offered and answer truthfully, Contingent Valuation would ideally estimate the true value of the environmental good. This paper explains the simple micro-theoretic principle of contingent valuation. It discusses some problems in its application and explores why it is a preferred method for environmental valuation in less developed nations