Existence value, contingent valuation, and natural resources damages assessment

The purpose of this paper is to review recent developments in economics and public policy with regard to environmental resources. We describe the traditional concepts of externalities, public goods, efficient property rights, and the more recent concept of existence values for wilderness areas and other natural resources. A feature is the inclusiveness of modem economic theory. We trace the development of economic approaches to estimating values. We briefly review approaches based on observable market behavior and contingent market responses. Contingent valuation plays a vital role in estimation because it is the sole technique available for estimating the potentially important existence values. Benefit-cost analysis for regulatory decisions and natural resource damages assessment for implementation of Superfund legislation are discussed. We conclude that estimates of existence values based on contingent valuation can be useful especially when the alternative is greater reliance upon an imperfect political process.