Efficient estimation methods for closed-ended contingent valuation surveys

Abstract

Closed-ended contingent valuation surveys can be very useful in the evaluation of non-market resources. Respondents merely state whether they would accept or reject a hypothetical threshold amount, either as payment for giving up access to the resource, or as a fee for its use. We develop a maximum likelihood procedure which exploits the variation in the threshold values to allow direct and separate point estimates of regression-like slope coefficients and error standard deviations (without truncation bias). Our illustration uses data from a survey of recreational fishermen to examine factors which influence individuals’ willingness-to-pay.