Question

Explain two potential problems involved in stated preference methods for environmental valuation. Use an example to explain what makes thismethod attractive despite the potential problems.

Answer 1

Preferential methods for the environmental valuations include:
1) contingent valuation method
2) hedonic pricing model
3) travel cost method
4) trade off game method
5) the costless choice method
6) Delphi method
7) replacement cost method
8) relocation cost method
9) opportunity cost method
10) cost benefit method.
the process in which monetary values are put on the environmental goods and services is known as environmental valuation.the methods provide an estimation of the value for a resource which are not very necessary willing to pay or accept the compensation at upper and lower values.the method which measures the willingness of the individuals to pay is mainly based on the contingent valuation method.the main focus is on the defining categorising and application of different techniques of environmental valuation that are applied in revealing the reference method values.