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What are the limitations of the Stated Preference method to measure demand with environmental goods? (use...

What are the limitations of the Stated Preference method to measure demand with environmental goods? (use an example).

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Answer : Stated preference method means that valuation of non market resources which does not have price and has only utilies for us. These environment good such as view of mountain has been priceless and it has been not directly sold in the market.

Limitations of stated preference methods are :

  • It is survey method so no actual result has been determined.
  • Proper willingness to pay for certain environment good to maintain proper balance is not accurate.
  • Costly and unrealistic method to measure the demand.
  • Properly analysis has been done.

Example : Stated preference method has been used to analysis for analysis how much willingness a person have in purchasing a particular product or service. How we determined that how much people pay for seeing the beautiful view of the mountains and it is unrealistic approach.

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