HOW LARGE IS THE EXTENT OF THE MARKET FOR PUBLIC-GOODS - EVIDENCE FROM A NATIONWIDE CONTINGENT VALUATION SURVEY

To assess the extent of the geographic area over which to sum vertical ly the public-good benefits of removing two dams and restoring salmon populations, households were surveyed throughout the US. Households we re asked a dichotomous-choice contingent-valuation question regarding their willingness to pay higher federal taxes for ten years to remove the dams and restore salmon populations. While the distance from the s ite of the dam removal is statistically significant and negative in th e legit willingness-to-pay equation, benefits per household fall off s lowly and the extent of the market is nationwide. With a majority of h ouseholds living outside the immediate area of the dam, the rest of th e US households reflect 97% of the national benefits for dam removal a nd salmon restoration. This example suggests that failure to account f or the national public-good market can result in a serious underestima te of the value of public goods.