Valuation of environmental goods: Correcting for bias in contingent valuation studies based on willingness-to-accept

The willingness-to-accept (WTA) measure of value is often subject to a syst ematic, large bias, making it unsuitable for use in contingent valuation st udies. However, for the valuation of environmental goods, in many cases WTA rather than the willingness-to-pay (WTP) is the relevant measure. The pape r proposes that, by using a composite-error model for the estimation of the valuation function, a correction can be made for the bias in reported WTA. To illustrate the proposed methodology, it is applied to the data of the B rookshire-Coursey (1987) study of alternative tree density in Troutman Park , Fort Collins.