Modelling the non-market environmental costs and benefits of biodiversity projects using contingent valuation data

CV studies rarely ask willingness to accept (WTA) questions, yet there are a range of environmental projects where there are likely to be potential lo sers as well as gainers. This paper presents evidence from six biodiversity projects that the inclusion of contingent compensation payments from those respondents who preferred the status quo can substantially reduce net proj ect benefits, even when the proportion of losers is relatively small. A sta tistical model for estimating the mean welfare measure from dichotomous cho ice data which allows for both positive WTP, zero WTP, and WTA is described . As many environmental projects are likely to create both gainers and lose rs, we recommend that CV analysts give serious consideration to the collect ion and analysis of WTA data otherwise they risk generating biased estimate s of project benefits.