Scandinavian Working Papers in Economics

Working Papers,
National Institute of Economic Research

No 85: Applying the Contingent Valuation Method in Resource Accounting: A Bold Proposal

Mattias Boman , Anni Huhtala , Charlotte Nilsson , Sofia Alroth , Göran Bostedt , Leif Mattssson and Peichen Gong
Additional contact information
Mattias Boman: Southern Swedish Forest Research Centre, Swedish University of Agricultural Sciences, Postal: Box 49, SE-230 53 Alnarp, Sweden,
Anni Huhtala: Environmental Economics, MTT Economic Research, Postal: Luutnantintie 13, FI-00410, Helsinki, Finland
Charlotte Nilsson: National Institute of Economic Research, Postal: P.O. Box 3116, SE-103 62 Stockholm, Sweden
Sofia Alroth: Environmental Strategies Research Group, Postal: Box 2142, SE-103 14 Stockholm, Sweden
Göran Bostedt: Dept. of Forest Economics, Swedish University of Agricultural Sciences, Postal: SE-901 83 Umeå, Sweden,
Leif Mattssson: Southern Swedish Forest Research Centre, Swedish University of Agricultural Sciences, Postal: Box 49, SE-230 53 Alnarp, Sweden,
Peichen Gong: Dept. of Forest Economics, Swedish University of Agricultural Sciences, Postal: SE-901 83 Umeå, Sweden,

Abstract: Resource accounting involves complementing conventional national accounts with changes in environmental and natural resource capital valued in monetary terms. By adopting the Ramsey device of "Bliss", we derive a theoretically consistent environmentally adjusted NDP (Net Domestic Product) measure. The measure indicates sustainable future consumption that an economy can support along the optimal path approaching "Bliss", or "sustainability" determined by national environmental goals. The goals accepted by the Swedish parliament are used to show the applicability of the contingent valuation method to elicit non-market benefits of an economy approaching the sustainability targets. We investigate the compatibility of marginal willingness to pay measures derived on hypothetical markets with market prices used in national accounts. Finally, we raise certain issues of survey design, e.g. to take advantage of the CVM as a democratic device for value estimation over time.

31 pages, May 27, 2003

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