eia-lesson 11

The methodologies of
economic evaluation III
You pay nothing if u ask ... And
give an answer?
Expression method of the preference
The revelation methods of the preferences
base the evaluation on the observation of
the individuals behavior according to the
conditions of choice  particularly, the real
and ‘indirect’ market prices
The expression methods of the
preferences ask directly the individuals
to evaluate in opportune conditions a
environmental property
The method of the contingent evaluation is
based on -direct, telephone, postal interviewwith the property users.
The users can be individualized according to
their frequency for environmental property to
be appraised...
… That on the base of another
for instance
residence in the commune in
which the property is found
The contingent evaluation is not
confined to consider the real use,
and therefore to measure the value
of direct or indirect use.
It can also concern the potential use
value of option
and even the distinguished interest
value of existence use
The contingent evaluation generally
consists in the revelation of availability
to pay (DAP) for safeguarding (or for the
production, or for the restoration, etc.)
of a determined environmental property
on a representative sample of the users
- recent or potential -.
On the base of the samples data it becomes
possible to calculate the average availability
to pay that can be extrapolated to the whole
population multiplying such value by the
total number of the users.
So we obtain an estimation of the
total value assigned to the
environmental property from the
concerned population.
A possible application of the method can
propose to the users different sceneries
where they considered levels of safeguarding
-production, restoration- property
alternatives, distinguishing particularly
between users and non users.
We are able to obtain a detailed estimation
of the curves of question observing how the
availability to pay changes for the different
levels of property endowment determining
then the average curve of question and that
total for the whole population.
In general, the individuals manifest a certain
availability to pay for an ‘essential’ level of
property endowment, while availability is
progressively grown weak for ulterior
increases of the endowment level.
The curves of reconstructed question are
therefore tilted negatively. Besides,
availability to pay of some users is generally
superior to that of the non users.
Positive availability to pay of the non users is
an index of value of option and/or value of
existence and it can be also the signal of an
altruistic predisposition.
Any of these aspects can be noticed through
methodologies that trust entirely individuals
choices of market!
This is true and great reason for those natural
resources, for those who don’t have natural
resources and for those who don’t have
sense to speak of value of use but that can
be thought very important and of big value...
… Think of the Anta tide or
the Amazonian forests!
The contingent evaluation can furnish a base
for any type of cost-benefit analysis that
has an environmental impact, requiring only
that the individuals interested have enough
information to be able to manifest their
own availability to pay.
It is possible to perform a contingent
- in terms of availability - to accept a
compensation in front of missing
production of a benefit…
... Or to the production of a
damage in terms of available
environmental resources.
Overestimate of availability to pay
Relationship between availability to pay and
to accept
Relationship between ‘parts’ and ‘all’
Payment methods
Initial offer
The method of the contingent evaluation
is based on the hypothesis that the
individual is able to appraise correctly
his availability to pay so as they can
prepare a determined benefit.
The application of payment
represent a hypothetical
situation: how they can be
sure that the individuals are
indeed prepared to pay the
declared sums?
And if it was not, what meaning
such declarations of availability
would have?
The available experiments show that
when the individual is asked to pay the
sums, the real payments are around
70-90 % of the declared sums.
If from one side the real availability to pay is
underestimated the paid percentage results
to be superior to those that many researchers
had foreseen..
As being said ,the availability to pay for a
benefit and availability to accept a compensation
for a damage should be equivalent formulations
that achieve the same results from the point of
view of the evaluation of the resource.
The “price” that will be paid for
having it should be equal to the
compensation required for not
having it.
The empirical studies show that the
DAA overcomes highly the DAP
This shows that the individuals
are not reliable in their
Also it is discovered that this
anomaly is largely explained from
the cognitive mechanisms that
govern the human decisions…
... For the production of a damage
- the worse of the recent situation has a superior weight in comparison to
missing production of a benefit - missing
improvement of the recent situation - …
.... Explain the discrepancy
between the two measures.
On the other hand we must take care that
the questions on the DAP and those based
on the DAA require from the individuals
mental calculations of enough complex
evaluation that not all has the patience or
the desire to do!
It is necessary therefore to recognize
that at least the discrepancy between
the two evaluations could reflect some
inaccurate answers
The “Part” and the “All”
It is noticed that if the individuals are
asked about the DAP for the
safeguarding of a resource  for
instance, a lake that takes part of a
wide resource  for instance, a lake
The evaluation performed for ‘partial’
property (the single lake) results very
similar to those of ‘total’ property (the
whole lake region).
… It is Rather strange like
criterion of evaluation!
The individuals tend to organize their budget
by categories, and therefore if the amount
once increased over the budget it will affect
the ability to buy something else!
The problem can be surrounded
- Remember the individuals that they can
be called to appraise more
environmental property, and for each of
them it must be determined the DAP
- Choosing only groups of wide
environmental property to be
… Always underlining that this is
performed on the base of the
proper income, whose amount is
well precise value to be limited!
But the individuals are able to appraise
whole wide and complex property as a
whole lake region?
And how much does their evaluation
reflect their own preferences and how
the desire of “well to show up” to their
eyes and of the interviewer?
The formulation of the evaluation
questions should refer to a specific
payment tool, to make the question
more “concrete” ...
… And to avoid the problem of
different answers regarding the mean of
The DAP of many individuals is for
example high if the payment is done
through taxes rather than through a
direct contribution!
The better rule is to choose the payment
mean that would be presumably selected
from the majority of the individuals.
In some cases, in the direct
interviews, the DAP is determined
from an initial payment application for
a precise sum that varied up to
determine the exact sum that the
individual is prepared to pay.
Yet, the result seems to depend
substantially on the amount of the initial
This is a serious problem for
which a satisfactory solution is
not found till now.