Stated preference valuation
RICS Insight Paper ‘Value of natural capital - the need for chartered surveyors’ published by the Royal Institution of Chartered Surveyors in 2017 suggests that stated preference valuation methods rely on the stated preferences of stakeholders. These may be drawn from a key group, or from a more general population. They are preferred for the estimation of non-use values such as altruistic, bequest and existence values.
Two principal approaches are used:
Where contingent valuation is: ‘An approach that asks respondents direct questions about their willingness to pay (WTP) for various environmental options. Alternatively, respondents may be asked what price they would be willing to accept (WTA) for the loss of an option… Contingent valuation has not always enjoyed a good press, and it is important that samples are large enough to give meaningful results, the choices are placed in an appropriate context and respondents are carefully reminded that their own financial resources are limited.’
Choice modelling is: ‘often done in focus groups (group approaches). When the approach can be described as deliberative, respondents are asked to choose between options that have different costs.’
Contingent valuation and choice modelling can be combined.
Other approaches to valuation include:
- Revealed preference methods.
- Value transfer/benefit transfer.
NB The Green Book, Central Government Guidance On Appraisal And Evaluation, Published by HM Treasury in 2020, suggests: ‘Stated preference is a technique for eliciting values for something that is not-marketed, and is derived from responses to expertly designed surveys.’ See also willingness to pay and willingness to accept.
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