Valuing the environment through contingent valuation

T he ability to place a monetary value on the consequences of pollution discharges is a cornerstone of the economic approach to the environment. If this cannot be done, it undercuts the use of economic principles, whether to determine the optimal level of pollution or to implement thisvia Pigouvian taxes or Coase-style liability rules. Sometimes, the valuation involves a straightforward application of methods for valuing market commodities, as when sparks from a passing train set fire to a wheat field. Often, however, the valuation is more difficult. Outcomes such as reducing the risk of human illness or death, maintaining populations of native fish in an estuary, or protecting visibility at national parks are not themselves goods that are bought and sold in a market. Yet, placing a monetary value on them can be essential for sound policy.