Valuation of Environmental Goods: Correcting for Bias in Contingent Valuation Studies Based on Willingness‐to‐Accept

The willingness‐to‐accept (WTA) measure of value is often subject to a systematic, large bias, making it unsuitable for use in contingent valuation studies. However, for the valuation of environmental goods, in many cases WTA rather than the willingness‐to‐pay (WTP) is the relevant measure. The paper proposes that, by using a composite‐error model for the estimation of the valuation function, a correction can be made for the bias in reported WTA. To illustrate the proposed methodology, it is applied to the data of the Brookshire‐Coursey (1987) study of alternative tree density in Troutman Park, Fort Collins.