Several different practical methods, which can be used to measure the willingness to pay for public goods (bads), have been suggested in the literature. This chapter presents the most frequently used methods (survey techniques, hedonic approaches, and travel costs methods). Each of these methods has its own serious weaknesses. However, apart from a few exceptions, no comprehensive discussion of these problems will be undertaken here. Instead the reader is referred to the references given below which provide an extensive discussion of the shortcomings associated with the different methods. In addition Fisher and Peterson (1976) and Freeman (1979a) present informative reviews of the environment in economics. Comparisons of methods for valuing environmental commodities can be found in Brookshire et al. (1981), Johnson et al. (1983), Knetsch and Davis (1966), Mäler (1974), Shapiro and Smith (1981), and Schulze et al. (1981).

Survey data

Direct demand-revealing methods for public goods have been suggested and also used by several authors. Roughly speaking these approaches collect preference information by asking the consumers how much they are willing to pay for some change in the provision of a public good or an environmental service, or about the minimum compensation consumers require if the change is not carried out. For example, the following questions may be asked of the respondent

1. (CV) Suppose the provision of z is increased from z0 to z1. What is the most you would be willing to pay for this increase?

2. […]