Sequencing and Valuing Public Goods

Author: Carson R.   Flores N.E.   Hanemann W.M.  

Publisher: Academic Press

ISSN: 0095-0696

Source: Journal of Environmental Economics and Management, Vol.36, Iss.3, 1998-11, pp. : 314-323

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Abstract

This paper establishes several propositions concerning the importance of context in valuing public goods. It first provides necessary and sufficient conditions for the value of a public good to be independent of context. Utility-constant valuation sequences are considered where public goods are systematically made available or taken away. For the case of strict Hicksian substitutes, willingness to pay for an increase in one of the public goods is strictly decreasing the farther out in a sequence it is valued. For the destruction of public goods the reverse is true for willingness to accept compensation. Sequencing has opposite implications for the assessment of the benefits of providing public goods than for the assessment of the damage from destroying them.