Inferred valuation versus conventional contingent valuation: a salinity intrusion case study

Abstract

People's willingness-to-pay values may be inflated by a variety of influences (e.g. hypothetical bias), which means that stated preference validity tests remain relevant. Recently developed inferred valuation approaches may serve to identify and/or reduce inflated stated preference values. However, economic applications of inferred valuation approaches are relatively limited in the literature, and the evidence remains mixed. This paper examines farmers' willingness-to-pay for salinity intrusion mitigation programs in the Mekong River Delta of Vietnam using both conventional contingent and inferred valuation approaches. Inferred valuation estimates were as much as 31 per cent lower than conventional estimates of willingness-to-pay, and averaged about 24 per cent lower across the groups. We discuss these findings, and the role that commitment costs and provision point mechanism payment vehicles may play. Public policy implications for any future salinity intrusion mitigation program are also outlined.