This study compares the welfare measures estimated from two different stated choice methods, contingent valuation method and choice modelling. The welfare measures are inferred from different assumptions about the utility function definition, like allowing for second-order interactions. The application involves the estimation of non-market values from alternative afforestation programmes in the Northeast of Spain. The two techniques are found to yield equivalent estimates of welfare change for identical afforestation programmes when the fully specified utility functions are used as the basis for the calculations. When elements of the utility functions, e.g., the second-order interactions effects, are omitted from the value estimation procedure, significant differences do occur between estimates derived using the two valuation techniques.
One issue faced by those using social cost-benefit analysis to make decisions on forestation is how to account for environmental externalities. This paper compares two different valuation techniques, contingent valuation and choice modelling. Both approaches were applied to an afforestation programme in the northeast of Spain, and were found to yield similar estimates of welfare change when the utility function was fully specified. However, when elements of the utility function were omitted, significant differences were detected in the welfare estimates derived from the two techniques. Choice modelling is the method recommended for use in policy evaluation contexts, such as cost-benefit analysis applications, because of the additional valuation information it provides.
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