Chapter

The Estimation of Benefits

Agnar Sandmo

in The Public Economics of the Environment

Published in print April 2000 | ISBN: 9780198297987
Published online November 2003 | e-ISBN: 9780191596858 | DOI: http://dx.doi.org/10.1093/019829798X.003.0004

Series: The Lindahl Lectures

The Estimation of Benefits

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The estimation of the benefits from environmental policies is a necessary component in cost–benefit analysis in this area. Because of the public good nature of the environment, one cannot take it for granted that firms and consumers have the right incentives to reveal their benefits truthfully. The analysis covers both indirect methods in which environmental benefits are inferred from observed market behaviour, and the more direct method of contingent valuation. It also includes an application of the theory of demand‐revealing mechanisms to the determination of optimal environmental policy, as well as a discussion of distributional effects.

Keywords: contingent valuation; cost–benefit analysis; distribution; incentives

Chapter.  8673 words. 

Subjects: Economic Development and Growth

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