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- Report n°4: How Much to Spend for the Protection of Health and Environment
Report n°4: How Much to Spend for the Protection of Health and Environment
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Table of contents
- Monetary Valuation
- General Considerations
- Monetary Valuation
General Considerations
The goal of the monetary valuation of damages is to account for all costs, market and non-market. For example, the valuation of an asthma attack should include not only the cost of the medical treatment but also the willingness-to-pay (WTP) to avoid the residual suffering. It turns out that damage costs of air pollution are dominated by non-market goods, especially mortality. If the WTP for a non-market good has been determined correctly, it is like a price, consistent with prices paid for market goods. Economists have developed several tools for determining non-market costs. Of these tools contingent valuation (CV) has enjoyed increasing popularity in recent years [Mitchell & Carson 1989]. The results of well conducted studies are considered sufficiently reliable.