The economic value of reducing environmental health risks: Contingent valuation estimates of the value of information

Obtaining economically consistent values for changes in low probability health risks continues to be a challenge for contingent valuation (CV) as well as for other valuation methods. One often cited condition for economic consistency is that estimated values be sensitive to the scope (differences in quantity or quality) of a good described in a CV application. The alleged limitations of CV pose a particular problem for environmental managers who must often make decisions that affect human health risks. This paper demonstrates that a well-designed CV application can elicit scope sensitive values even for programs that provide conceptually complex goods such as risk reduction. Specifically, it finds that the amount sport anglers are willing to pay for information about chemical residues in fish varies systematically with informativeness—a relationship suggested by the theory of information value.