Fuzzy Approaches to Measuring a Fuzzy Concept: An Alternative to Nonmarket Valuation
By G. Cornelis van Kooten and Jasper Dalhuisen
ABSTRACT
The contingent valuation method (CVM) is used to value environmental amenities (e.g., existence value of certain salmon stocks) that do not leave traces via market transactions. Recently, insights from the marketing literature have been used in what is called choice experiments (CE) to value environmental amenities, particularly various attributes associated with the amenities. In this paper, we suggest a third approach to the valuation of nonmarket amenities that explicitly recognises the uncertainty of the valuation exercise. People never fully know their tradeoff between money and the environmental commodity to be valued, while that which is being valued is vague. This approach relies on insights from fuzzy logic. We examine several valuation methods using fuzzy sets, including what we refer to as the fuzzy CVM and fuzzy pairwise techniques. We apply these methods to the valuation of forest protection and improvements in water quality, comparing the results with those obtained by traditional CVM.
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