Other issues associated with CVM and an appraisal
These are mostly connected with the conduct, analysis and interpretation of CVM investigation and thus their reliability and content, construct and criterion validity. It is a fundamental consideration of all surveys that they should be both reliable, in that they should yield consistent result when replicated, and valid, meaning that they should be representative of circumstances in the real world. Attention here is concentrated on the validity of CVM, largely reflecting the exposition in Hanley and Spash (1993) and Perman et al.(2003)
The validity of CVM depends crucially on the construction of the hypothetical market being credible and realistic, in which sufficient information is given to respondents and they have knowledge of the resources and the issues relating to it. The design of the survey should be such that the sample is truly representative of the relevant population and its size is large enough to be statistically robust. Two key elements of the method that are viewed as central are to place emphasis on WTP, rather than WTA, and the means of payment. Every effort should be made to reduce or eliminate the biases identified above. The estimates emerging should meet the expected results when the study is instigated.
The CVM is considered by administrators and politicians as a democratic approach to establishing people’s attitudes and views on environmental and resources use issues; the findings of studies have certainly influenced action, particularly in the US. However, economists have been rather more cautious about it because of concerns over its inherent hypothetical nature. They tend to favour revealed preference methods. A review in the US by the NOAA(1993), albeit in the relatively early development of CVM, identified a number of reservations, but these were essentially positive in making recommendation on its use.