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Determining Economic Value of Endangered Species and Natural Resources

When trying to assign a value to endangered species or natural resources, often the "willingness-to-pay" (contingent valuation) figure can be determined. One way to put a value on the willingness-to-pay is to look at expenditures made to maintain a species population. For example, in Puerto Rico, about $100,000 was spent in a year to maintain a refuge and the endangered parrots within. The number of parrots known to exist was 10. Thus, each parrot could be valued at $10,000.

For other animals like the endangered sea turtle, if an economist has no preservation expenditure figure to work with, a survey can be sent out to a random sampling of people, asking respondents how much each would be willing to pay to protect the species in question. This type of method was actually used with sea turtles and the researcher came up with a value of $32 per turtle. Survey questions can probe respondents feelings about different levels of willingness-to-pay by asking how much an individual would pay to maintain an endangered species if 300 were left, or 200, or 100. Willingness-to-pay will often vary with species numbers.

In another example, waterfowl hunters could be surveyed and asked "how much money they might be willing to spend rather than give up the right to hunt waterfowl for a year." Multiplying the mean value of what each would spend by number of hunters could give an approximate value of waterfowl hunting (Conover 2002).

Some "willingness-to-pay" studies will use pictures of, say, different densities of trees and ask the question - "What would you be willing to pay to see a forest that looks like this"? Or, vice versa, what would you be willing to pay to prevent a forest from looking like this (e.g., clearcut)"?

Problems with willingness-to-pay studies include difficulty in getting a representative random sampling of respondents. Also, some of the willingness-to-pay figures given by respondents on surveys are undermined when, later in the survey, far different figures are indicated should the money have to come from a tax increase. For these reasons, some researchers discredit these types of studies but they remain some of the only tools available for determining values.