Is contingent valuation worth the trouble?
The method of contingent valuation should be discarded as a way of determining the value of natural resources in hazardous substances liability cases. Contingent valuation is basically flawed because it commodifies natural resources. Three rules of thumb could be used instead, basing damages on the cost of restoration, on a fixed damages multiplier or on a matrix, like the system used in workers' compensation. These rules would better capture the nonuse values of natural resources than contingent valuation, in which people are asked how much they would charge for contamination of a resource or how much they would pay to prevent the damage.
Publication Name: University of Chicago Law Review
"Ask a silly question ...": contingent valuation of natural resource damages
Contingent valuation is unreliable as a method for measuring nonuse values of natural resources. The method uses survey research to elicit respondents' willingness to pay for a specified improvement. The figures are then averaged and used to calculate a total value for the population. However, due to the hypothetical nature of the questions, the values obtained reflect a general altruism in the respondents, rather than actual nonuse values of resources. Although currently included in Interior Department regulations, contingent valuation should be used, if at all, only when nonuse values are very high.
Publication Name: Harvard Law Review
A lawyer's guide to modern valuation techniques in mergers and acquisitions
Valuation techniques are used in mergers and acquisitions to calculate the net present value of the target firm. The discounted cash flow technique is used to determine the present value of future cash flows, with the discount rate based on either the capital asset pricing model, the weighted average cost of capital or arbitrage pricing theory. Major sources of error in valuation include an overly optimistic prediction of future cash flows and a discount rate that is too low.
Publication Name: The Journal of Corporation Law
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