Valuing amenity resources under uncertainty: Does the existence of fair contingent claims markets matter?

Alternative welfare measures are evaluated as measures of the value of change in access conditions for environmental resources, and it is shown that traditional Hicksian surplus estimates systematically underestimate benefits. It is further argued that the existence of fair contingent claims markets is a peripheral consideration in benefit estimation, that state-dependent payments present no significant collection obstacles not already encountered in state-independent payment schemes, and that risk-neutral social decision making requires state-dependent benefit measures for situations involving individual risk. These findings imply that future research should focus on developing theoretical bounds between the expected value of state-dependent benefit measures and conventional measures, and that contingent valuations techniques need to be extended to measure contingent payment possibilities for changes in uncertain access conditions to environmental resources.