d contingent liability in the Los Angeles harbor oil spill incident. Non-use values are discussed, as are the advantages and disadvantages associated with the use of surveys to measure natural resource damage. The application of the CVM process to the Los Angeles harbor oil spill incident is also reviewed in the contexts of the survey focus group and the effects of the application of the CVM approach on the litigation associated with the case.
The most typical approach to the protection of the environment in the United States is through the application of non-market activities by government. Several economists, however, suggest that market approaches would be more effective. Within the context of this suggestion, environmental damage is viewed as an externality. The typical approach to economic externalities is based upon two assumptions. First, the assumption is that externalities are harmful, and second, it is assumed that they are unidirectional. Based upon these assumptions, solutions to the problems thus created have tended to be one of the following three types: (1) require the entity creating the externality to pay damage to those injured by its existence; (2) tax the entity creating the externality by an amount equivalent to the damage caused; or (3) prohibit those activities in areas where harmful externalities would be created.
According to the Anderson and Leal (1991, p. 5), government regulation directed at environmental protection is doomed to failure for two reasons. First, such regulation evolves from a political agenda, as opposed to being developed on the basis of sound economic realities. Second, governmental regulation for environmental protection is based upon a concept of penalty, as opposed to an incentive basis. The general tenor of this argument is that society should reward those of its members who would despoil the environment to the extent required to assure that such individuals and institutio...