The value of natural resources may be subdivided into different components. Government agencies or environmental groups bringing lawsuits against polluters must quantify these damages. Contingent valuation involves the use of surveys. Respondents are polled to determine their willingness to pay for pollution abatement. Since passage of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 these issues have received considerable attention.
Environmental pollution is addressed by the tort system of law. This system requires that the polluter, or tortfeasor, pay damages. These damages serve two functions. For one, the payments compensate victims for their incurred losses. Moreover, they also act as an incentive to the "feasor to take cost-justified care to avoid damages" (Brookshire & McKee, 1994, pp. 51-72). Such care will typically be proportional to the expected cost of possible payments. The "optimal level of care" occurs when preventative care measures are equal to potential damage assessments (Brookshire & McKee, 1994, pp. 51-72).
One problem with paying damages, however, lies in estimating how much they should be. When the prices of different commodities can be found in conventional markets, it is fairly simple to calculate appropriate compensable damages (Ruff, 1993, p. 20-36). Unfortunately though, environmental damages often additionally involve nonmarket goods. In such cases, the calculation of monetary damages payable by the responsible tortfeasor can be considerably more complex.
Most natural resources provide a variety of different benefits to a number of parties. The "flow of services" provided by such resources is generally comprised both of "use" and "nonuse" values (Cicchetti & Wilde, 1992, pp. 1121-1125). Use values involve those benefits accrued through either use of the resource currently or in the future. Current use value can include both consumptive ...