An Adding-up Test on Contingent Valuations of River and Lake Quality

For a contingent valuation (CV) study of a bundle of water quality improvements, this paper tests whether the sum of the estimated willingness to pay (WTP) for each individual part of the package, evaluated incrementally, equals the estimated WTP for the entire bundle—as implied by standard utility theory. This is the first application of the adding-up test using incremental parts and Carson and Groves’s (2007) procedures to induce truthful respondents’ answers. The test is failed, which implies that either the CV method did not elicit truthful answers or that respondents’ true preferences are inconsistent with standard utility theory. (JEL Q51)