Different methods, different values: Policy implications of alternative valuation methods

Policy analysis is underpinned by empirical research that evaluates the magnitude and distributional effects of regulatory costs and benefits. Valuation research constitutes a central component of this analysis and may employ both monetary and non-monetary methodologies. This study investigates how the application of different valuation approaches yields distinct insights into the efficiency and equity outcomes associated with water policy interventions. We synthesized the results of over a decade of water quality valuation work in the U.S. state of Minnesota. We compared stated preference surveys, hedonic analyses, avoided cost approaches, and travel cost models with results from non-monetary valuation methods that use surveys, spatial indicators, and deliberative approaches. For each method, we consider advantages and limitations based on theoretical and practical applications with a focus on whose values are counted and the types of values captured in each method. We consider the utility of each method to inform benefit cost analysis, spatial prioritization of investments, and distributional analyses and review how values research has been integrated into practice in Minnesota. Monetary valuation methods captured egoistical and hedonic water values, whereas biospheric and altruistic values were emphasized in the non-monetary methods. Different methodologies captured values of certain subpopulations, with monetary methods reflecting the preferences of predominantly wealthier and whiter residents. Our work raises questions about embedded assumptions in valuation methodologies and the appropriate application and interpretation of values research for policy objectives of efficiency and equity.