The state of the art of environmental valuation with discrete choice experiments

Abstract

This paper provides with a review of the state of the art of environmental valuation with discrete choice experiments (DCEs). The growing body of literature on this field serves to emphasize the increasing role that DCEs are playing in environmental decision making in the last decade. The paper attempts to cover the full process of undertaking a choice experiment, including survey and experimental design, econometric analysis of choice data and welfare analysis. The research on this field is found to be intense, although many challenges are put forward (e.g. choice-task complexity and cognitive effort, experimental design, preference and scale heterogeneity, endogeneity or model uncertainty). Reviewing the state of the art of DCEs serves to draw attention to the main challenges that this methodological approach will need to overcome in the coming years and to identify the frontiers in discrete choice analysis.