Typically the survey asks how much money people would be willing to pay (or willing to accept) to maintain the existence of (or be compensated for the loss of) an environmental feature, such as biodiversity.
The Exxon Valdez oil spill in Prince William Sound was the first case where contingent valuation surveys were used in a quantitative assessment of damages.
Early contingent valuation surveys were often open-ended questions of the form "how much compensation would you demand for the destruction of X area" or "how much would you pay to preserve X".
Such surveys potentially suffer from a number of shortcomings; strategic behaviour, protest answers, response bias and respondents ignoring income constraints.
In response to criticisms of contingent valuation surveys, a panel of high profile economists (chaired by Nobel Prize laureates Kenneth Arrow and Robert Solow) was convened under the auspices of the United States National Oceanic and Atmospheric Administration (NOAA).
[7] As shown by Mundy and McLean (1998), contingent valuation is now widely accepted as a real estate appraisal technique, particularly in contaminated property or other situations where revealed preference models (i.e. transaction pricing) fail due to disequilibrium in the market.
The technique has also been used in Australia to value areas of the Kakadu National Park[11] as well as trophy property in the United States, and is recognized as a valuable tool in the appraisal of brownfields.