Basic Report

Contingent Valuation Method(CVM) is an evaluation technique that establishes a virtual market for non-marketable goods that causes individuals to state a direct monetary Willingness To Pay(WTP) for changes in public services under evaluation. CVM have been mainly applied as an economic value estimation method for non-market goods with high non-use value and high public property characteristics, such as culture, sports and parks.
   Local Investment Management Center(LIMAC) is a specialized agency for the feasibility study of local financial investment projects for new projects with a total project cost of 50 billion won or more, pursuant to article 37.2 of the Local Finance Act. However, because there is no guidance of LIMAC on the CVM analysis method for local financial investment projects, it is applied in accordance with PIMAC(Public and Private Infrastructure Investment Management Center)'s methodology for improving CVM analysis guidelines for feasibility studies. In addition, due to the absence of the LIMAC survey methodology (guideline), the nature of local financial investment projects in applying CVM is not sufficiently considered, and the relativity and specificity among local governments are causing inconsistencies in the analysis process of the projects.
   Therefore, this study proposed standardization of survey design for CVM being applied in the feasibility study of local finance investment projects(Table 1). For standardizing survey design, we examined the recent CVM survey design research and feasibility study tasks for applying CVM to LIMAC and PIMAC. Criteria for design of CVM survey for 10 types of criteria was proposed, CVM applicability, area of influence, Focus Group Interview(FGI), survey collateral, initial BID value, payment target and payment vehicle, period of intent to pay, income restriction phrase, questionnaire and viewing card, and verified applicability of the proposed criteria through CVM demonstration. In addition, the standard questionnaire and viewing card were prepared using the CVM survey tasks performed in PIMAC and LIMAC to minimize the likelihood of various conveniences resulting from the questionnaire. Standard questionnaire were divided into mandatory, optional, and special questions for the researchers to use according to their business characteristics. The viewing card were also presented by dividing them into mandatory, optional and special items.
   It is expected that this study will contribute to enhancing consistency and equity among feasibility studies of local financial investment projects by presenting the standards for application of the CVM of LIMAC, standardization of survey design, and CVM standard questionnaire (proposal) in accordance with the nature of local financial investment projects. Also, contribute to enhancing the reliability of the LIMAC CVM feasibility study results, which are used as the main basis for the (central) investment examination for the planned operation of limited investment resources by local governments, and providing a rational basis for judgment in investor sentiment were expected.