JOURNAL OF ENVIRONMENTAL. ECONOMICS AND MANAGEMENT 1, 132-149 (19%) Bidding Games for Valuation of Aesthetic Environmental Improvements1 ALAN RANDALL Department of Agricultural Economics, University of Kentucky, Lexington, Kentucky 40506 AND BERRY IVES AND CLYDE EASTMAN Department of Agricultural Economics and Agricultural Business, New Mexico State University, Las Cruces, New Mexico:88003 Received March 19, 1974 An empirical case study of the benefits of abatement of aesthetic environmental damage associated with the Four Corners power plant and Navajo mine using the bidding game technique is presented. Bidding games were carefully designed to avoid the potential problems inherent in that technique. The results indicate the existence of substantial bene- fits from abatement of this aesthetic environmental damage. Aggregate bid curves, marginal bid curves, and estimates of the income elasticity of bid are presented. The effectiveness of the bidding game technique is discussed. It has proved a difficult and often forbidding task to ascribe economic values to environmental improvements. Yet, rational and informed social decision making requires, among other things, a consideration of the economic costs and benefits of environmental improvements. The difficulties in economic evaluation are compounded in the case of environmental improvements of an aesthetic nature. This article discusses the problems inherent in the valuation of aesthetic environmental improvements and presents a case study in which bidding games were used as the valuation technique. THE THEORY Aesthetic damage to an outdoor environment, to the extent that it diminishes the utility of some individuals, is a discommodity and its abatement is a commodity. Abatement of this kind of external diseconomy is both a nonmarket good, since it is nonexclusive, and a public good in the sense of Davis and Whinston [S], since it is inexhaustible at least over a very substantial range. That is, additional consumers of this kind of aesthetic environmental improvement can be added without diminishing the visibility or scenic beauty available to each (at least, until crowding occurs). Ad- ditional users can be added at near zero marginal cost, over a substantial range. Bradford [2] has presented a theoretical framework for the valuation of public goods. Traditional demand curves are inappropriate for the analysis of demand for r Journal Article 506, New Mexico State University, Agricultural Experiment Station, Las Cruce 6. The authors are grateful for helpful comments from Ralph d’Arge a nd tuo ancnyrrous reviewers. 132 Copyright 0 1974 by Academic Press, Inc. All rights of reproduction in any form reserved.