Involuntary resettlement of people displaced by large dams, as by several other development projects, is largely considered a failure. Increasingly, researchers have shifted focus from trying to improve welfare outcomes for the affected to questioning the involuntariness of resettlement schemes. The idea of voluntary resettlement, under which the displaced are consulted regarding their resettlement, is often suggested as a preferred alternative. This approach can in principle ensure that compensation reflects the true losses incurred by the displaced and can also guarantee that the process of displacement and resettlement does not adversely affect the displaced. The problem of ‘incentive incompatibility’, however, suggests that, if asked for an evaluation of their losses, the affected have an incentive to exaggerate. In this paper the author explores the possibility of using the contingent valuation method (CVM) – a method often used to make decisions about environmental issues – to consult the affected without capitulating to this problem. This experiment is carried out in nine villages affected by the construction of the Sardar Sarovar Project (SSP) in the Narmada Valley.The CVM involved offering a set of four hypothetical compensation packages to the affected. The packages contained varying amounts of cash explicitly in exchange for three important aspects of their pre-displacement lives: commons, community and irrigable lands. They were designed to capture the monetary value that the affected place on each significant dimension of their losses. This in turn was used to estimate their willingness to accept cash in exchange for these qualitative aspects, since reproducing them elsewhere is difficult if not impossible. The findings of the study suggest that CVM can prove to be a very useful technique to elicit the true losses suffered by the displaced populations. The elicited preferences were to a large extent explained by the socio-economic circumstances of the respondents. More specifically the results indicate that the SSP resettlement scheme is flawed in some of its pivotal features.