The proportion of wind capacity in the generation portfolio continues to expand with increasing renewable penetration in the United States. The combination of more frequent negative real-time locational marginal prices and over-generation from wind farms has started to reduce wind farm owners' operating profit in Independent System Operator (ISO) managed electricity markets. Therefore, it is vital for utilities/independent power producer to start negotiating (or renegotiating) wind energy procurement contracts with developers to include some type of curtailment rights. The contract negotiations call for the development of a comprehensive methodology to conduct economic valuation on curtailment rights. This paper addresses the needs by proposing a new method for evaluating wind farm curtailment rights. The valuation methodology not only considers the financial aspect but also closely models the physical dispatch of wind farms. The valuation method is applied to a generic wind farm in the California ISO (CAISO) system. The simulation results demonstrate that curtailment rights have a significant value to wind farm owners if the resource is bid appropriately into the wholesale power market.