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Benefit Transfers with the Contingent Valuation Method

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Benefit Transfer of Environmental and Resource Values

Part of the book series: The Economics of Non-Market Goods and Resources ((ENGO,volume 14))

Abstract

The results of contingent valuation analyses are often used for benefit transfer. The contingent valuation method is a stated preference approach to the valuation of non-market goods in which survey respondents are asked hypothetical questions directly about their total economic values. The advantages of the method include flexibility , ability to estimate nonuse values and an ability to incorporate ex-ante uncertainty . Previous benefit transfer research with contingent valuation is difficult to assess since each study uses different forms of the valuation question and benefit transfer tests are not uniform. Nevertheless, there is some evidence that dichotomous choice valuation questions may produce lower transfer errors relative to other question formats. We present a case study using the dichotomous choice referendum question format with key tests for theoretical validity and find evidence that these study features may improve benefit transfer reliability.

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Notes

  1. 1.

    See Whitehead (2006) for a discussion of how to conduct CVM studies and Whitehead and Blomquist (2006) for a discussion of CVM and benefit-cost analysis.

  2. 2.

    This is in part due to the controversy surrounding the Exxon Valdez oil spill (Portney 1994).

  3. 3.

    This is a much needed area for future research since there are a large number of contingent behavior studies which can serve as a source of environmental values for benefit transfer-based policy analysis.

  4. 4.

    Rosenberger and Stanley (2006) raise additional (and related) issues that may reduce benefit transfer accuracy.

  5. 5.

    See Bateman et al. (2011) for a more recent CVM benefit transfer study.

  6. 6.

    Measurement error refers to a transfer error caused by bias in the original valuation study.

  7. 7.

    This is distinct from the use of the term “reliability” in the benefit transfer literature, where it refers to the size of transfer errors (Johnston and Rosenberger 2010).

  8. 8.

    Bateman et al. (2011) test for scope effects with the payment card question format.

  9. 9.

    See Whitehead et al. (2012) for more details.

  10. 10.

    Louisiana willingness to pay is negative at the mean number of lives saved. Willingness to pay is positive and statistically significant at p = 0.20 when lives saved are equal to 26.

  11. 11.

    Alternatives include recoding undecided voters to “against” votes or estimating multinomial or ordered models (Groothuis and Whitehead 2002).

  12. 12.

    When willingness to pay values have wide confidence intervals the standard tests of differences in means are relatively weak. Equivalence testing may be more important in the benefit transfer context (Kristofferson and Navrud 2005). Equivalence tests specify a range of acceptable transfer errors . Johnston and Duke (2008) suggest a range of 40–60 % for acceptable transfer errors in an equivalence test.

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Acknowledgments

The data used in this chapter were collected under research supported by Gulf Oyster Industry Program Grant No. R/LR-Q-32. The authors thank Greg Martin and Richard Sjolander for their contributions to the data collection effort and Rob Johnston for a number of helpful comments and suggestions.

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Authors and Affiliations

  1. Department of Economics, Appalachian State University, Boone, NC, USA

    John C. Whitehead & O. Ashton Morgan

  2. Department of Marketing and Economics, University of West Florida, Pensacola, FL, USA

    William L. Huth

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  1. John C. Whitehead
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  2. O. Ashton Morgan
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Correspondence to John C. Whitehead .

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Editors and Affiliations

  1. Department of Economics and George Perkins Marsh Institute, Clark University, Worcester, Massachusetts, USA

    Robert J. Johnston

  2. School of Business and Law, CQUniversity, Rockhampton, Queensland, Australia

    John Rolfe

  3. Dept. of Forest Ecosystems & Society, Oregon State University, Corvallis, Oregon, USA

    Randall S. Rosenberger

  4. Department of Environmental Economics, Vrije Universiteit, Amsterdam, The Netherlands

    Roy Brouwer

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Whitehead, J.C., Morgan, O.A., Huth, W.L. (2015). Benefit Transfers with the Contingent Valuation Method. In: Johnston, R., Rolfe, J., Rosenberger, R., Brouwer, R. (eds) Benefit Transfer of Environmental and Resource Values. The Economics of Non-Market Goods and Resources, vol 14. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-9930-0_7

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