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Benefit Transfer

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A Primer on Nonmarket Valuation

Part of the book series: The Economics of Non-Market Goods and Resources ((ENGO,volume 13))

Abstract

Benefit transfer is a nonmarket valuation tool that is widely-used in a variety of decision contexts. Its primary role is deriving reliable estimates of value from prior research when new, original research is not feasible given time and resource constraints. This chapter begins by setting the development of benefit transfer in its historical context, which formally began in earnest in the early 1990’s in response to an increased need for value measures in environmental and natural resource management and policy decisions. The two primary types of benefit transfer—value transfer and function transfer—are conceptually defined, including key steps when conducting them and examples of their empirical application. Sub-types of value transfers discussed include point estimate and measures of central tendency, and administratively-approved value transfers. Sub-types of function transfers discussed include benefit or demand function, and meta-regression analysis transfers. Reliability of benefit transfer is shown to be 45% transfer error for value transfers and 36% transfer error for function transfers. Criteria for minimizing transfer error rates in benefit transfers are provided to help guide practitioner decisions when using this tool.

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Notes

  1. 1.

    The Government Performance and Results Act of 1993 superseded some previous federal legislation requiring formal cost-benefit analyses of federal programs.

  2. 2.

    V is used to denote value information or data and can consist of measures of benefits or costs, resource quantities or qualities, population characteristics, and other relevant information such as elasticities, dose-response effects, regression coefficients, and t-values.

  3. 3.

    Studies that do not report any data or insufficiently report data may not be of use. Other factors can include a poor match between data needs for the policy site context (what is affected and how impacts are measured) and the context of the study site data. Boyle and Bergstrom (1992) describe how data may not be relevant for benefit transfers in general.

  4. 4.

    Other functions include dose-response or production functions, especially prevalent in the health sciences literature.

  5. 5.

    Another reason this example is simplified is that it deals with a benefit function, which is a direct estimation method. As such, it directly models the relationship between WTP and independent variables. Other models, such as demand models, may not be as easily adjusted or may not be amenable to adjustment depending on how the models are developed, including functional form (Adamowicz et al. 1989).

  6. 6.

    The potential use of meta-regression analysis in defining benefit transfer functions is like the holy grail of benefit transfer: developing a function that can be used to estimate different types of values for different policy contexts. That is, even in conditions where no point estimates or demand functions are reported in the literature, a meta-regression analysis function may be able to provide such estimates or functions.

  7. 7.

    The range of PTE estimates from the literature are provided in an appendix located at http://recvaluation.forestry.oregonstate.edu/sites/default/files/PTE_Summary.pdf.

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Authors and Affiliations

  1. Oregon State University, Corvallis, OR, USA

    Randall S. Rosenberger

  2. Colorado State University, Fort Collins, CO, USA

    John B. Loomis

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  1. Randall S. Rosenberger
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Correspondence to Randall S. Rosenberger .

Editor information

Editors and Affiliations

  1. USDA Forest Service Rocky Mountain Research Station, Fort Collins, Colorado, USA

    Patricia A. Champ

  2. Dept. Agricultural and Applied Economics, Virginia Polytechnic Institute and State University, Blacksburg, Virginia, USA

    Kevin J. Boyle

  3. USDA Forest Service Rocky Mountain Research Station, Fort Collins, Colorado, USA

    Thomas C. Brown

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Rosenberger, R.S., Loomis, J.B. (2017). Benefit Transfer. In: Champ, P., Boyle, K., Brown, T. (eds) A Primer on Nonmarket Valuation. The Economics of Non-Market Goods and Resources, vol 13. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-7104-8_11

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