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2.3.1. Benefits Transfer

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Environmental Economics Research at EPA

Benefits transfer involves the transfer of estimated economic relationships from a “study area” to an unstudied “policy area.” Generally, a second step involves aggregating benefits for the relevant population in the policy area. Where appropriate, a variety of adjustments may be made as benefits estimates are transferred. For example, the value of a statistical life in an underdeveloped nation (the policy area) is commonly estimated using results obtained in the United States (the study area) and adjusting for differences in income. Or the value of a day of recreation at the beach estimated in California might be assumed to apply in Florida.

Benefits Transfer: Procedures, Problems, and Research Needs, 1992 Association of Environmental and Resource Economists Workshop, Snowbird, Utah (EE-0078) contains papers presented at this workshop. Some of those papers may be noted here. In that volume Brookshire offers his views on “Issues Regarding Benefits Transfer,” focusing largely on recreation demand and how it is affected by environmental conditions, substitute sites, and complementary activities. Deck and Chestnut ask “How Good is Good Enough?” for benefits transfer. Krupnick argues that damages to health are the most easily transferred, but damage to natural assets are much more problematic. Benefits transfer of recreation values is difficult, particularly because of substitute sites and local conditions such as congestion. Krupnick also considers in some detail problems caused by gaps and errors in the original study and how this limits opportunities for benefits transfer.

Recreational Benefits Transfer Project (EE-0151) by Smith and Kaoru (1989) reviews all published and unpublished travel cost recreational demand models done between 1970 and 1986. From this literature a subset of 77 studies are summarized and subject to a meta-analysis. Some of their findings may be highlighted: (1) virtually all estimates of consumer surplus from recreatoin activities are biased because they involve nonlinear transformations of demand parameters; (2) it is possible to summarize into fairly narrow ranges the consumer surplus per unit of use and the price elasticity of demand for recreation sites; and (3) benefits transfer will be facilitated if researchers report a small set of summary statistics in a consistent fashion.

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