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Study on benefit transfer in an international setting. How to improve welfare estimates in the case of the countries' income heterogeneity?

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  • Czajkowski, Mikolaj
  • Scasný, Milan

Abstract

The paper aims at investigating the validity of benefit transfer in the case of transfers between countries highly heterogeneous in income, and demonstrates relative performance of different benefit transfer methods under these conditions. Lake water quality valuation studies were conducted in two countries in transition -- Poland and the Czech Republic. They reflected two earlier studies carried out in Norway. We examine how income elasticity of WTP varies with the levels of income and find support for applying the income elasticity of 1 to adjust transferred welfare estimates in case of high differences in income between countries. In addition, we show that using site-specific measures of income outperforms transfers based on GPD per capita. The accuracy of benefit transfer is compared using equivalence testing following the TOSC (two one-sided convolutions) test. A new, more informative way of reporting equivalence is proposed, based on computing minimum tolerance level rather than specifying it a priori.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 69 (2010)
Issue (Month): 12 (October)
Pages: 2409-2416

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Handle: RePEc:eee:ecolec:v:69:y:2010:i:12:p:2409-2416

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Web page: http://www.elsevier.com/locate/ecolecon

Related research

Keywords: Benefit transfer Income heterogeneity Contingent valuation Water quality Equivalence testing TOSC Minimum tolerance level Convolutions Economies in transition;

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Cited by:
  1. Baulcomb, Corinne & Moran, Dominic, 2011. "Rapid Integrated Assessment of Climate Change-Induced Disease Burdens under Uncertainty," Working Papers 131462, Scottish Agricultural College, Land Economy Research Group.
  2. Czajkowski, Mikołaj & Bartczak, Anna & Giergiczny, Marek & Navrud, Stale & Żylicz, Tomasz, 2014. "Providing preference-based support for forest ecosystem service management," Forest Policy and Economics, Elsevier, vol. 39(C), pages 1-12.
  3. Baulcomb, Corinne & Moran, Dominic, 2011. "Rapid Integrated Assessment of Climate Change-Induced Disease Burdens under Uncertainty," Working Papers 131462, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
  4. Dritan Osmani, 2013. "Valuing Equally the Environmental Goods in Rich and Poor Countries in a Post-Kyoto World," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 7(2), pages 073-099, July.
  5. Timothy Swanson & Chiara Ravetti & Mu Quan & Xuxuan Xie & Zhang Shiqiu, 2014. "Ancillary Benefits of GHG Abatement Policies in Developing Countries: A literature Survey," IHEID Working Papers 26-2014, Economics Section, The Graduate Institute of International Studies.

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