Improving multi-site benefit functions via Bayesian model averaging: A new approach to benefit transfer
AbstractA benefit function transfer obtains estimates of willingness-to-pay (WTP) for the evaluation of a given policy at a site by combining existing information from different study sites. This has the advantage that more efficient estimates are obtained, but it relies on the assumption that the heterogeneity between sites is appropriately captured in the benefit transfer model. A more expensive alternative to estimate WTP is to analyze only data from the policy site in question while ignoring information from other sites. We make use of the fact that these two choices can be viewed as a model selection problem and extend the set of models to allow for the hypothesis that the benefit function is only applicable to a subset of sites. We show how Bayesian model averaging (BMA) techniques can be used to optimally combine information from all models. The Bayesian algorithm searches for the set of sites that can form the basis for estimating a benefit function and reveals whether such information can be transferred to new sites for which only a small data set is available. We illustrate the method with a sample of 42 forests from U.K. and Ireland. We find that BMA benefit function transfer produces reliable estimates and can increase about 8 times the information content of a small sample when the forest is 'poolable'.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Environmental Economics and Management.
Volume (Year): 56 (2008)
Issue (Month): 1 (July)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622870
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- C. J. Leon & F. J. Vazquez-Polo & N. Guerra & P. Riera, 2002. "A Bayesian model for benefit transfer: application to national parks in Spain," Applied Economics, Taylor and Francis Journals, vol. 34(6), pages 749-757.
- Kirchhoff, Stefanie & Colby, Bonnie G. & LaFrance, Jeffrey T., 1997. "Evaluating the Performance of Benefit Transfer: An Empirical Inquiry," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 75-93, May.
- Carmen Fernandez & Carmelo J. Leon & Mark F.J. Steel & Francisco Jose Vazquez-Polo, 2004. "Bayesian Analysis of Interval Data Contingent Valuation Models and Pricing Policies," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 431-442, October.
- Fernandez, Carmen & Ley, Eduardo & Steel, Mark F. J., 2001.
"Benchmark priors for Bayesian model averaging,"
Journal of Econometrics,
Elsevier, vol. 100(2), pages 381-427, February.
- Carmen Fernandez & E Ley & Mark F J Steel, 2004. "Benchmark priors for Bayesian models averaging," ESE Discussion Papers 66, Edinburgh School of Economics, University of Edinburgh.
- Carmen Fernandez & Eduardo Ley & Mark F.J. Steel, 1998. "Benchmark Priors for Bayesian Model Averaging," Econometrics 9804001, EconWPA, revised 31 Jul 1999.
- Dadi Kristofersson & Ståle Navrud, 2005. "Validity Tests of Benefit Transfer – Are We Performing the Wrong Tests?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 30(3), pages 279-286, 03.
- Downing, Mark & Ozuna, Teofilo Jr., 1996. "Testing the Reliability of the Benefit Function Transfer Approach," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 316-322, May.
- Moeltner, Klaus & Boyle, Kevin J. & Paterson, Robert W., 2007. "Meta-analysis and benefit transfer for resource valuation-addressing classical challenges with Bayesian modeling," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 250-269, March.
- Bauwens, Luc & Lubrano, Michel & Richard, Jean-Francois, 2000. "Bayesian Inference in Dynamic Econometric Models," OUP Catalogue, Oxford University Press, number 9780198773139.
- Hellerstein, Daniel & Feather, Peter, 1997.
"Calibrating Benefit Function Transfer to Assess the Conservation Reserve Program,"
25357, University Library of Munich, Germany.
- Peter Feather & Daniel Hellerstein, 1997. "Calibrating Benefit Function Transfer to Assess the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 151-162.
- Arana, Jorge E. & Leon, Carmelo J., 2005. "Flexible mixture distribution modeling of dichotomous choice contingent valuation with heterogenity," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 170-188, July.
- I. Bateman & R. Brouwer & S. Ferrini & M. Schaafsma & D. Barton & A. Dubgaard & B. Hasler & S. Hime & I. Liekens & S. Navrud & L. De Nocker & R. Ščeponavičiūtė & D. Semėnienė, 2011. "Making Benefit Transfers Work: Deriving and Testing Principles for Value Transfers for Similar and Dissimilar Sites Using a Case Study of the Non-Market Benefits of Water Quality Improvements Across E," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 50(3), pages 365-387, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.