Threshold Effects in Meta Analyses with Application to Benefit Transfer for Coral Reef Valuation

Policymakers and advocates alike often turn to benefit transfers to estimate the economic value of environmental amenities when primary valuation studies are infeasible. Coral reef ecosystems, among the most biologically diverse and productive ecosystems on the planet, are an amenity for which benefit transfers are particularly helpful. Meta analyses, which synthesize site and methodological characteristics from many different studies, can improve upon traditional site-to-site transfers. We build on previous research on meta analysis by introducing threshold effects. We find that a threshold in reef quality exists: users of coral reefs place a higher value on improvements in live coral cover on degraded reefs than on healthy ones. Relaxing the assumption of users' constant valuation across the distribution of this characteristic improves the performance of coral reef benefit transfers. Tests of convergent validity reveal that including the threshold effect reduces the variability and magnitude of transfer errors in some experiments.