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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.

Suggested Citation

  • Czajkowski, Mikolaj & Scasný, Milan, 2010. "Study on benefit transfer in an international setting. How to improve welfare estimates in the case of the countries' income heterogeneity?," Ecological Economics, Elsevier, vol. 69(12), pages 2409-2416, October.
  • Handle: RePEc:eee:ecolec:v:69:y:2010:i:12:p:2409-2416
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    Cited by:

    1. Milan Ščasný & Emanuele Massetti & Jan Melichar & Samuel Carrara, 2015. "Quantifying the Ancillary Benefits of the Representative Concentration Pathways on Air Quality in Europe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 383-415, October.
    2. repec:gii:giihei:ciesrp:cies_rp_26 is not listed on IDEAS
    3. Gillespie, Rob & Kragt, Marit E., 2012. "Accounting for Nonmarket Impacts in a Benefit-Cost Analysis of Underground Coal Mining in New South Wales, Australia," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 3(02), pages 1-29, May.
    4. -, 2011. "An assessment of the economic impact Of climate change on the health sector in Saint Lucia," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38597, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Baumgärtner, Stefan & Drupp, Moritz A. & Meya, Jasper N. & Munz, Jan M. & Quaas, Martin F., 2016. "Income inequality and willingness to pay for public environmental goods," Economics Working Papers 2016-04, Christian-Albrechts-University of Kiel, Department of Economics.
    6. 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.
    7. Chiara Ravetti & Timothy Swanson & Mu Quan & Xuxuan Xie & Zhang Shiqiu, 2014. "Ancillary Benefits of GHG Abatement Policies in Developing Countries: A literature Survey," CIES Research Paper series 26-2014, Centre for International Environmental Studies, The Graduate Institute.
    8. Ewa Zawojska & Zbigniew Szkop & Mikołaj Czajkowski & Tomasz Żylicz, 2016. "Economic valuation of ecosystem services provided by the Wilanów Park: A benefit transfer study," Working Papers 2016-31, Faculty of Economic Sciences, University of Warsaw.
    9. -, 2011. "An economic assessment of the impact of climate change on the health sector in Montserrat," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38589, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. 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.
    11. Czajkowski, Mikołaj & Ahtiainen, Heini & Artell, Janne & Meyerhoff, Jürgen, 2017. "Choosing a Functional Form for an International Benefit Transfer: Evidence from a Nine-country Valuation Experiment," Ecological Economics, Elsevier, vol. 134(C), pages 104-113.
    12. repec:kap:enreec:v:68:y:2017:i:3:d:10.1007_s10640-016-0040-4 is not listed on IDEAS
    13. Edward B. Barbier & Mikołaj Czajkowski & Nick Hanley, 2017. "Is the Income Elasticity of the Willingness to Pay for Pollution Control Constant?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 663-682, November.
    14. 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.
    15. 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.
    16. Alberini, Anna & Bigano, Andrea & Ščasný, Milan & Zvěřinová, Iva, 2016. "Preferences for Energy Efficiency vs. Renewables: How Much Does a Ton of CO2 Emissions Cost?," MITP: Mitigation, Innovation,and Transformation Pathways 249352, Fondazione Eni Enrico Mattei (FEEM).
    17. repec:eee:jeeman:v:85:y:2017:i:c:p:35-61 is not listed on IDEAS
    18. repec:eee:ecolec:v:144:y:2018:i:c:p:171-185 is not listed on IDEAS

    More about this item

    Keywords

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

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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