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What Determines Prediction Errors In Benefits Transfer Models?

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  • Colombo, Sergio
  • Hanley, Nick

Abstract

The aim of BT techniques is to provide decision makers with a monetary valuation of environmental goods and service in a cost-effective and timely manner, since original valuation studies are both expensive and time-consuming. Demands for environmental valuation estimates are rising in the policy community in both Europe and the US. In the UK, widespread use of benefits transfer has already occurred within policy making and regulatory bodies, for instance in the setting of water quality targets for private water companies and in the design of agrienvironmental policy. An important question is how big the errors are resulting from this practice, and how sensitive transfer errors are to how the benefits transfer is conducted. In this study we employ a choice experiment study focusing on the value of landscape attributes in four upland farming regions of England to investigate the sensitivity of transfer error to procedures. This is done using an experimental design with the same set of attributes and levels applied in four different regions of England. The main findings to emerge are that transfer errors depend on the choice of study site at which original valuations are sought, on whether a single site or pooled model is used, and on whether a mean value or benefit function transfer is used. Large variations in transfer errors are found to be related to these choices.

Suggested Citation

  • Colombo, Sergio & Hanley, Nick, 2007. "What Determines Prediction Errors In Benefits Transfer Models?," 81st Annual Conference, April 2-4, 2007, Reading University 7967, Agricultural Economics Society.
  • Handle: RePEc:ags:aes007:7967
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    File URL: http://purl.umn.edu/7967
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    References listed on IDEAS

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    1. 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.
    2. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D., 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, April.
    3. Wiktor Adamowicz & Peter Boxall & Michael Williams & Jordan Louviere, 1998. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments and Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 64-75.
    4. Sergio Colombo & Javier Calatrava-Requena & Nick Hanley, 2007. "Testing Choice Experiment for Benefit Transfer with Preference Heterogeneity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 135-151.
    5. van Bueren, Martin & Bennett, Jeffrey W., 2004. "Towards the development of a transferable set of value estimates for environmental attributes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), March.
    6. 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.
    7. Sergio Colombo & Nick Hanley & Javier Calatrava-Requena, 2005. "Designing Policy for Reducing the Off-farm Effects of Soil Erosion Using Choice Experiments," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(1), pages 81-95.
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    10. Mark Morrison & Jeff Bennett, 2004. "Valuing New South Wales rivers for use in benefit transfer," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(4), pages 591-611, December.
    11. Adamowicz, Wiktor L. & Boxall, Peter C. & Williams, Michael & Louviere, Jordan, 1995. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments versus Contingent Valuation," Staff Paper Series 24126, University of Alberta, Department of Resource Economics and Environmental Sociology.
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    1. Sergio Colombo & Nick Hanley & Jordan Louviere, 2009. "Modeling preference heterogeneity in stated choice data: an analysis for public goods generated by agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 40(3), pages 307-322, May.

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    Environmental Economics and Policy;

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