Benefit Transfers with the Contingent Valuation Method

Abstract

The results of contingent valuation analyses are often used for benefit transfer. The contingent valuation method is a stated preference approach to the valuation of non-market goods in which survey respondents are asked hypothetical questions directly about their total economic values. The advantages of the method include flexibility, ability to estimate nonuse values and an ability to incorporate ex-ante uncertainty. Previous benefit transfer research with contingent valuation is difficult to assess since each study uses different forms of the valuation question and benefit transfer tests are not uniform. Nevertheless, there is some evidence that dichotomous choice valuation questions may produce lower transfer errors relative to other question formats. We present a case study using the dichotomous choice referendum question format with key tests for theoretical validity and find evidence that these study features may improve benefit transfer reliability.