The International Yearbook of Environmental and Resource Economics 2004/2005

The International Yearbook of Environmental and Resource Economics 2004/2005

A Survey of Current Issues

New Horizons in Environmental Economics series

Edited by Tom Tietenberg and Henk Folmer

This major annual publication provides a state-of-the-art survey of contemporary research on environmental and resource economics by some of the leading experts in the field.

Chapter 5: Value transfer and environmental policy

Ståle Navrud

Subjects: economics and finance, environmental economics, environment, environmental economics


Ståle Navrud WHY VALUE TRANSFER? Increased use of economic analyses in the environment, transport, energy, health and cultural sectors has increased the demand for information on the economic value of environmental and other non-market goods by decisionmakers. Due to limited time and resources when decisions have to be made, new environmental valuation studies often cannot be performed, and decision makers must rely on transfer of economic estimates from previous studies (often termed ‘study sites’) of similar changes in environmental quality to value the environmental change at the ‘policy site’. This procedure is most often termed ‘benefit transfer’, but since damage estimates can also be transferred, I will use the more general term ‘value transfer’. Value transfer increases the uncertainty in the estimated environmental value, and a crucial question becomes: what level of accuracy is acceptable, and how does the need for accuracy vary with the policy use of the value? Results from validity tests of value transfer procedures have shown that the uncertainty in spatial and temporal benefit transfer could be quite large. Thus one should be careful in using value transfer in policy uses where the demand for accuracy is high. The practice of value transfer can be traced back to be the calculation of lost recreational value from the Hell’s Canyon hydroelectric project 30 years ago (see Krutilla and Fisher, 1975, chs 5 and 6). The first large-scale user of value transfer, however, was the USDA Forest Service. In preparation for the 1980 Resource Planning Assessment (RPA)...

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