Valuing Water Quality Using Benefit Transfer Methods

Abstract

This article summarizes methods, prospects, and methodological questions for water quality benefit transfer. Benefit transfer is the use of welfare estimates from settings where original valuation research has been conducted to predict similar estimates for other settings, allowing quantification of benefits and costs when original valuation studies are infeasible. Water quality has been among the most researched areas of benefit transfer, in part due to requirements for benefit-cost analysis within policies and programs that affect surface and ground water. The article begins with a review of benefit transfer methods and characteristics of water quality that challenge transfer validity. We then explore alternative approaches for meta-regression modeling and value prediction to support these transfers, focusing on emerging methods that may afford greater flexibility than traditional parametric approaches and enable gains in transfer accuracy, while maintaining desirable theoretical properties. The article concludes with a discussion of unresolved questions and research needs.