Evaluating the Performance of Benefit Transfer: An Empirical Inquiry

Abstract Benefit transfers are used by public agencies needing information on costs and benefits of policy decisions, although scientific debate regarding the validity of benefit transfer is ongoing. This article develops a methodology to evaluate the performance of direct benefit transfer and benefit function transfer and applies the methodology to two pairs of similar non-market amenities. Empirical results indicate that benefit function transfer is more robust than transfer of average site benefits. Our results suggest that the circumstances under which benefit function transfer provides valid, policy-relevant information may be limited and that errors from applying benefit transfer can be quite large, even across seemingly similar amenities.