THE EVOLUTION OF A MORE RIGOROUS APPROACH TO BENEFIT TRANSFER - BENEFIT FUNCTION TRANSFER

The desire for economic values of recreation for unstudied recreation resources dates back to the water resource development benefit-cost analyses of the early 1960s. Rather than simply applying existing estimates of benefits per trip to the study site, a fairly rigorous approach was developed by a number of economists. This approach involves application of travel cost demand equations and contingent valuation benefit functions from existing sites to the new site. In this way the spatial market of the new site (i.e., its differing own price, substitute prices and population distribution) is accounted for in the new estimate of total recreation benefits. The assumptions of benefit transfer from recreation sites in one state to another state for the same recreation activity is empirically tested. The equality of demand coefficients for ocean sport salmon fishing in Oregon versus Washington and for freshwater steelhead fishing in Oregon versus Idaho is rejected. Thus transfer of either demand equations or average benefits per trip are likely to be in error. Using the Oregon steelhead equation, benefit transfers to rivers within the state are shown to be accurate to within 5-15%.