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THE DECISION TO USE BENEFIT TRANSFER OR CONDUCT ORIGINAL VALUATION RESEARCH FOR BENEFIT-COST AND POLICY ANALYSIS

Authors

  • BRYON P. ALLEN,

    1. Allen: PhD Candidate, Department of Agricultural and Resource Economics, Colorado State University, Fort Collins, CO 80523-1172, E-mail bryon@carrierallen.com
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      Partial support for this research was provided by Regional Research project W1133 and the Colorado Agricultural Experiment Station. We thank an anonymous reviewer for several suggestions for clarifying the exposition of this manuscript. Any omissions are the responsibility of the authors.

  • JOHN B. LOOMIS

    1. Loomis: Professor, Department of Agricultural and Resource Economics, Colorado State University, Fort Collins, CO 80523-1172, E-mail jloomis@lamar.colostate.edu
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      Partial support for this research was provided by Regional Research project W1133 and the Colorado Agricultural Experiment Station. We thank an anonymous reviewer for several suggestions for clarifying the exposition of this manuscript. Any omissions are the responsibility of the authors.


Abstract

We develop a method for determining the economic returns to using original valuation research rather than benefit transfer to estimate nonmarket values for policy analysis purposes. We provide a method to guide policymakers in determining the project sizes for which original research can be expected to yield positive returns in terms of reduced decision errors. We then provide an empirical example of how our method can be applied to the estimation of recreation benefits and provide simple guidance to policymakers regarding the relationship between project size and expected returns to original valuation research to estimate recreation benefits. (JEL H43, Q51, Q26)

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