The Use Of Benefit Transfer In The Evaluation Of Water Quality Improvement: An Application In China

Since the late 1960s, economists have been developing methodologies to measure environmental impacts. Among the approaches most widely used are the travel cost method (TCM) and the contingent valuation method (CVM). Generally, these methods provide a reasonable approximation of the value of a non-marketed environmental good or service; their drawbacks are that they are time-consuming and expensive. The pressures of time and budget are common during project appraisals. Traditional cost-benefit analyses (CBA) are now supplemented by environmental impact assessments (EIA) with results that are often difficult to reconcile. While the CBA is expressed in monetary value, the EIA is usually in physical terms. To compare the two, the EIA must be converted to a monetary value; but time and money for a full-scale valuation are rarely available. The use of 'benefit transfer' (BT) is often advocated (ADB, 1996). This involves taking the results from one or more primary economic studies with estimated values for similar impacts, and modifying and transferring them to the project being evaluated. In cases where a high degree of precision is not critical, BT may provide useful information for decision-making. Frequently, it will be the only way of providing such information. The inclusion of environmental impacts in project appraisals has increased greatly in the last 10 years. Interest in benefit transfer has grown correspondingly and literature on the subject is now substantial (e.g., Desvouges, et al. 1992; Navrud, 1996). But efforts to test the approach in developing countries are relatively few. Since most original valuation studies have been done in developing countries, efforts to validate the transfer of values between developed and developing countries, and between developing countries, are especially needed.