Validity Tests of Benefit Transfer – Are We Performing the Wrong Tests?

The validity of environmental benefit transfer has been tested on numerous occasions assuming classical null hypothesis of equality. We argue against this assumption on the basis of theory, which clearly indicates that environmental benefits should be assumed to vary from context to context. We sugg...

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Bibliographic Details
Published in:Environmental & resource economics 2005-03, Vol.30 (3), p.279-286
Main Authors: Kristofersson, Dadi, Navrud, Ståle
Format: Article
Language:English
Subjects:
benefit transfer
contingent valuation
Economic models
Economic theory
Economics
Environment
Environmental economics
Environmental policy
Equivalence
equivalence tests
Hypotheses
Natural resources
Q1
Statistics
Studies
Test design
Tests
Validity
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Summary:The validity of environmental benefit transfer has been tested on numerous occasions assuming classical null hypothesis of equality. We argue against this assumption on the basis of theory, which clearly indicates that environmental benefits should be assumed to vary from context to context. We suggest the use of equivalence testing as a more appropriate and a clear compliment to the shortcomings of classical tests. Equivalence tests test the null hypothesis of difference between the original and transferred value estimates. Equivalence tests also combine the concepts of statistical significance and policy significance into one test, by defining an acceptable transfer error prior to the validity test. The results of a published study on validity of benefit transfer are reversed when subjected to an equivalence test. Copyright Springer 2005
ISSN:0924-6460
1573-1502
DOI:10.1007/s10640-004-2303-8