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Bayesian nonlinear meta regression for benefit transfer

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  • Moeltner, Klaus
Abstract
In recent years numerous meta-regression models for benefit transfer in the context of environmental quality changes have been proposed by the academic literature and used by government agencies for policy making. We examine a set of popular specifications in terms of consistency with some basic utility-theoretic considerations, including the adding-up condition that is currently under much scrutiny by benefit transfer practitioners. We also compare these models based on econometric fit with underlying data, and ability to generate meaningful and efficient benefit transfer distributions. We find that our preferred Bayesian Nonlinear Meta-Regression Model (BNL-MRM) satisfies all theoretical requirements. Using a built-in nonlinear model search algorithm we show that it produces benefit estimates that are comparable or superior in efficiency to those flowing from better fitting, but theoretically flawed linear models that do not satisfy adding-up.

Suggested Citation

  • Moeltner, Klaus, 2019. "Bayesian nonlinear meta regression for benefit transfer," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 44-62.
    • Handle: RePEc:eee:jeeman:v:93:y:2019:i:c:p:44-62
    DOI: 10.1016/j.jeem.2018.10.008
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    References listed on IDEAS

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    1. Stephen C. Newbold & Patrick J. Walsh & D. Matthew Massey & Julie Hewitt, 2018. "Using structural restrictions to achieve theoretical consistency in benefit transfers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(3), pages 529-553, March.
    2. Johnston, Robert J. & Thomassin, Paul J., 2010. "Willingness to Pay for Water Quality Improvements in the United States and Canada: Considering Possibilities for International Meta-Analysis and Benefit Transfer," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(1), pages 1-18, February.
    3. Charles Griffiths & Heather Klemick & Matt Massey & Chris Moore & Steve Newbold & David Simpson & Patrick Walsh & William Wheeler, 2012. "U.S. Environmental Protection Agency Valuation of Surface Water Quality Improvements," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 6(1), pages 130-146.
    4. Phaneuf,Daniel J. & Requate,Till, 2017. "A Course in Environmental Economics," Cambridge Books, Cambridge University Press, number 9781107004177, September.
    5. Robert J. Johnston & Randall S. Rosenberger, 2010. "Methods, Trends And Controversies In Contemporary Benefit Transfer," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 479-510, July.
    6. Catherine L. Kling & Daniel J. Phaneuf, 2018. "How are Scope and Adding up Relevant for Benefits Transfer?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(3), pages 483-502, March.
    7. Rosenberger, Randall S. & Loomis, John B., 2000. "Panel Stratification in Meta-Analysis of Economic Studies: An Investigation of Its Effects in the Recreation Valuation Literature," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(3), pages 459-470, December.
    8. Richard T. Carson, 2012. "Contingent Valuation: A Practical Alternative When Prices Aren't Available," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 27-42, Fall.
    9. Klaus Moeltner & Randall S. Rosenberger, 2014. "Cross-Context Benefit Transfer: A Bayesian Search for Information Pools," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(2), pages 469-488.
    10. Robert J. Johnston & Elena Y. Besedin & Ryan Stapler, 2017. "Enhanced Geospatial Validity for Meta-analysis and Environmental Benefit Transfer: An Application to Water Quality Improvements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 343-375, October.
    11. Kaul, Sapna & Boyle, Kevin J. & Kuminoff, Nicolai V. & Parmeter, Christopher F. & Pope, Jaren C., 2013. "What can we learn from benefit transfer errors? Evidence from 20 years of research on convergent validity," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 90-104.
    12. Chib S. & Jeliazkov I., 2001. "Marginal Likelihood From the Metropolis-Hastings Output," Journal of the American Statistical Association, American Statistical Association, vol. 96, pages 270-281, March.
    13. Klaus Moeltner & Richard Woodward, 2009. "Meta-Functional Benefit Transfer for Wetland Valuation: Making the Most of Small Samples," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(1), pages 89-108, January.
    14. Robert J. Johnston & Elena Y. Besedin & Richard Iovanna & Christopher J. Miller & Ryan F. Wardwell & Matthew H. Ranson, 2005. "Systematic Variation in Willingness to Pay for Aquatic Resource Improvements and Implications for Benefit Transfer: A Meta‐Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(2‐3), pages 221-248, June.
    15. Rosenberger, Randall S. & Loomis, John B., 2000. "Panel Stratification In Meta-Analysis Of Economic Studies: An Investigation Of Its Effects In The Recreation Valuation Literature," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(3), pages 1-12, December.
    16. Johnston, Robert J. & Besedin, Elena Y. & Ranson, Matthew H., 2006. "Characterizing the effects of valuation methodology in function-based benefits transfer," Ecological Economics, Elsevier, vol. 60(2), pages 407-419, December.
    17. Phaneuf,Daniel J. & Requate,Till, 2017. "A Course in Environmental Economics," Cambridge Books, Cambridge University Press, number 9780521178693, September.
    18. Moeltner Klaus & Rosenberger Randall S, 2008. "Predicting Resource Policy Outcomes via Meta-Regression: Data Space, Model Space, and the Quest for 'Optimal Scope'," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-31, August.
    19. Whitehead, John C., 2016. "Plausible responsiveness to scope in contingent valuation," Ecological Economics, Elsevier, vol. 128(C), pages 17-22.
    20. Geweke, J, 1993. "Bayesian Treatment of the Independent Student- t Linear Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(S), pages 19-40, Suppl. De.
    21. Moeltner, Klaus & Boyle, Kevin J. & Paterson, Robert W., 2007. "Meta-analysis and benefit transfer for resource valuation-addressing classical challenges with Bayesian modeling," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 250-269, March.
    22. Van Houtven, George & Powers, John & Pattanayak, Subhrendu K., 2007. "Valuing water quality improvements in the United States using meta-analysis: Is the glass half-full or half-empty for national policy analysis?," Resource and Energy Economics, Elsevier, vol. 29(3), pages 206-228, September.
    23. Robert Johnston & Klaus Moeltner, 2014. "Meta-Modeling and Benefit Transfer: The Empirical Relevance of Source-Consistency in Welfare Measures," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(3), pages 337-361, November.
    24. Amiran, Edoh Y. & Hagen, Daniel A., 2010. "The scope trials: Variation in sensitivity to scope and WTP with directionally bounded utility functions," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 293-301, May.
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    Cited by:

    1. Meya, Jasper N. & Drupp, Moritz A. & Hanley, Nick, 2021. "Testing structural benefit transfer: The role of income inequality," Resource and Energy Economics, Elsevier, vol. 64(C).
    2. Dennis Guignet & Matthew T. Heberling & Michael Papenfus & Olivia Griot, 2022. "Property Values, Water Quality, and Benefit Transfer: A Nationwide Meta-analysis," Land Economics, University of Wisconsin Press, vol. 98(2), pages 191-218.
    3. Hermine Vedogbeton & Robert J. Johnston, 2020. "Commodity Consistent Meta-Analysis of Wetland Values: An Illustration for Coastal Marsh Habitat," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(4), pages 835-865, April.
    4. Newbold, Stephen C. & Johnston, Robert J., 2020. "Valuing non-market valuation studies using meta-analysis: A demonstration using estimates of willingness-to-pay for water quality improvements," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    5. Robert J. Johnston & Kevin J. Boyle & Maria L. Loureiro & Ståle Navrud & John Rolfe, 2021. "Guidance to Enhance the Validity and Credibility of Environmental Benefit Transfers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(3), pages 575-624, July.
    6. Dupoux, Marion & Martinet, Vincent, 2022. "Could the environment be a normal good for you and an inferior good for me? A theory of context-dependent substitutability and needs," Resource and Energy Economics, Elsevier, vol. 69(C).
    7. Moeltner, Klaus & Puri, Roshan & Johnston, Robert J. & Besedin, Elena & Balukas, Jessica & Le, Alyssa, 2022. "Locally Weighted Meta-Regression and Benefit Transfer," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322359, Agricultural and Applied Economics Association.
    8. Jasper N. Meya, 2018. "Environmental Inequality and Economic Valuation," Working Papers V-416-18, University of Oldenburg, Department of Economics, revised Dec 2018.
    9. Jasper N. Meya, 2020. "Environmental Inequality and Economic Valuation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(2), pages 235-270, July.
    10. Jasper N. Meya & Stefan Baumgärtner & Moritz A. Drupp & Martin F. Quaas, 2020. "Inequality and the Value of Public Natural Capital," CESifo Working Paper Series 8752, CESifo.

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