A Bayesian model for benefit transfer: application to national parks in Spain
Applied Economics, 34 (6):
749--757 (2002)Abstract
Valuing environmental goods through benefit transfer is based on information
from the set of past empirical studies of similar or identical sites.
This paper proposes a Bayesian approach to model prior information
on mean consumer surplus. The prior distribution is defined as a
convex combination of the results from past empirical studies. An
advantage of the Bayesian approach is that the prior distribution
could be combined with on-site sample information in order to improve
predictions on the benefits of the policy site. The model is applied
to data from national parks in Spain. The results show that the benefits
of policy sites are more sensitive to the prior information for smaller
sample sizes. This implies that the prior distribution can be seen
as a substitute for on-site sample information.