Testing Choice Experiment for Benefit Transfer with Preference Heterogeneity

Abstract

Benefit transfer is a cost‐effective method for estimating the value of environmental goods that relies on information obtained in previous studies. The multiattribute approach of choice experiments should provide advantages in terms of benefit transfer, allowing differences in environmental improvements between sites as well as differences in socioeconomic and attitude characteristics between respondent populations. This article investigates the capability of choice experiment method to be used in environmental benefit transfer when a random parameters approach is used to allow for preference heterogeneity: we find that the inclusion of respondents' taste heterogeneity reduces the magnitude of the transfer error.

Keywords: benefits transfer, choice experiment, heterogeneity, random parameter model