Measuring the Economic Benefits of Water Quality Improvement with the Benefit Transfer Method: An Introduction for Non-Economists

Chris Dumas, Pete Schuhmann and John C. Whitehead ()

No 04-12, Working Papers from Department of Economics, Appalachian State University

Abstract: In this paper we provide an introduction to water quality benefit estimation for noneconomists. Net water quality benefits are typically measured using the concept of consumer surplus, which can be estimated using a number of economic valuation methodologies. These can be divided into direct and indirect methods. Direct methods involve questioning survey respondents to determine their consumer surplus. Indirect methods use data from consumer market behavior to estimate economic values. When limited time or funding preclude costly data collection and the development of new consumer surplus estimates, the method of benefit transfer can be used to tailor pre-existing consumer surplus estimates to fit new policy situations. We provide an example of benefit transfer by estimating the value of water quality improvements for the Cape Fear River in North Carolina. Benefit transfer methods are used with three valuation approaches to estimate the benefits of water quality improvement.

Date: Written 2004
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