Locally-weighted meta-regression and benefit transfer

Klaus Moeltner, Roshan Puri, Robert Johnston, Elena Besedin, Jessica A. Balukas and Alyssa Le

Journal of Environmental Economics and Management, 2023, vol. 121, issue C

Abstract: Meta-regression models (MRMs) are commonly used within benefit transfer to estimate willingness to pay for environmental quality improvements. In virtually all benefit transfers of this type, a single regression model is fit to all source points in the metadata, and used to produce out-of-sample predictions for all possible policy-site applications. Despite the advantages of this approach over other types of benefit transfer, the predictive accuracy of these MRMs generally leaves room for improvement. In this paper we propose a locally-weighted regression approach to MRM estimation to enhance the accuracy of benefit transfer predictions in an environmental valuation context. We introduce the concept of locally-weighted meta-regression, provide econometric underpinnings, and discuss the construction of weight functions. We illustrate the use of cross-validation to decide between weight functions, and show how this framework can be applied in an actual benefit transfer setting. For our empirical application on willingness-to-pay for water quality improvements, we find that the proposed approach brings substantial gains in predictive accuracy in a leave-one-out setting, and measurable improvements in predictive efficiency for benefit transfer.

Keywords: Semi-parametric methods; Bayesian estimation; Water quality; Cross-validation (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S009506962300089X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:121:y:2023:i:c:s009506962300089x

DOI: 10.1016/j.jeem.2023.102871

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().