Evaluating the accuracy of the benefit transfer method: a rural water supply application in the USA

Due to declining federal, state, and local government budgets, there is an increasing need to analyze the benefits of government funded programs to determine where increasingly limited funds would best be spent. The benefits transfer technique is analyzed for the development of a rural water supply system and guidelines for successful benefits transfer are presented. Benefit transfer appears to provide reasonably accurate estimates of natural resource benefits if a broad based benefit model is used. The benefits-transfer-based estimates are accurate as long as a model based on data from a wide variety of conditions is used or the model is based on data from a very similar region. The wide-based data modeling approach has the greatest practical application. These findings are based upon contingent valuation data obtained from four sites in the western USA.