Valuation of Biodiversity Benefits (OECD)

activity day, there is greater variability in reporting non-use values from CV surveys, both in terms ofWTP for whom, and for what time period. WTP is reported both per household and per individual, andas a one-time payment, an annual payment for a limited time period, an annual payment for anindefinite time, or even monthly payments. Second, the WTP is reported for one or more specifieddiscrete changes in environmental quality, and not on a marginal basis. Therefore, the magnitude ofthe change, should be similar, in order to get valid transfers of estimates of mean, annual WTP perhousehold. Also the initial levels of environmental quality should be similar if one expectsnon-linearity in the benefit estimate or underlying physical impacts.For health impacts the question of which units to transfer seems somewhat simpler. Withregards to mortality the unit would be the Value of a Statistical Life (VSL) or the newer, and disputedmeasure, Years of Life Lost (YOLL). It is more complex to measure morbidity, therefore severalunits of value are used. For light symptoms like coughing, headaches and itching eyes, symptom days(defined as a specified symptom experienced one day by one individual) are often used. Values formore serious illnesses are reported in terms of value per case. However, the description of thesedifferent symptoms and illnesses varies in terms of severity. A better measure would be to constructvalues for episodes of illness defined in terms of symptoms, duration and severity (in terms ofrestrictions in activity levels, whether one would have to go to the hospital, etc.).On the issue of units to transfer, one should also keep in mind that often the valuation step ispart of a larger damage function approach. The study objective is often to estimate values for theendpoints of dose-response and exposure-response functions for environmental and health impacts,respectively, due to changes in, for example, emissions of air pollutants. Thus, a linkage has to bedeveloped between the units the endpoints are expressed in, and the unit of the economic estimates.This has been done successfully for e.g. changes in visibility range [Smith and Osborne (1996)], but ismore difficult as the complexity of changes in environmental resources increase.The simple unit transfer approach is not fit for transfer between countries with differentincome levels and standards of living. Therefore, unit transfer with income adjustments has beenapplied, for example, by using Purchase Power Parity indexes. However, this adjustment does not takecorrect for differences in preferences, environmental conditions, and cultural and institutionalconditions between countries. Very few studies have tested the impacts of these factors on valuationresults. Ready et al. (1999) conducted the same CV study in five European countries (the Netherlands,Norway, Portugal, Spain, and the United Kingdom). They found that the transfer error in valuingrespiratory symptoms was ±38% in terms of predicting mean willingness-to-pay (WTP) to avoid thesymptom in one country from the data of the other countries. The WTP estimates were adjusted withPPP indexes (for the cities the studies were conducted in, since national PPP indexes were notrepresentative for these specific cities). Thus, the remaining differences in the valuations are due toother factors than income.This same study is also a test of the accuracy of benefit transfer. The observed transfer errorshould be compared with the variability in the original estimate within a country of ±16 % (estimatedusing Monte Carlo simulations). These results relate to the valuation of respiratory symptoms that canbe linked to air or water pollution, and it is not certain that they are transferable to other environmentalgoods. Thus, we should perform similar types of validity tests of international benefit transfer for bothuse and non-use value of biodiversity. This would provide very useful information about thepossibilities and uncertainty involved in using the international stock of biodiversity valuation studieswhen valuing biodiversity in CBA of projects or new policies.68