Threshold Effects in Meta-Analyses With Application to Benefit Transfer for Coral Reef Valuation

Abstract

Policymakers and advocates often use benefit transfers to estimate the economic value of environmental amenities when primary valuation studies are infeasible. Benefit transfers based on meta-analyses, which synthesize site and methodological characteristics from valuation studies of similar underlying amenities, generally outperform traditional site-to-site transfers. We build on earlier meta-analyses of willingness-to-pay for tropical coral reef recreation by introducing a meta-regression model with threshold effects, with a goal of increasing transfer reliability. We estimate a threshold in coral reef quality and find that increases in live coral cover have a large impact on individuals' WTP for recreation at degraded coral reefs. Relaxing the assumption of users' constant valuation across the distribution of this characteristic improves the performance of coral reef benefit transfers in some instances: tests of convergent validity reveal that including the threshold effect reduces the mean transfer error and the interquartile range of transfer errors in 5 out of 8 tests.