Lake Water Quality Valuation – Benefit Transfer Approach vs. Empirical Evidence

The paper reports research in benefit transfer validity between Norway and two New Member States of EU-Poland and the Czech Republic. Based on the original eutrophication contingent valuation study conducted in Norway in 1994, repeated later in Norway (1997) and Germany (2000), two studies were conducted in Poland and the Czech Republic in 2005 in which we ask residents for willingness-to-pay for a hypothetical improvement of water quality in a lake which is strongly euthrophicated and therefore not usable for all recreational activities. The studies were designed in a way that would match the Norwegian original as closely as possible, with regard to site selection, scenario, payment vehicle and even the questionnaire design. The experience gained and the data collected serves to test for possibilities for future BT from Western European countries to new EU Member States as well as between two new member countries. Naive single benefit transfer yields the largest error rates. Transfers adjusted by purchasing power decrease these errors, however, they still remain very large. The error rates are more reduced by transfer benefit function and particularly after adjustments by income elasticities. Following our best transfer, the lowest error remains as high as 30%. Error rates for transferring benefits from Norwegian 1997-study which is just comparable with the Czech and Polish one from even after purchasing power adjustments remain. The paper summarizes the process of collecting data and results, analyzes main differences between the original and two latter studies as well as between the new studies. Finally, value transfer and function transfer are conducted and followed by validity tests.