Does Benefit Transfer Always Work: a Multi-country Comparison

Abstract

This paper analyzes the welfare effects of a 50 percent reduction in air pollution caused by road traffic in both Cairo (Egypt) and Rabat-Salé (Morocco) using a contingent valuation method with identical elicitation questions. Despite the fact that both the numbers of inhabitants and vehicles are higher in Cairo the willingness to pay to reduce the impacts of vehicle emissions is higher in Rabat-Salé although incomes are rather similar in both cities. This paper shows that the relatively often-used benefit transfer frequently leads to biases where damage costs are under- or overestimated.