Which of the following statements best describes the benefit transfer method? Select one: a. An analyst converts all benefits into negative costs before calculating the NPV of a project b. A person transfers his health insurance benefits to his partner O c. The government uses the tax system to transfer payments from the rich to the poor O d. An analyst borrows estimated shadow prices from an existing study and adjusts them for use in a new study The internal rate of return… Select all that apply Select one or more: a. It can be used to construct an equally valid alternative to the NPV b decision rule. It is equivalent to the rate of return on investment (IRR) c. is the threshold discount rate at which the NPV of a project changes from positive to negative (or vice versa) d. It is sometimes used to perform sensitivity tests against the discount rate e. May not be unique The difference between the change in expected surplus caused by a policy change and the affected individuals’ DDP for them is called: Choose an answer: a. Option price b. Option value c. Equivalent variation d. Compensating variation e. Equivalent certainty
Answers
1.Option d) An analyzer borrows existing shadow prices from a
existing study and adjust them for use in a new study
Transfer of benefits refers to the process of
apply the evaluation results, functions, data or derived models in
a place or context (study site) to estimate the economic values of
ecosystem services in an alternative context or location (policy
square). For example, values for recreational fishing in a place where
an ecosystem restoration project under study can be
estimated based on similar studies in the literature.
2.Option c) This is the threshold discount rate at which a project
The NPV changes from positive to negative (or vice versa)
The internal rate of return (IRR) is a measure used in capital
budget to estimate the profitability of potential investments.
The internal rate of return is a discount rate that makes net income
present value (NPV) of all cash flows of a specific project
equal to zero.
3. Option A) Option price