WRC RESEARCH REPORT NO. 128

IMPROVED PROCEDURES FOR VALUATION OF THE

CONTRIBUTION OF RECREATION TO N A T I O N A L ECONOPUC DEVELOPMENT

John F. Dwyer John R. K e l l y

Michael D. Bowes

Department o f F o r e s t r y Department o f L e i s u r e S tud ies

Department o f Economics

FINAL REPORT

P r o j e c t No. C-7525

Th is p r o j e c t i s funded by O f f i c e o f Water Research and Technology

U. S. Department o f t he I n t e r i o r Water Resources Research Ac t o f 1964

PL 88-379 - T i t l e I 1

Grant No. 14-34-001 -6237

U n i v e r s i t y o f I l l i n o i s Water Resources Center

2535 Hydrosys tems Labora to ry Urbana, I 1 1 i n o i s 61801

September, 1977

The Research Team

U n i v e r s i t y o f I l l i n o i s a t Urbana-Champaign

P r i n c i p a l I n v e s t i g a t o r s

John F. Dwyer, Department o f F o r e s t r y John R. K e l l y , Department o f L e i s u r e S tud ies

Research A s s i s t a n t s

Michael D. Bowes, Department o f Economics Marianne Bowes, Department o f Economics Randy A. Nel son, Department o f Economics

Dav id J . Ravenscra f t , Department o f Economics

AYIISERS TO THE SnJDY

Consul tants

Dr. W i l l i a m G. Brown Dr. Robert K. Davis Dr. Jack L. Knetsch Dr. John V. K r u t i l l a Dr. Kenneth E. McConnell Dr. Jon R. M i l l e r Dr. Danie l M. Ogden Dr. George L. Peterson

Oregon S t a t e U n i v e r s i t y U. S. Department o f t h e I n t e r i o r Simon Fraser U n i v e r s i t y Resources For The Fu tu re U n i v e r s i t y o f Rhode I s l a n d C l arkson Col 1 ege Colorado S t a t e U n i v e r s i t y Northwestern U n i v e r s i t y

RECREATION B E N E F I T E V A L U A T I O N COMMITTEE

C l arence E. B l ac ks tock Dale A. Crane Henry L. DeGraff Ad r i an L. Haught I d i 11 i am H. Heneberry W i l l i a m H. Honore* A. Glen Johnson D a r r e l l E. Lewis G. Robert 01 son Rodney 14. 01 son Richard L. P o r t e r Richard T. Reppert Gordon Tay lo r George B. Tu l l e y Demetres A. V la tas

Robert C. Waters Ralph C. Wi lson

Federal Power Commi ss i on Corps o f Engineers Department o f Cornmerce Fo res t Serv ice Econorni c Research Se rv i ce Bureau o f Outdoor Recreat ion S o i l Conservat ion Serv ice Bureau o f Land Management Tennessee Val 1 ey A u t h o r i t y F i sh and W i l d l i f e Se rv i ce Bureau o f Reclamation Corps o f Engineers Federal Power Commission Tennessee Val 1 ey A u t h o r i t y O f f i c e o f Water Research and

Techno1 ogy Water Resources Counci 1 Soi 1 Conservat ion Serv i ce

*Chai rman

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PREFACE

T h i s r e p o r t was i n i t i a t e d i n response t o a problem faced by

p lanners concerned w i t h water and r e l a t e d l a n d resources. The

P r i n c i p l e s and S t a n d a r d s o f t h e Water Resources Counci l es tab-

l i s h e s a n a t i o n a l economic development o b j e c t i v e , t o which

r e c r e a t i o n c o n t r i b u t e s . The s tudy presented i n t h i s r e p o r t

concerns t h e e s t i m a t i o n o f t h i s c o n t r i b u t i o n .

The g u i d e l i n e s and procedures f o r e s t i m a t i n g r e c r e a t i o n ' s

c o n t r i b u t i o n t o n a t i o n a l econornic devel oprrient t h a t a re prov ided

i n t h e P r i n c i p l e s and S t a n d a r d s a r e vague and i n some ins tances

m is l ead ing . Agency p lanners have n o t made s i g n i f i c a n t progress

i n develop ing improved g u i d e l i n e s and procedures t o supplement

t h e P r i n c i p l e s and S t a n d a r d s . Consequently, t h e r e has been no

g e n e r a l l y agreed upon o r u n i v e r s a l l y accepted method o f e s t i -

mat ing r e c r e a t i o n ' s c o n t r i b u t i o n t o n a t i o n a l economic

development.

The problem was o u t l i n e d by W i l l i a m H. Honore o f t h e D i v i s i o n

o f Water Resources, Bureau o f Outdoor Recrea t ion i n a presenta-

t i o n t o t h e T e n t h Annual W a t e r R e s o u r c e s R e s e a r c h C o n f e r e n c e i n

Washington, D .C . on A p r i l 9, 1975. Dr. Glenn E. S tou t , D i r e c t o r

o f t h e Water Resources Center a t t he U n i v e r s i t y o f I l l i n o i s ,

subsequent ly brought t h e problem t o t he a t t e n t i o n o f researchers

a t t he U n i v e r s i t y o f I l l i n o i s .

A research proposal was prepared and submi t ted t o t he O f f i c e

o f Water Research and Technology and, a f t e r app rop r i a te m o d i f i -

c a t i o n , funded by t h e O f f i c e o f Water Research and Technology

under T i t l e I 1 o f t h e Water Resources Research Act, Grant No.

14-34-001 -6237.

The s tudy was guided, i n p a r t , by a team o f e i g h t n a t i o n a l l y

recognized consu l t an t s and t h e Recrea t ion B e n e f i t Eva lua t i on

Cornr~iittee, which i nc l udes 17 r e p r e s e n t a t i v e s of federa l agencies.

The c o n s u l t a n t s and t h e Recrea t ion Bene f i t Eva lua t i on Committee

commented on t h r e e p rev ious d r a f t s of t h i s r e p o r t . I n a d d i t i o n ,

a Recreation Benef i t Evaluation Conference was he ld a t George

Washington U n i v e r s i t y on December 2 and 3, 1976. The Conference

was a t tended by t h e research team, consu l t an t s , and 40 represen-

t a t i v e s of federa l agencies, i n c l u d i n g t h e Recrea t ion Bene f i t

Eva1 ua ti on Commi t t e e .

A1 1 conference p a r t i c i p a n t s were fu rn ished a d r a f t manuscri p t

e n t i t l e d "Guide1 i n e s For Va lua t i on o f Water-Based Recrea t ion"

t h r e e weeks be fo re t h e Conference t o p rov i de background f o r

d i scuss ion . That document was, i n essence, a p r e l i m i n a r y d r a f t

of t h i s r e p o r t . The Conference focused on key i ssues concern ing

r e c r e a t i o n ' s c o n t r i b u t i o n t o n a t i o n a l economic development.

Thus t h e au tho rs have b e n e f i t e d f rom t h e adv i ce o f a l a r g e

number o f knowledgeable i n d i v i d u a l s . Th i s r e p o r t r e f 1 e c t s t h a t

adv ice, b u t t h e conc lus ions a r e n o t n e c e s s a r i l y endorsed by a l l

o f t h e consu l t an t s , members o f t h e Recrea t ion B e n e f i t Eva lua t i on

CoInITIittee, o r p a r t i c i p a n t s a t t h e Recreation Benefi t Evaluation

Conference .

Three ou t s tand ing co l leagues , Marianne Bowes, Randy A. Nelson,

and David J. Ravenscra f t made major c o n t r i b u t i o n s t o t h e deve l -

oprnent o f t h i s r e p o r t . Wi thou t t h e i r he lp , guidance, and i n -

s i g h t t h i s r e p o r t cou ld n o t have been w r i t t e n .

The au tho rs wish t o acknowledge t h e e x c e l l e n t adv i ce and

ass i s t ance t h a t t h e y have rece ived ; we a lone, however, bear s o l e

respons i b i 1 i ty f o r t h i s r e p o r t and t h e recommendations t h a t i t

con ta i ns .

J. F. D.

J. R . K .

M. D . B.

TABLE OF CONTENTS

ABSTRACT i v

PREFACE v

TABLE OF CONTENTS v i i

ILLUSTRATIONS x i

TABLES AND CHARTS x i i

Purpose . . . . ' . . . . . . . . . . . . . . . . . . . . 1 Scope . . . . . . . . . . . . . . . . . . . . . . . . . 1 Background . . . . . . . . . . . . . . . . . . . . . . . 2

B e n e f i t - C o s t A n a l y s i s . . . . . . . . . . . . . . . 2 System o f Accounts . . . . . . . . . . . . . . . . . 4 Appl i c a t i o n o f t h e Systern o f A c c o u r ~ t s . . . . . . . 5

Approach . . . . . . . . . . . . . . . . . . . . . . . 6

2 . CONCEPTS OF VALUES . . . . . . . . . . . . . . . . . . . 7

W i l l i r ~ g n e s s t o Pay a s a Measure o f B e n e f i t s . . . . . . 7 W i l l i n g n e s s t o Pay . . . . . . . . . . . . . . . . . . 8 Consumers ' S u r p l us . . . . . . . . . . . . . . . . . . 1 0 W i l l i n g n e s s t o S e l l . . . . . . . . . . . . . . . . . . 12 D i s t r i b u t i o n a l Impacts . . . . . . . . . . . . . . . . 15

. . . . . . . . . . . . . . . . . . . . . . . . Summary 16

THE PROBLEM AND AN OVERVIEW OF THE SOLUTION . . . . . . 1 9

C r i t e r i a f o r R e c r e a t i o n V a l u a t i o n Procedures . . . . . 19 . . . . . . . . . . . . . C u r r e n t V a l u a t i o n Procedures 20

A Rev ised U n i t Day Va lue Approach? . . . . . . . . . . 24 Recommended Improved Procedures . . . . . . . . . . . . 33

. . . . . . . . . . . . . . . . . . . The Survey Method 37 The Va lue o f R e c r e a t i o n I n The Maine Woods . . . . . 37 The Va lue o f Water fowl . . . . . . . . . . . . . . . 39

. . . . . . . . . . . . . . . . The T r a v e l Cost Method 40 The Va lue o f R e s e r v o i r R e c r e a t i o n . . . . . . . . . 41

. . . . . . . . . . . . . . The Va lue o f Urban Parks 42 . . . . . . . . . . . . . . . . . . . . . . . . Summary 43

Appendix t o Chapter 3 . . . . . . . . . . . . . . . . . 45

v i i i

. . . . . . . . . . . . . . . . . . . 4 . THE SURVEY METHOD 55

The A b i l i t y o f Consumers t o Ass ign Values . . . . . . . 57 The A b i l i t y o f t h e Survey t o E l i c i t Values . . . . . . 59

Understanding t h e Ques t ions . . . . . . . . . . . . 60 Gaming S t r a t e g y o f t he Respondent . . . . . . . . . 62

. . . . . . . . . . . . . . . . . . . . M u l t i p l e V i s i t s 64 Examples App l y i ng t h e Survey Method t o Recrea t ion . . . 64

The Davis Study . . . . . . . . . . . . . . . . . . 65 The Horva th Study . . . . . . . . . . . . . . . . . 68 The Hamrr~ack and Brown Study . . . . . . . . . . . . 71 Eva lua t i on o f t h e Survey Technique . . . . . . . . . 74

Summary of Suggest ions f o r Use o f t h e Survey . . . . . . . . . . . . . . . . . . . . . . . . Method 75

5 .THE TRAVEL COST METHOD . . . . . . . . . . . . . . . . . 79

. . . . . . . . . . . . . . . . . . . . . I n t r o d u c t i o n 79 The Assurnptions o f t h e Trave l Cost Method . . . . . . . 82

E n t r y Fees-Si te Use B e n e f i t s vs . T r i p . . . . . . . . . . . . . . . . . . . . . Bene f i t s 82

. . . . . . . . . . . . . . . . . . . S p e c i f i c a t i o n 83 Capac i t y . . . . . . . . . . . . . . . . . . . . . . 84

The App rop r i a t e Use o f t h e T rave l Cost Method . . . . . 84 . . . . . . . . . . . . . The Bas ic T rave l Cost Method 87

Exampl e 1 . Development o f a Simple T rave l . . . . . . . . . Cost Model f rom an E x i s t i n g S i t e 88

Example 2 . A p p l i c a t i o n o f t h e Model t o a Proposed S i t e Wi th No S u b s t i t u t e s . . . . . . . . . 94

Example 3 . A p p l i c a t i o n o f t he Model t o a Proposed S i t e i n Compet i t i on w i t h an

. . . . . . . . . . . . . I d e n t i c a l Subs t i t u t e S i t e 98 . . . . . . . . . . . Summary o f I n t r o d u c t o r y Examples 102

. . . . . . . . . . . . . . . The Loca t i on o f Users 102 . . . . . . . . . . . . . . . . . . . S u b s t i t u t e S i t e s 103 . . . . . . . . . . . . . . . . . . U n i t Day Values 103 . . . . . . . . . . . . . . . . . . Subsequent Examples 104

. . . . . . . . . . . . Regional T rave l Cost Es t ima to r s 104 . . . . . . . . . . . . . . . . . Model C o n s t r u c t i o n 105

. . . . . . . . . . . Eva lua t i on o f a Proposed S i t e 107 I . B u r t and Brewer (1974): A L i n e a r System o f

. . . . . . . . . . . . . Per Cap i t a Demand Equat ions 109 . . . . . . . . . . . . . . . . . . . . . Procedure 110

. . . . . . . . . . E v a l u a t i o n o f t h e Proposed S i t e 112 I 1 . Cesar io and Knetsch (1976) : A S i n g l e

. . . . . . . . . . . . . . . . . . . . Equat ion Model 114 . . . . . . . . . . . . . . . . . . . . . . Equat ion 11 5

. . . . . . . . . . . E v a l u a t i o n o f a Proposed S i t e 119 The Choice of Trave l Cost Model s-Speci f i c a t i o n

. . . . . . . . . . . . . . . . . . . . . . . . E r r o r s 121

. . . . . . . . . . . . . . . . . . . . . . . . Time 122 Exarnple 4: The Simple T rave l Cost Model-

. . . . . . . . . . . . . . . Cor rec ted f o r T rave l Time 123 . . . . . . . . . . . . . . . . Stage 1 -Tt-i p Demand 125

. . . . . . . . . . . Stage 2-Aggregate S i t e Demand 126

S u b s t i t u t e s . . . . . . . . . . . . . . . . . . . . . . 127 Example 5: S u b s t i t u t e s . . . . . . . . . . . . . . . . 127 Eva lua t i on o f t h e Travel Cost Method . . . . . . . . . 129 Summary and Comments . . . . . . . . . . . . . . . . . 131

6 . SUMMARY OF RECOMMENDATIONS CONCERNING VALUATION CONCEPTS. VALUATION METHODS. AND AGENCY PROCEDURES . . . 133

Va lua t i on Concepts . . . . . . . . . . . . . . . . . . 133 Va lua t i on Methods . . . . . . . . . . . . . . . . . . . 135

The Survey Method . . . . . . . . . . . . . . . . . 136 The Trave l Cost Method . . . . . . . . . . . . . . . 137

Choosing a Va lua t i on Method . . . . . . . . . . . . . . 138 Agency Procedures . . . . . . . . . . . . . . . . . . . 140

. . . . . . . ? REVISIONS FOR THE PRINCIPLES AND STANDARDS 143

Revised Sec t ion 1I .F.e . . . . . . . . . . . . . . . . . 143 A d d i t i o n t o Sec t ion 1I.G.a . . . . . . . . . . . . . . . 146

8 . RECOMMENDATIONS FOR IMPLEMENTATION . . . . . . . . . . . 149

Summary . . . . . . . . . . . . . . . . . . . . . . . . 151

9. RESEARCH NEEDS . . . . . . . . . . . . . . . . . . . . . 153

. . . . . . . . . . . . . . . . . . . Survey Ques t ions 153 . . . . . . . . . . . . . . . . . . . . . . Congestion 154

I n d i v i d u a l D i f f e r e n c e s . . . . . . . . . . . . . . . . 154 . . . . . . . . . . . . . . . . . . . . . . . . Qua1 i t y 155

. . . . . . . . . . . . . . . . . . . . . . . . . Time 155 . . . . . . . . . . . . . . . . . . . . . . S u b s t i t u t e s 156

. . . . . . . . . . . . . . . . . Demand S p e c i f i c a t i o n 156 . . . . . . . . . . . . . . . . . . W i l l i n g n e s s t o S e l l 156

APPENDIX A-THE RECREATION BENEFIT EVALUATION . . . . . . . . . . . . . . . . . . . . . . . . CONFERENCE 157

. . . . . . . . . . . . . . . . . . . The Research Team 161 . . . . . . . . . . . . . . . . . . . . . . Consu l tan ts 162

Agency Representat ives a t Recreat ion B e n e f i t . . . . . . . . . . . . . . . . Eva lua t i on Conference 163

. . . . . . . . . . . . . . . APPENDIX B-AGENCY PROCEDURES 167 . . . . . . . . . . . . . U . S . Army Corps o f Engineers 167

. . . . . . . . . S o i l Conservat ion Serv ice . . . . . ; 169 . . . . . . . . . . . . . Bureau o f Outdoor Recreat ion 170 . . . . . . . . . . . . U . S . F i s h and Wild1 i f e Serv ice 171

APPENDIX C-VALUATION METHODOLOGY . . . . . . . . . . . . . 173

Concepts Related t o N i l 1 ingness t o Pay . . . . . . . . 173 . . . . . . . . . . . . . . . . . . . . Market Value 173

Maximum Revenue o f a Non-Price- . . . . . . . . . . . . . D i s c r i m i n a t i n g Monopo l i s t 176

Maximum Revenue o f Pe r fec t -P r i ce - . . . . . . . . . . . . . D i s c r i m i n a t i n g Monopol i s t 180

. . . . . . . . . . . . . . . The Land-Value Method 181 . . . . . . . . . . . . . . . . . . A1 t e r n a t i ve Cost 184

. . . . . . . . . . . . . . . Other Va lua t i on Concepts 188 . . . . . . . . . . . . . . . . . Expendi ture Method 189

Gross Na t i ona l Product Method . . . . . . . . . . . 191 . . . . . . . . . . . . . . . . . . . . Cost Method 192

. . . . . . . . . . . . . . . . Market Value o f Game 192

APPEND1 X D-EQUIVALENT AND COMPENSATING VARIATION . . . . . . . . . . . . . . . . . . AS MEASURES OF BENEFITS 195

. . . . . . . . . . . . . APPENDIX E-DISSENTING STATEMENT 199

. . . . . . . . . . . . . . . . . . . . . LITERATURE CITED 201

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TABLES ANI) CHARTS

Char t I . Example of a P o i n t System and I t s Use . . . . . 28 Char t 11. P o i n t Systems f o r Choosing a U n i t Day

Value . . . . . . . . . . . . . . . . . . . . 30

Table 1 .

Table 2.

Table 3. Table 4.

Table 5.

Table 6.

Table 7.

Table 8 .

Table 9.

Table 10.

U n i t Day Val u,es Der i ved f rom Emp i r i ca l W o r k . . . . . . . . . . . . . . . . . . . . . 46

U n i t V i s i t Values Der ived f rom Emp i r i ca l W o r k . . . . . . . . . . . . . . . . . . . . . 51

Resu l t s o f t h e Horvath Study. . . . . . . . . . 70 Bas ic Data f o r t h e Simple Trave l Cost

Method . . . . . . . . . . . . . . . . . . . . 89 The Trave l Cost Method: Stage 2. The

Aggregate S i t e Demand Curve f o r an E x i s t i n g S i t e . . . . . . . . . . . . . . . . 93

Data f o r App l y i ng t h e Simple Trave l Cost Model t o a Proposed S i t e . . . . . . . . 96

The Trave l Cost Method-Exampl e 2: Appl i c a t i on o f t h e Model t o a New S i t e . . . . . . . . . . . . . . . . . . . 97

The Trave l Cost Method-Example 3: Appl i ca t i o n o f t h e Model t o a New S i t e w i t h a S u b s t i t u t e . . . . . . . . . . 99

Data f o r t h e Simple T rave l Cost . . . . . . . . Method I n c l u d i n g Trave l Time. 123

T r i p Demand Equat ions-Tr ips Per . . . . . . . . . . . Cap i t a vs. T rave l Cost. 125

CHAPTER I I NTRODUCT ION

Recrea t iona l use o f wa te r and r e l a t e d l a n d resources c o n t i n -

ues t o demand inc reased a t t e n t i o n f rom p lanners . Popul a t i o n

inc reases and ga ins i n income, m o b i l i t y , and l e i s u r e f o r l a r g e

segments of t h e p o p u l a t i o n have c o n t r i b u t e d t o growing p a r t i -

c i p a t i o n i n r e c r e a t i o n . A t t h e same t ime, concern f o r t h e

long- te rm we1 1 -be ing o f t h e n a t u r a l environment and f o r t h e

management o f water and w a t e r - r e l a t e d l and resources has r i s e n

d r a m a t i c a l l y as a p u b l i c i ssue . Perce ived c o n f l i c t s between t h e

severa l b e n e f i t s and c o s t s o f r e c r e a t i o n development pose a

ma jo r cha l 1 enge f o r p lanners .

The aim o f t h i s r e p o r t i s t o p rov i de a b a s i s f o r improved

procedures f o r e v a l u a t i n g t he c o n t r i b u t i o n o f water-based r e c r e -

a t i o n t o n a t i o n a l economic development. The r e v i s e d g u i d e l i n e s

and procedures i n t h i s r e p o r t suggest replacernents f o r and

supplements t o t h e g u i d e l i n e s presented i n t h e p r i n c i p l e s and

S t a n d a r d s f o r P l a n n i n g W a t e r and R e l a t e d Land ~ e s o u r c e s ' ( su bse-

q u e n t l y r e f e r r e d t o as t h e P r i n c i p l e s and S t a n d a r d s ) .

SCOPE

The Water Resources Counci l e s t a b l i s h e d t h e P r i n c i p l e s and

S t a n d a r d s i n 1973 t o a i d t h e pub1 i c p l ann ing and d e c i s i o n making

process. The P r i n c i p l e s and S t a n d a r d s p rov ides a framework f o r

a n a l y z i n g t h e b e n e f i c i a l and adverse impacts o f an a l t e r n a t i v e

'water Resources Counc i l . 1973. Water and Related Land Re- sources: Estab l ishment o f P r i n c i p l e s and Standards f o r P lann ing . F e d e r a l R e g i s t e r , Vol . 38, No. 174, P a r t I I I .

on r e c r e a t i o n and o t h e r ou tpu t s2 th rough f o u r c a t e g o r i e s o r

accounts : n a t i o n a l economic development, env i ronmenta l qua1 i t y ,

r e g i o n a l development , and s o c i a l we1 1 -being. The f i r s t two

accounts cor respond t o t h e two o b j e c t i v e s i d e n t i f i e d by t h e

P r i n c i p l e s and S t a n d a r d s . The o t h e r two accounts a r e n o t ob jec -

t i v e s , b u t measures o f a t t a i n m e n t a r e s p e c i f i e d f o r them. The

procedures f o r e v a l u a t i n g t h e c o n t r i b u t i o n o f r e c r e a t i o n t o

n a t i o n a l economic devel oprnent , and analyses based on these

g u i d e l i n e s , have been t h e o b j e c t o f c r i t i c i s m . Th i s r e p o r t ex-

amines these procedures and c r i t i c i s m s and develops improved

procedures and guide1 i n e s f o r t h e i r use.

I t i s impo r tan t t o recogn ize a t t he o u t s e t t h a t t he scope o f

t h i s paper i n c l u d e s one ou tpu t , r e c r e a t i o n ( b o t h p o s i t i v e and

nega t i ve impacts on r e c r e a t i o n ) , and cons ide rs o n l y one ob jec -

t i v e , n a t i o n a l economic development. By choos ing t h i s f ocus , we

cons ide r o n l y one f a c e t o f t h e p o t e n t i a l c o n t r i b u t i o n o f r e c r e -

a t i o n t o t h e q u a l i t y o f 1 i f e .

It i s usefu l t o l o o k a t r e c r e a t i o n ' s c o n t r i b u t i o n t o n a t i o n a l

economic development i n terms o f b e n e f i t - c o s t a n a l y s i s and t h e

system o f accounts e s t a b l i s h e d by t he P r i n c i p l e s and S t a n d a r d s .

B e n e f i t - C o s t A n a l y s i s

E v a l u a t i n g t h e c o n t r i b u t i o n o f a p r o j e c t t o n a t i o n a l economic

development i s g e n e r a l l y done i n e x p l i c i t fo rm i n a b e n e f i t - c o s t

a n a l y s i s . B e n e f i t s r ep resen t t h e va lue o f t h e goods and ser -

v i c e s d e r i v e d f rom t h e a l t e r n a t i v e , w h i l e c o s t s a r e t h e va lue o f

goods and s e r v i c e s t h a t c o u l d have been produced had t h e r e -

sources n o t been wi thdrawn frorn o t h e r uses. I n t h e case o f

' ~ h e s e o u t p u t s i n c l u d e water supply , f l o o d c o n t r o l , land s t a b i 1 i- z a t i o n , d ra inage , power, t r a n s p o r t a t i o n ( n a v i g a t i o n ) , r ec rea t i on , and f i s h and w i l d l i f e .

r e c r e a t i o n , t h i s " o p p o r t u n i t y c o s t M should i n c l u d e t h e mone-

t a r y c o s t s of development and maintenance o f t h e s i t e o r

area, a long w i t h an account ing of b e n e f i t s l o s t by w i thdrawing

water and r e l a t e d l a n d resources frorn t h e i r p resen t uses.

The d i f f e r e n c e between b e n e f i t s and c o s t s i s termed net

benefits. S t r i c t appl i c a t i o n of a b e n e f i t - c o s t c r i t e r i o n

would r e q u i r e t h a t i n choosing among f e a s i b l e a l t e r n a t i v e s one

be chosen t h a t maximizes n e t bene f i t s , w i t h n e t b e n e f i t s pos i -

t i v e . F u l f i l l m e n t of t h i s bene f i t - c o s t c r i t e r i o n should en-

sure t h a t i t i s p o s s i b l e f o r those who b e n e f i t t o make s u f f i -

c i e n t payments t o f u l l y compensate t he l o s e r s such t h a t no one

person i s made worse o f f , and a t l e a s t some people can be made

b e t t e r o f f . I f such compensation were t o be made, t h a t would

seem t o make t h e b e n e f i t - c o s t c r i t e r i o n a reasonable bas i s f o r

p r o j e c t choice. I n f a c t , i t i s u n l i k e l y t h a t f u l l compensa-

t i o n ever occurs, and i t becomes t he t a s k o f t he d e c i s i o n

maker t o judge t h e a c c e p t a b i l i t y o f t he ac tua l inc idence o f

losses and ga ins . Note, however t h a t w i t h t h i s m o t i v a t i o n o f

t h e b e n e f i t - c o s t c r i t e r i o n i t i s reasonable and necessary t o

use w i l l i ngness - to -pay t o measure ga ins, and des i r ed compensa-

t i o n t o measure most losses .

B e n e f i t s and cos t s a r e o r d i n a r i l y measured by t he sum o f

each i n d i v i d u a l r e c i p i e n t ' s va lua t i ons . Thus, i n terms o f

n a t i o n a l economic development, and l e a v i n g as ide t he d i s t r i bu-

t i o n o f t h i s ga in , a d o l l a r o f b e n e f i t s e n t e r s w i t h t h e same

we igh t , r ega rd less o f who de r i ves t he b e n e f i t s . I n o r d e r t o

i n c l u d e d i s t r i b u t i o n e f f e c t s i n b e n e f i t - c o s t a n a l y s i s ( i .e.,

t o eva lua te t h e d i s t r i b u t i o n o f b e n e f i t s and cos t s among the

p o p u l a t i o n ) , some consensus on t h e we igh ts t o be a t tached t o

t h e ga ins and losses o f each i n d i v i d u a l would be requ i red . I n

t h e absence o f such a consensus, t h e d i s t r i b u t i o n a l impacts

should be cons idered separa te ly .

System o f Accounts

Whi le accounts o t h e r t h a n n a t i o n a l economic development a r e

o u t s i d e t h e scope of t h i s s tudy , an unders tand ing o f t h e system

o f accounts i s e s s e n t i a l f o r subsequent d i s c u s s i o n . The

f o l l o w i n g s e c t i o n p r o v i d e s a genera l d e f i n i t i o n o f each account.

National Economic Development. T h i s account measures

changes i n t h e v a l u e o f goods and s e r v i c e s p r o v i d e d . A l l

changes which can be e v a l u a t e d i n monetary terms shou ld be i n -

c l u d e d i n t h i s account . R e c r e a t i o n ' s impac t on t h i s account

i s i n d i c a t e d by t h e w i l l i n g n e s s o f p a r t i c i p a n t s t o pay i n

o r d e r t o engage i n t h e r e c r e a t i o n a c t i v i t i e s c r e a t e d by t h e

a1 t e r n a t i v e b e i n g eva lua ted , as we1 1 as t h e f u l l c o s t s o f p ro -

v i d i n g r e c r e a t i o n i n c l u d i n g n e t b e n e f i t s l o s t a t d i s p l a c e d

f a c i 1 i t i e s .

~nvironmental Qua l i t y . T h i s account rrleasures changes i n

t h e c h a r a c t e r o f an a r e a ' s p h y s i c a l and b i o l o g i c a l environment.

These changes a r e measured i n terms o f p h y s i c a l , b i o l o g i c a l ,

and e c o l o g i c a l c r i t e r i a . R e c r e a t i o n ' s impac t on t h i s account

i s i n d i c a t e d by a l t e r a t i o n s i n t h e p h y s i c a l e x t e n t o f open and

green spaces, w i l d and s c e n i c r i v e r s , l a k e s , beaches, shores,

w i 1 derness areas, e s t u a r i e s , and o t h e r areas o f n a t u r a l

beauty ; changes i n a r c h e o l o g i c a l , h i s t o r i c a l , b i o l o g i c a l , and

geo l o g i c a l resources and s e l e c t e d e c o l o g i c a l systems ; changes

i n t h e qua1 i t y o f wa te r , l a n d , and a i r resources ; and i r r e v e r -

s i b l e commitments o f resources t o f u t u r e uses. As w i t h t h e

n a t i o n a l economic development account , these impacts r e f l e c t

changes i n t h e va lues o f goods and t h e e f f i c i e n c y w i t h which

t h e y a r e p rov ided . The d i f f i c u l t y i n e s t a b l i s h i n g monetary

va lues f o r these impacts and t h e p o t e n t i a l l y o v e r r i d i n g impor-

tance o f n e g a t i ve env i ronmenta l repercuss ions argue f o r t h i s

separa te account .

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o b j e c t i v e f u n c t i o n which would have o v e r a l l v a l i d i t y . Mu1 t i - p l e c r i t e r i a such as those presented i n t h e P r i n c i p l e s and

S t a n d a r d s a r e t h e r e f o r e r e q u i r e d .

The r e p o r t c o n t a i n s n i n e c h a p t e r s i n c l u d i n a t h i s i n t r o d u c -

t i o n . Chapter 2 p r e s e n t s t h e concepts t h a t a r e t h e necessary

b a s i s f o r t h e subsequerlt c h a p t e r s dea l i n g w i t h t h e deve l opment

o f economic models. Chapter 3 o u t l i n e s s tandards and o b j e c -

t i v e s ' f o r procedures t o e v a l u a t e r e c r e a t i o n ' s c o n t r i b u t i o n t o

n a t i o n a l economic development. C u r r e n t procedures a r e de-

s c r i b e d and t h e i r i n a p p r o p r i a t e n e s s i s p o i n t e d o u t . Examples

o f improved procedures a r e then p resen ted and t h e i r use i s

demonst ra ted. Chapters 4 and 5 d e s c r i b e how t h e "su rvey"

(Chapter 4 ) and " t r a v e l c o s t " (Chapter 5 ) methods a r e t o be

used t o e v a l u a t e r e c r e a t i o n ' s c o n t r i b u t i o n t o n a t i o n a l eco-

nomic development. I n each case, t h e b a s i c concepts o f model

c o n s t r u c t i o n a r e p resen ted and g u i d e l i n e s f o r model deve lop -

ment and use a r e o u t l i n e d . The concepts , models, and gu ide -

l i n e s p resen ted a r e based on t h e b e s t procedures c u r r e n t l y

a v a i l a b l e . Chapter 6 summarizes guide1 i n e s f o r e v a l u a t i o n o f

r e c r e a t i o n ' s c o n t r i b u t i o n t o n a t i o n a l economic development.

T h i s c h a p t e r h i g h l i g h t s t h e f i n d i n g s o f Chapters 4 and 5 and

a l s o p r e s e n t s g u i d e l i n e s f o r choos ing between t h e t r a v e l c o s t

and s u r v e y methods i n d i f f e r e n t t ypes o f p lar l r l ing s i t u a t i o n s .

Chapter 7 p r e s e n t s r e v i s e d g u i d e l i n e s t o supplement and r e -

p l a c e those i n t h e P r i n c j p l e s and S t a n d a r d s . Chapter 8 p r e -

s e n t s recommendations f o r imp lement ing r e v i s e d procedures.

These recornrrlendations a r e based p r i m a r i l y on t h e R e c r e a t i o n

B e n e f i t E v a l u a t i o n C o n f e r e n c e h e l d a t George Washington Un i -

v e r s i t y on December 2-3, 1976. The R e c r e a t i o n B e n e f i t Eva lua-

t i o n Conference i s d i scussed i n Appendix A. Chapter 9 suggests

a d d i t i o n a l r e s e a r c h t h a t would improve procedures f o r eva lua -

t i n g r e c r e a t i o n ' s c o n t r i b u t i o n t o n a t i o n a l economic

development.

CHAPTER 2 CONCEPTS OF VALUE

Recrea t ion bene f i t s must be eva lua ted accord ing t o t h e same

d e f i n i t i o n of n a t i o n a l economic development and w i t h t h e same

c r i t e r i a f o r measuring a t t a i nmen t o f t h i s o b j e c t i v e as o t h e r

ou tpu ts . Th i s p o i n t i s c r i t i c a l because t h e a n a l y s i s o f man-

agement a l t e r n a t i v e s o f t e n i n v o l v e s t h e e v a l u a t i o n o f t r ade -

of fs among d i f f e r e n t mixes o f ou tpu ts . I n o rde r t o make a

v a l i d a n a l y s i s of these t r a d e o f f s , t he concepts used f o r

e s t i m a t i n g t h e c o n t r i b u t i o n o f r e c r e a t i o n t o n a t i o n a l economic

development should be c o n s i s t e n t w i t h t he concepts used f o r

o the r ou tpu ts . The f o l l o w i n g d i s c u s s i o n o u t l i n e s r e c r e a t i o n

b e n e f i t e s t i m a t i o n concepts t h a t meet t h i s c r i t e r i o n . See

Appendix C f o r more d e t a i l e d d e f i n i t i o n s o f t he b e n e f i t

measures used here and f o r d e s c r i p t i o n s o f va r i ous measures of

b e n e f i t , some o f which we r e j e c t as be ing i n a p p r o p r i a t e o r

i n c w r e c t .

The P r i n c i p l e s and S t a n d a r d s speci f y t h a t p o s i t i v e b e n e f i t s

a r i s i n g from inc reases i n t he o u t p u t o f goods and se rv i ces a r e

t o be measured i n terms o f w i l l i n g n e s s o f users t o pay f o r

each increment of o u t p u t prov ided. The r e l e v a n t concept o f

w i l l ingness t o pay f o r r e c r e a t i o n b e n e f i t e s t i m a t i o n concerns

payment by p a r t i c i p a n t s s p e c i f i c a l l y f o r t he use o f a s i t e o r

area. I n ou r usage, w i l l i n g n e s s t o pay i nc l udes e n t r y and use

fees a c t u a l l y p a i d and a l s o an es t imate o f t he maximum amount

i n excess o f these charges t h a t users cou ld be induced t o pay.

I t i s n o t a p p r o p r i a t e t o i n c l u d e payment f o r equipment, food,

t r ave l , o r l o d g i n g t h a t may be made i n c o n j u n c t i o n w i t h t he

r e c r e a t i o n exper ience, s i nce these payments a r e n o t s p e c i f i -

c a l l y f o r s i t e use. We r e f e r t o w i l l i n g n e s s t o pay i n excess

o f a c t u a l chargesas "ne t w i l l i n g n e s s t o pay." Th is i s t he

a p p r o p r i a t e measure o f a d d i t i o n a l bene f i t s r e c e i v e d by those

i n d i v i d u a l s who g a i n from t h e use of a r e c r e a t i o n a l f a c i l i t y .

W i l l i ngness of p a r t i c i p a n t s t o pay f o r s i t e use does n o t

i n c l u d e c e r t a i n p o s i t i v e b e n e f i t s which may be r e l e v a n t t o

n a t i o n a l we1 fare. However, t h i s approach i s c o n s i s t e n t w i t h

t he c u r r e n t d e f i n i t i o n o f t h e n a t i o n a l econorr~ic development

account and thus meets ou r c r i t e r i o n o f cons i s t ency . Many

goods and s e r v i c e s assoc ia ted w i t h h i s t o r i c a l s i t e s , urban

r e c r e a t i o n , w i lde rness , and f r e e - f l o w i n g r i v e r s have va lue t o

those who do n o t p r e s e n t l y consume them. These va lues, a l -

though c o n c e p t u a l l y e q u i v a l e n t i n impor tance t o use r bene f i t s ,

may n o t be expressed e a s i l y i n monetary terms and a r e t he re -

f o r e t o be en te red i n o t h e r accounts. S ince t h e r e i s p res -

e n t l y no method f o r e v a l h a t i n g t h e i r monetary s i g n i f i c a n c e i n

terms o f n a t i o n a l economic development, t h e P r i n c i p l e s and

S t a n d a r d s s p e c i f y t h a t these cons ide ra t i ons be en te red i n t h e

env i ronmenta l q u a l i t y o r s o c i a l w e l l - b e i n g accounts . These

va lues a r e n o t cons idered t o be w i t h i n t he scope of t h i s

s t udy .

An approx imat ion o f w i l l ingness o f users t o pay f o r p a r t i c -

u l a r r e c r e a t i o n o p p o r t u n i t i e s can be developed f rom a demand

c u r v e - o r schedule which i n d i c a t e s t h e q u a n t i t y o f use t h a t

buyers ( p a r t i c i p a n t s ) i n a market would be w i l l i n g and a b l e t o

purchase a t each p r i c e . A demand schedule i s i l l u s t r a t e d by

t h e l i n e AB i n F i g u r e 1. Demand curves g e n e r a l l y have a down-

ward s l ope (a l t hough they a r e n o t n e c e s s a r i l y s t r a i g h t l i n e s )

because i n c r e a s i n g amounts o f a good o r s e r v i c e a r e d e s i r e d a t

lower p r i c e s . ' For consumer goods o r se rv ices , w i l l ingness t o

pay i s r e l a t e d t o t h e area under t h e demand curve. W i l l i n g -

ness t o pay may be descr ibed as t h e sun'^ o f two components: t h e

ac tua l market expend i tu re p l u s any excess amount which con-

sumers m igh t be induced t o pay. As l ong as demand i s downward

s l op ing , t h i s excess amount w i l l be p o s i t i v e . We d e f i n e t h i s

q u a n t i t y as consumers' " ne t w i l l i n g n e s s t o pay," t h a t i s ,

t o t a l w i 11 ingness-to-pay n e t o f ac tua l expend i tu re . It i s

t h e app rop r i a te measure o f t h e e x t r a b e n e f i t s o f those i n d i -

v i d u a l s who have ga ined as a d i r e c t r e s u l t o f a p r o j e c t . It

i s de f i ned more c a r e f u l l y as t he maximum amount t h a t users

would pay t o ensure t h a t t hey w i l l n o t be excluded f rom a

p r o j e c t . It i s an amount i n excess o f those cos t s (oppor tu-

n i t y c o s t s ) which would a c t u a l l y be i n c u r r e d a f t e r t h e p r o j e c t

i s developed. For example, f o r a concession s tand ope ra to r i t

would be t h e e x t r a p r o f i t t h a t cou ld be made a t t h i s l o c a t i o n ,

compared t o t h e n e x t bes t l o c a t i o n . For a consumer, i t i s t h e

monetary va lue o f t h e e x t r a s a t i s f a c t i o n gained from t h i s s i t e ,

compared t o t h e n e x t bes t a1 t e r n a t i v e .

I n o r d e r t o e n v i s i o n t h e ex is tence o f t h i s excess w i l l i n g -

ness t o pay, i t i s h e l p f u l t o imagine a p e r f e c t l y ( p r i c e )

he amount o f a good t h a t purchasers choose t o buy i s a r e - f l e c t i o n o f the p r i c e o f t he good, the p r i c e o f s u b s t i t u t e s a n d complements f o r t he good, t he income o f consumers, and con- sumer t a s t e s and p re fe rences . A change i n the p r i c e o f a good r e s u l t s i n a movement a long i t s demand curve, w h i l e a change i n o t h e r v a r i a b l e s r e s u l t s i n a s h i f t o f the demand curve. For example, an increase i n income may increase the q u a n t i t y t h a t a consumer i s w i l l i n g and a b l e t o buy a t each p r i c e . An i l l u s t r a t i o n o f a demand f u n c t i o n i s as f o l l o w s :

qd = f (Px, Ps , PC, Y , T )

Where : qd = q u a n t i t y demanded

Px = p r i c e s o f t he good

Ps = p r i c e s o f s u b s t i t u t e goods

PC = p r i c e s o f complementary goods

Y = i n d i v i d u a l ' s income

T = i n d i v i d u a l ' s t a s t e s

d i s c r i m i n a t i n g m o n o p o l i s t who c o u l d cha rge a d i f f e r e n t p r i c e

f o r each u n i t o f a good t h a t he s o l d . He would cha rge as much

as t h e consumer was w i l l i n g t o pay f o r each u n i t purchased.

The downward s l o p e o f a demand c u r v e i n d i c a t e s t h a t consurners

a r e w i l l i n g t o pay g r e a t e r amounts f o r i n i t i a l u n i t s o f a good

t h a n f o r l a t e r u n i t s . The m o n o p o l i s t would t a k e advantage o f

t h i s and e x t r a c t t h e f u l l w i l l i n g n e s s t o pay. T h i s i s an

amount, i n t o t a l , a p p r o x i m a t e l y equal t o t h e f u l l a rea under

t h e demand c u r v e up t o t h e q u a n t i t y demanded. Tha t i s , t o t a l

w i l l i n g n e s s t o pay i s a measure o f g ross consumer b e n e f i t s

wh ich i n c l u d e s a c t u a l marke t e x p e n d i t u r e , and may be a p p r o x i -

mated as t h e a r e a under t h e demand c u r v e f o r a good ( o r s e r -

v i c e ) up t o t h e q u a n t i t y demanded. Ne t w i l l i n g n e s s t o pay may

be approx imated as t h e a r e a under t h e demand c u r v e above mar-

k e t p r i c e ( i .e., e x c l u d i n g a c t u a l m a r k e t e x p e n d i t u r e ) . Approx-

imated, s i n c e if, i n f a c t , i n i t i a l u n i t s were s o l d a t h i g h e r

p r i c e s , t h e consumer would f i n d h i m s e l f i n a s i t u a t i o n s i m i l a r

t o h a v i n g h i s income reduced by t h e amount p a i d i n excess o f

t h e normal marke t p r i c e . The demand m i g h t p i v o t t o t h e l e f t

a round t h e p o i n t o f i n t e r s e c t i o n w i t h t h e v e r t i c a l a x i s . Such

a demand schedul e ( i ncome-compensated ) i s r e p r e s e n t e d by t h e

dashed l i n e AD i n F i g u r e 1 . The s h i f t i s r e f e r r e d t o as an

"income e f f e c t . " I f t h e income e f f e c t r e s u l t s i n t h e c u r v e

s h i f t i n g t o t h e l e f t ( p o s i t i v e income e f f e c t ) , t h e n t o t a l

w i l l i n g n e s s t o pay w i l l be somewhat l e s s t h a n t h e approx ima ted

a r e a under t h e demand c u r v e .

B e n e f i t s a r e u s u a l l y approx imated by an a rea under t h e

a c t u a l demand c u r v e . I f i n F i g u r e 1 , OQ u n i t s were consumed

a t p r i c e P, b e n e f i t s wou ld be measured as t h e a r e a ACQO. T h i s

i n c l u d e s t h e a c t u a l e x p e n d i t u r e PCQO, p l u s an a p p r o x i m a t i o n ,

ACP, o f what consumers were w i l l i n g t o pay. T h i s a rea ACP i s

r e f e r r e d t o as consumers ' s u r p l u s s i n c e i t approx ima tes n e t

b e n e f i t s t o consurners, o r t h e w i l l i n g n e s s o f consumers t o pay

i n excess of t h e i r ac tua l payment. Because o f convenience f o r

l a t e r d iscuss ion , we d e f i n e consumers' su rp lus as t he area

under t h e demand curve above t h e p r i c e (area ACP). I n f a c t , consumers' su rp lus i s used i n t h e economics l i t e r a t u r e t o

r e f e r t o any o f severa l measures o f n e t consumer w e l f a r e gains.

0 Q D

Quantity

Using t h e area under t h e demand curve as an approx imat ion

of w i l l i n g n e s s of users t o pay i s s a t i s f a c t o r y o n l y under c e r -

t a i n cond i t i ons , b u t these c o n d i t i o n s a r e a lmost always met

f o r t he r e c r e a t i o n o u t p u t o f resource management a l t e r n a t i v e s .

The approx imat ion i s s a t i s f a c t o r y i f e x t r a c t i n g t h e f u l l w i l l -

ingness t o pay f o r each u n i t o f t h e good from consumers would

n o t r a i s e expend i tu re s u f f i c i e n t l y t o cause any s h i f t i n t he

demand curve ( i . e . , t h e r e would be a smal l income e f f e c t ) . I n

t h i s case, t h e usual demand curve AB would n e a r l y c o i n c i d e

w i t h t h e income-compensated dernand curve AD. I f t h e income

e l a s t i c i t y o f demand f o r a good i s low and t he r a t i o o f con-

sumers ' su rp lus t o income i s 1 ow, then consumers ' su rp lus p l u s

t h e a c t u a l e x p e n d i t u r e Y 2 ACQO, w i l l c l o s e l y app rox ima te t h e

t o t a l w i 1 1 i ngness t o pay measure o f b e n e f i t s , AECQO.

W i 11 i ngness t o pay p r o v i d e s a t h e o r e t i c a l l y c o r r e c t measure

o f t h e p o s i t i v e b e n e f i t s d i r e c t l y a s s o c i a t e d w i t h t h e o u t p u t s

produced b y a new p r o j e c t . However, f o r e v a l u a t i o n o f bene-

f i t s l o s t by e l i m i n a t i o n o f e x i s t i n g r e s o u r c e s , (e .g . , w a t e r -

f o w l h u n t i n g o p p o r t u n i t i e s . l o s t when w e t l a n d s a r e d r a i n e d ) , i t

may be more a p p r o p r i a t e t o measure t h e l o s t b e n e f i t s i n te rms

o f w i l l i n g n e s s o f u s e r s t o s e l l t h e i r e x i s t i n g r i g h t t o use

t h e r e s o u r c e .

The Principles and Standards r e q u i r e t h a t adve rse e f f e c t s

o f a p r o j e c t be measured by t h e v a l u e o f t h e r e s o u r c e s (used

by t h e p r o j e c t ) i n t h e i r b e s t (most l i k e l y ) a l t e r n a t i v e use.

I t i s common t o c o n s i d e r t h e o p p o r t u n i t y c o s t o f l a b o r and o f

c a p i t a l development t o be m e r e l y t h e i r mone ta ry c o s t . T h a t

i s , St i s t h e compensat ion r e q u i r e d by l a b o r and c a p i t a l

21n t h e case o f r e c r e a t i o n , e x p e n d i t u r e r e f e r s o n l y t o s i t e ( o r r e s o u r c e ) use f e e s , n o t t o accompanying t r i p c o s t s .

3 ~ i I1 i g (1975) p r o v i d e s t h e f o l l o w i n g f lnrmula f o r t h e case o f c o n s t a n t income e l a s t i c i t y o f demand, i n d i c a t i n g t h e e r r o r i n a p p r o x i m a t i n g n e t w i l l i n g n e s s t o pay by t h e a r e a under t h e demand c u r v e , above p r i c e .

WP = n e t w i l l i n g n e s s t o pay CS = consumers ' s u r p l u s , a rea under t h e demand c u r v e

above p r i c e N = income e l a s t i c i t y o f demand M = i n i t i a l l e v e l o f income

C S For example, i f e l a s t i c i t y = 1 . 1 , and - = 5500 = .025

2M

t h e n t h e p e r c e n t e r r o r i n u s i n g consumers ' s u r p l u s i s 2.75%.

T h i s h o l d s q u i t e c l o s e l y i f C S 5 .04 2 M

Exac t f o r m u l a s a r e a l s o p r o v i d e d f o r more g e n e r a l cases.

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sl! u! puel ayl aAJasaJd ay ley3 aJnsua 03 sJauMo ayl 03 Aed plnoM sJasn ley1 lunowe leuo!l!ppe unu!xew ayl s! s!y1 .sJasn

asay3 40 Aed 03 ssau6u!ll!~ leuo!J!ppe ay3 (jlasw!y 03 3503

leuo!l!ppe ou le) 13e~lxa 01 alqe uaaq pey ay J! apew aAey plno3 JauMo puel ay3 43!4~ s6u!u~ea lau 40 weaJjs ayj 13alja~

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40 Aed 03 ssau6u!l(!~ leuo!l!ppe ayl 'ase3 ley3 u( -sJasn (Jaylo JO) leuo!lea~3a~ 03 a3!Jd MO( e JO ou le alqel!eAe apew

6u!aq Alluasa~d s! puel aleA!Jd ay7 J! sas!Je anss! Jayloutj .s)y6!~ u!ewop luau!wa Japun puel ayj sasey3~nd ~uauu~a~o6 ayl uayM dame 02 pa~~oj s! JauMo ayl y3!4~ a3!~d ayl u! pal~al4 -a~ Alalenbape aq lou Aew s!y1 .A(~~u!~!Jo puel ayl yl!~ seM

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pup pup1 'KLJ~ 1 ku~s ' (s~ak ~ddns 2nd~~ jo ,, 1 [as 02 ssau6ul

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2~aCo~d sky2 Joj alqelkeAp aq LLCM Kay2 2ey2 JapJo uk ~2nd~~

such u s e r s have any l e g a l e n t i t l e m e n t t o a c t u a l r e c e i p t o f

compensat ion i s q u i t e a n o t h e r m a t t e r ; h e r e t h e measure o f we1 -

f a r e g a i n s and l o s s e s i s a t i s s u e .

I f c o s t s a r e measured i n t h i s manner, t h e f u l f i l l rnent o f

t h e b e n e f i t - c o s t c r i t e r i o n assu res us t h a t t h o s e who g a i n a r e

w i l l i n g t o pay enough t o coinpensate a d e q u a t e l y t h o s e who i n c u r

t h e c o s t s . T h a t i s , i t wou ld be p o s s i b l e t o a r r a n g e compensa-

t i o n payments so t h a t no one was made worse o f f and a t l e a s t

some p e o p l e c o u l d be made b e t t e r o f f . Thus, t h e use o f w i l l -

i ngness t o s e l l t o measure l o s t b e n e f i t s i s f u l l y c o n s i s t e n t

w i t h t h e use o f w i l l i n g n e s s t o pay t o measure i n c r e a s e d bene-

f i t s , and, i n f a c t , i s b a s i c t o t h e s p i r i t o f b e n e f i t - c o s t

a n a l y s i s . "

W i l l i n g n e s s t o s e l l , l i k e " n e t w i l l i n g n e s s t o pay," may be

app rox ima ted by t h e a rea under t h e demand c u r v e above p r i c e

(consumers ' s u r p l u s ) . As w i t h w i l l i n g n e s s t o pay, e x p l i c i t

bounds may be s e t on t h e e s t i m a t e o f w i l l i n g n e s s t o s e l l i f

consumers ' s u r p l u s and income e l a s t i c i t y o f demand a r e known.

F o r consur r~ers ' s u r p l u s o f t h e s i z e expec ted f rorn t h e m a j o r i t y

o f r e c r e a t i o n s i t e s and w i t h t h e l i k e l y l o w income e l a s t i c i t y

o f demand, t h e a p p r o x i m a t i o n seems a ~ c e p t a b l e . ~ However, f o r

5 More c o n v e n t i o n a l economic t e r m i n o l o g y i s a v a i l a b l e , b u t can

be q u i t e c o n f u s i n g and i s s o o f t e n misused t h a t we a v o i d i t . "Net w i 1 1 i ngness t o pay" i s t h e "compensat i n g v a r i a t i o n ' ' asso- c i a t e d w i t h a w e l f a r e g a i n ( e . g . , f r o m a p r i c e d e c r e a s e ) . " W i l l i n g n e s s t o s e l l " i s t h e "compensat ing v a r i a t i o n 1 ' asso- c i a t e d w i t h a w e l f a r e l o s s ( p r i c e i n c r e a s e ) .

' ~ i 1 1 i g (1975) p r o v i d e s t h e f o l l o w i n g f o r m u l a f o r t h e s i m p l e

case o f c o n s t a n t income e l a s t i c i t y and C S * N '

WS = w i l l i n g n e s s t o s e l l C S = consumers ' s u r p l u s , a r e a under t h e demand c u r v e

above p r i c e N = income e l a s t i c i t y o f demand M = i n i t i a l income l e v e l

e s p e c i a l l y d e s i r a b l e o r unique s i t e s , w i l l ingness t o s e l l may

be h ighe r than t he a p p r o p r i a t e area under t h e demand curve and

t h a t approx imat ion w i l l be, a t best , a l owe r bound.

Empi r i ca l evidence ob ta ined from surveys o f r e c r e a t i o n i s t s

(Hammack and Brown, 1974) i n d i c a t e s t h a t w i l l i n g n e s s t o s e l l

exceeds w i l l i n g n e s s t o pay by amounts f a r i n excess of t he ex-

pected d i f fe rence . It should be s t ressed t h a t t he measures

a r e w e l l def ined, and g i ven the knowledge o f demand f o r a

g i ven good and income e l a s t i c i t y they can be e x a c t l y measured.

The d i f fe rence observed i s n o t a f a i l i n g o f theory . Some ex-

p l a n a t i o n s of t h i s may be: ( 1 ) The good we a r e asked t o s e l l

i s no l onge r t h e same good t h a t we have bought. That i s ,

t a s t e changes a r e induced by g r e a t e r access t o a resource.

When a consumer s e l l s t he r i g h t t o use an area he a l s o seeks

compensation f o r t h e years o f exper ience and emot ional a t t a c h -

ment t o a s i t e , w h i l e a new s i t e i s o f u n c e r t a i n value. The

d e f i n i t i o n s o f consumer t heo ry presume t h a t the good gained o r

l o s t i s i d e n t i c a l . ( 2 ) The survey was n o t e f f e c t i v e l y admin-

i s t e r e d , i n t h e sense t h a t t h e t r u e v a l u a t i o n was n o t found.

( 3 ) There i s i n f a c t a s u b s t a n t i a l incorne e f f e c t , and the i n -

come e l a s t i c i t y o f demand changes d r a m a t i c a l l y as consumption

i s reduced t o near zero. However, t he p r e c i s e exp lana t i on f o r

t h e wide d i f f e r e n c e i s n o t y e t known. Whi le a c c u r a t e l y mea-

s u r i n g w i l l i n g n e s s t o s e l l may p resen t d i f f i c u l t i e s , t h e r e i s

no ques t i on t h a t i n some s i t u a t i o n s i t i s t he proper measure

o f l o s t gross b e n e f i t s . From a p r a c t i c a l s t andpo in t i t i s

p robab ly b e s t t o p resen t consumers' su rp lus as t h e bes t lower

bound es t ima te o f l o s t n e t b e n e f i t s f rom dest royed resources

w i t h t h e r e c o g n i t i o n t h a t t h i s may be a poor es t ima te o f t h e

l o s t va lue o f e s p e c i a l l y d e s i r a b l e o r unique resources.

Demand i s i n f l u e n c e d by the income d i s t r i b u t i o n o f t h e

p o t e n t i a l p a r t i c i p a n t s . Th is may be an impo r tan t f a c t o r i n

p u b l i c d e c i s i o n mak ing. However, i t does n o t n e c e s s a r i l y

d i m i n i s h t h e u s e f u l n e s s o f e s t i m a t e d w i l l i n g n e s s t o pay as an

i n p u t t o p u b l i c d e c i s i o n mak ing.

Even w i t h an i n i t i a l l y e q u i t a b l e d i s t r i b u t i o n o f income,

consurners w i t h h i g h e r incomes may exp ress a h i g h e r w i l l i n g n e s s

t o pay f o r sorne t y p e s o f r e c r e a t i o n t h a n t h o s e w i t h l o w e r i n -

comes and may t h u s g e n e r a t e p r o j e c t s wh ich p r o v i d e d i s p r o p o r -

t i o n a t e l y g r e a t e r b e n e f i t s f o r h i g h e r income groups. S i n c e

u s e r s o f p u b l i c r e c r e a t i o n r e s o u r c e s a r e n o t o r d i n a r i l y

charged t h e i r e n t i r e w i l l i n g n e s s t o pay, r e l y i n g e x c l u s i v e l y

on w i l l i n g n e s s t o pay as t h e d e c i s i o n c r i t e r i o n may i n some

cases l e a d t o an i n e q u i t a b l e d i s t r i b u t i o n o f n e t b e n e f i t s .

T h i s s i t u a t i o n s h o u l d be guarded a g a i n s t by u s i n g t h e systern

o f m u l t i p l e o b j e c t i v e s and accoun ts e s t a b l i s h e d by t h e

P r i n c i p l e s a n d S t a n d a r d s as gu ides f o r d e c i s i o n - m a k i n g .

W i t h an i n e q u i t a b l e d i s t r i b u t i o n o f income, t h e p rob lem o f

income d i s t r i b u t i o n i s more complex s i n c e i t i s no l o n g e r

r e a s o n a b l e t o add d i f f e r e n t i n d i v i d u a l s ' consumer s u r p l u s e s as

we have done i m p l i c i t l y above. We can no l o n g e r assurne t h a t a

d o l l a r t o one consumer i s e q u i v a l e n t t o a d o l l a r t o a n o t h e r .

The s o l u t i o n t o t h e d i s t r i b u t i o n a l p rob lem i s perhaps n o t

e n t i r e l y s a t i s f a c t o r y , b u t i t i s usua l t o assume t h a t f o r t h e

purposes o f a g i v e n p r o j e c t t h e d i s t r i b u t i o n o f income i s

t a k e n as s o c i a l l y s a n c t i o n e d and r e d i s t r i b u t i o n i s d e a l t w i t h

more d i r e c t l y a t a n o t h e r d e c i s i o n l e v e l .

The c o r r e c t use o f t h e b e n e f i t - c o s t c r i t e r i o n s h o u l d be t o

compare t h e g e n e r a t e d g r o s s b e n e f i t s o f a p r o j e c t , measured i n

te rms o f t o t a l w i l l i n g n e s s t o pay, t o t h e c o s t o f b i d d i n g t h e

necessa ry r e s o u r c e s away f r o m a l t e r n a t i v e uses. When an

a1 t e r n a t i ve p l a n c r e a t e s a d d i t i o n a l r e c r e a t i o n a l s i t e s o r

areas, t he a p p r o p r i a t e concept f o r va l u a t i o n o f t he r e c r e a t i o n

o u t p u t i s w i l l i n g n e s s o f users t o pay. Th i s i s an amount ex-

ceeding a c t u a l on -s i t e expendi tures. W i 11 i ngness t o pay may be

es t imated by t h e area under t h e demand curve f o r t he s i t e o r

area i n ques t ion .

When an a l t e r n a t i v e p l an des t roys o r o therw ise makes rec rea-

t i o n o p p o r t u n i t i e s unava i l ab l e, t h e app rop r i a te concept f o r

v a l u a t i o n o f t h e l o s t r e c r e a t i o n o u t p u t i s t he minimum compensa-

t i o n r e q u i r e d t o b i d t h e l a n d and water resources away from

t h e i r p resen t use. For p r i v a t e l y owned resources t h i s i s o f t en

bes t r e f l e c t e d by t h e s e l l i n g p r i c e o f t h e l and . I f the l a n d

i s p r e s e n t l y pub1 i c 1 and then t h e minimum compensation r e q u i r e d

by p resen t users o f t h e s i t e o r area i s t h e app rop r i a te va lua-

t i o n concept. However, a t p resen t t h e r e i s no g e n e r a l l y s a t i s -

f a c t o r y method f o r a c c u r a t e l y e v a l h a t i n g such w i l l i n g n e s s t o

s e l l . The area under t h e demand curve above c o s t i s a t bes t a

1 ower bound on 1 o s t n e t b e n e f i t s f rom dest royed resources.

Use o f t h e survey method t o es t ima te n e t w i l l i n g n e s s t o pay

and w i l l i n g n e s s t o s e l l f rom responses t o ques t ions i s d iscussed

i n Chapter 4. Ac tua l o n - s i t e expend i tu res a r e added t o n e t

w i l l i n g n e s s t o pay t o g e t t h e measure o f gross b e n e f i t s t o a new

s i t e . Chapter 5 w i l l d i scuss use o f t he t r a v e l c o s t method t o

develop a demand cu rve f rom which consumers' su rp lus may be

es t imated . Again, a c t u a l o n - s i t e expendi tures a r e added t o t h e

consumers' su rp lus t o approximate t h e t o t a l w i l l i n g n e s s t o pay

f o r a new s i t e . We concent ra te on t h e problem o f e v a l u a t i n g t h e

p o s i t i v e b e n e f i t s o f new s i t e s . That i s , our focus i s on t he

approx imat ion o f w i l l i n g n e s s t o pay. Bu t be fo re these approaches

a r e discussed, Chapter 3 presents an a n a l y s i s o f the c u r r e n t

problem w i t h r espec t t o r e c r e a t i o n b e n e f i t e s t i r r ~ a t i o r ~ and o u t -

l i n e s t h e recommended s o l u t i o n .

CHAPTER 3 THE PROBLEM AND AN OVERVIEW OF THE SOWTIOr\l

Th is chap te r p rov ides a genera l ou t1 i n e o f t he recommenda-

t i o n s f o r e v a l u a t i n g t he c o n t r i b u t i o n o f r e c r e a t i o n t o

n a t i o n a l economic development. Des i rab le c h a r a c t e r i s t i c s o f

v a l u a t i o n procedures a r e prov ided. Cur ren t agency procedures

a r e descr ibed and t h e i r d e f i c i e n c i e s o u t l i n e d . Suggested pro-

cedures a r e i n t r oduced and examples o f t h e i r a p p l i c a t i o n p ro -

v ided . Thus t he s tage i s s e t f o r t he remainder of t he r e p o r t

which descr ibes t he development and implementat ion of recom-

mended i n~provernen t s .

To p rov ide f o r t h e e f f i c i e n t a l l o c a t i o n o f resources, p ro -

cedures f o r es t i r na t i ng t h e c o n t r i b u t i o r ~ o f r e c r e a t i o n t o

n a t i o n a l economic development should meet t he f o l l o w i n g

c r i t e r i a :

1 ) Est imates o f va lue should be developed t h a t a r e cons i s -

t e n t w i t h and have a l e v e l o f p r e c i s i o n s i m i l a r t o t he e s t i -

mates o f va lue d e r i v e d f o r o t h e r goods and se rv i ces produced b y

a1 t e r n a t i v e p lans.

2 ) The procedures should be r e a d i l y a p p l i c a b l e t o eva lua t -

i n g proposed changes i n t h e a v a i l a b i l i t y o f t he s p e c i f i c r ec -

r e a t i o n o p p o r t u n i t i e s a f f e c t e d by t h e p r o j e c t s be ing analyzed.

Th is i n c l u d e s t h e o p p o r t u n i t i e s expected t o be c rea ted o r

des t royed by a1 t e r n a t i v e p lans.

3 ) Est imates of va lue of e x i s t i n g s i t e s a re use fu l

i f t h e a n a l y s i s i s used t o develop models t o va lue a proposed

change i n t h e a v a i l a b i l i t y o f s i m i l a r o p p o r t u n i t i e s .

Va lua t i on procedures and models should be e a s i l y appl i c a b l e t o

proposed a1 t e r n a t i v e s i n v o l v i n g r e c r e a t i o n o f d i f f e r i n g qua1 - i t i e s , f o r which t h e r e may be d i f f e r e n t ranges o f a v a i l a b l e sub-

s t i t u t e s , and d i f f e r e n t d i s t r i b u t i o n s of p o p u l a t i o n i n t he market

area.

4 ) I n d i v i d u a l s f a c i n g an e a s i l y access ib l e range o f h i g h l y

d e s i r a b l e a l t e r n a t i v e s w i l l presumably be w i l l i n g t o pay l e s s

f o r use o f a p a r t i c u l a r area than i n d i v i d u a l s w i t h fewer and

1 ess d e s i r a b l e a1 t e r n a t i v e s . Consequently, t he va lues de r i ved

should r e f l e c t t h e a v a i l a b i l i t y o f a broad range o f a1 t e r n a t i v e

o p p o r t u n i t i e s .

5 ) I t should be recognized t h a t d i f f e r e n t values may be

p laced on r e c r e a t i o n p a r t i c i p a t i o n by d i f f e r e n t subsets o f the

t o t a l popu la t i on . Relevant subsets may be based on income, p a s t

p a r t i c i p a t i o n , f a r r~ i l y s t r u c t u r e , d i s t ance f rom f a c i l i t i e s , and

o t h e r f a c t o r s . If they a r e found t o be s i g n i f i c a n t , these

v a r i a b l e s should be r e f 1 ec ted i n t he e s t i m a t i o n procedure.

6 ) The procedures should i f poss ib l e , and w i t h f u r t h e r r e -

f inement , t ake i n t o account t he p o s s i b i l i t y t h a t the t o t a l l e v e l

of use of an area may, due t o crowding o r congest ion, have an

i n f l uence on t h e va lue o f t h a t s i t e t o an i n d i v i d u a l . The crea-

t i o n o r d e s t r u c t i o n o f r e c r e a t i o n o p p o r t u n i t i e s may a f f e c t the

l e v e l of use ( i .e., conges t ion) o f o t h e r areas. Changes i n the

va lue due t o d i f f e r e n t l e v e l s of conges t ion a r e a p p r o p r i a t e l y

a t t r i b u t e d t o t h e a l t e r n a t i v e t h a t induced them.

Va lua t i on procedures c u r r e n t l y used by f e d e r a l agencies do

n o t meet any o f t he c r i t e r i a o u t l i n e d above and t h e r e i s a

s t r ong need f o r r e v i s e d procedures. A t p resen t , most agencies

es t ima te r e c r e a t i o n ' s c o n t r i b u t i o n t o n a t i o n a l economic develop-

ment by choosing a va lue f rom t h e range o f u n i t day va lues

prov ided i n t h e Principles and Standards and mu1 t i p l y i n g t h a t

va lue by an es t imate o f expected use.' Th i s procedure w i l l be

r e f e r r e d t o as t h e " i n t e r i m u n i t day va lue approach."

I n p resen t i ng t h e i n t e r i m u n i t day va lue approach, t he Pr in -

c i p l e s and Standards i n d i c a t e s t h a t " i n t he i n t e r i m , w h i l e r ec -

r e a t i o n methodology i s be ing f u r t h e r developed, t h e f o l l o w i n g

schedule of monetary u n i t va lues may be used i n t h e p repa ra t i on

o f p lans . " A s i m i l a r i n t e r i m approach was presented n e a r l y a

decade e a r l i e r i n Supplement 1 t o Senate Document 972 (subse-

q u e n t l y r e f e r r e d t o as S.D. 97, Suppl . 1 ) . A r e c r e a t i o n day,

w h i l e n o t de f i ned i n t h e Pr inc ip les and Standards, was d e f i n e d

i n i t s fo re runner , Supplement No. 1 t o Senate Document 97, as: A

s tandard u n i t of use c o n s i s t i n g o f a v i s i t by one i n d i v i d u a l t o

a r e c r e a t i o n development o r area f o r r e c r e a t i o n purposes d u r i n g

any reasonable p o r t i o n o r a l l o f a 24-hour pe r i od .

Wl th t h e i n t e r i m u n i t day va lue approach, as o u t l i n e d by t h e

P r i n c i p l e s and Standards, a s i n g l e va lue pe r r e c r e a t i o n day i s

assigned rega rd less o f t he number o f a c t i v i t i e s t h a t an i n d i v i d -

ua l engages i n . That va lue may r e f l e c t bo th t he q u a l i t y o f

a c t i v i t y and t h e d e g r e e t o which o p p o r t u n i t i e s t o engage i n a

number of a c t i v i t i e s a r e ava i lab1 e. Recrea t ion days a r e d. iv ided

i n t o two ca tego r i es and a r a n g e . o f u n i t day va lues i s assigned

he P r i n c i p l e s and Standards do no t requ i r e t h a t the i n t e r i m u n i t day va lue approach be used. The t r a v e l cos t method i s descr ibed and i t i s i n d i c a t e d t h a t o t h e r methods f o r e s t i m a t i n g wi 1 1 i ngness t o pay a r e ava i l a b l e . However, f ede ra l agencies have chosen t o r e l y almost e x c l u s i v e l y on t he i n t e r i m u n i t day va lue approach. A d i scuss ion o f agency procedures i s p re - sented i n Appendix B o f t h i s r e p o r t .

2~upp lemen t No. 1 To Senate Document 97. Eva lua t i on Standards For Pr imary Recreat ion B e n e f i t s . June 4, 1964.

f o r each. The ca tego r i es a r e as f o l l o w s :

GENERAL

A r e c r e a t i o n day i n v o l v i n g p r i m a r i l y those a c t i v i t i e s a t t r a c t i v e t o t h e m a j o r i t y o f ou tdoor r e c r e a t i o n i s t s and which genera l 1 y requ i r e the development ahd maintenance o f con- ven ien t access and adequate f a c i l - i t i e s . T h i s i nc l udes t he g rea t m a j o r i t y o f a1 1 r e c r e a t i o n a c t i v i t i e s assoc ia ted w i t h wa te r p r o j e c t s such as swimming, p i c n i c k i n g , boa t ing , and most warm wate r f i s h i n g .

SPECIALIZED

Range o f U n i t Day Values

$0.75-$2 .25

A r e c r e a t i o n day i n v o l v i n g p r i m a r i l y those a c t i v i t i e s f o r which oppor tu - n i t i e s i n genera l a r e l i m i t e d , i n t e n s i t y o f use i s low, and which may a l s o i n v o l v e a l a r g e personal expense by t he user . Inc luded a re a c t i v i t i e s l ess o f t e n assoc ia ted w i t h wa te r p r o j e c t s , such as b i g game h u n t i n g and salmon f i s h i n g .

The P r i n c i p l e s and S t a n d a r d s i n d i c a t e s t h a t h i ghe r u n i t

va lues may be assigned t o those a c t i v i t i e s f o r which fewer

a1 t e r n a t i v e s a r e ava i 1 ab l e and f o r which genera l l y h i ghe r c o s t s

a r e i n c u r r e d by p a r t i c i p a n t s . However, no a d d i t i o n a l guidance

i s p rov ided f o r s e l e c t i n g va lhes w i t h i n t h e range o f u n i t day

va lues. Depar ture from t h e range can be made i f a " f u l l ex-

p l a n a t i o n " i s g iven , b u t t h e bas i s f o r such an exp lana t i on i s

n o t s p e c i f i e d .

Many o f t h e ma jo r problems encountered w i t h t he i n t e r i m u n i t

day va lue approach have t h e i r o r i g i n s i n t h e l a c k o f a c l e a r

3 Supp. 1 t o S . D . 97 ( t h e f o re runne r o f t he P r i n c i p l e s and s t a n d a r d s ) i n d i c a t e d t h a t cho i ce o f a va l ue w i t h i n the range should depend on t h e degree o f development o f f a c i l i t i e s , the q u a l i t y o f t h e a e s t h e t i c exper ience , and t h e e x i s t e n c e o f a l t e r - n a t i v e r e c r e a t i o n o p p o r t u n i t i e s .

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6 ) Procedures f o r e s t i m a t i n g t h e number o f r e c r e a t i o n days by

which a ur l i t day va lue i s t o be mu1 t i p 1 i e d a r e n o t ou t1 ined. I f

an accura te use model were a v a i l a b l e , i t would p r o v i d e more use-

f u l i n f o r m a t i o n about demand, and, as a r e s u l t , about w i l l i n g -

ness t o pay, than would an a r b i t r a r y t a b l e o f va lues.

A REVISED UNIT DAY VALUE APPROACH?

One approach t o improved b e n e f i t e s t i m a t i o n procedures would

be a r e v i s e d u n i t day v a l i ~ e method. A meaningfu l r e v i s i o n o f

t h e i n t e r i m u n i t day va lue approach rrlust dea l w i t h t h e s i x prob-

lems o u t l i n e d above. Some o f t h e problems a r e d e f i n i t i o n a l i n

n a t u r e and can be d e a l t w i t h q u i t e e a s i l y . The u n i t day va lue

shou ld be i n t e r p r e t e d as average w i l l ingness t o pay ( p r o b l em 1 ) . Average w i l l i n g n e s s t o pay i s d e r i v e d by d i v i d i n g t o t a l w i l l i n g -

ness t o pay by amount o f use. Thus, when t h e u n i t day va lue i s

m u l t i p l i e d by an e s t i m a t e o f use i t w i l l produce an es t ima te o f

t o t a l w i l l i n g n e s s o f use rs t o pay. The a p p r o p r i a t e measure of

use (prob lem 5 ) i s t h e r e c r e a t i o n day, d e f i n e d by S.D. 97,

Suppl . 1 as, "a v i s i t by one i n d i v i d u a l t o a r e c r e a t i o n develop-

ment o r area f o r r e c r e a t i o n purposes d u r i n g any reasonable por -

t i o n o r a l l o f a 24-hour p e r i o d . " Problem 6, which concerns

e s t i r r ~ a t i o n o f t h e l e v e l o f use, can be d e a l t w i t h i n p a r t from a

d e f i n i t i o n a l s t andpo in t . The a p p r o p r i a t e l e v e l o f use t o be

m u l t i p l i e d by t h e u n i t day .,value i s t h e amount o f p a r t i c i p a t i o n

a t whatever e n t r y o r use f e e i s charged. E s t i m a t i n g t h i s l e v e l

o f use i s n o t an easy t a s k and i t rep resen t s one of t h e rrlajor

e m p i r i c a l problems w i t h which we w i l l subsequent ly deal .

The bas i c problem w i t h t h e i n t e r i m u n i t day va lue approach i s

t h a t i t i s , f o r t h e most p a r t , n o t based on v a l i d evidence o f

t h e a c t u a l w i l l i n g n e s s o f p a r t i c i p a n t s t o pay f o r r e c r e a t i o n .

The ranges o f va lues p resen ted were appa ren t l y based on charges

a t p r i v a t e areas. Average wi 11 ingness t o pay may n o t be

c l o s e l y r e l a t e d t o p r i v a t e market p r i c e s f o r comparable rec rea-

t i o n . P r i c e s charged f o r use o f p r i v a t e resources a r e h e a v i l y

i n f l u e n c e d by t h e e x i s t i n g 1 ow p r i c e f o r 'pub l ic resources, and

p r i v a t e o p p o r t u n i t i e s may n o t be c l o s e l y comparable t o pub1 i c

o p p o r t u n i t i e s . It should a l s o be c l e a r t h a t , i f consumers' su r -

p l u s i s t o be ignored , i t i s market p r i c e minus c o s t which i s

t h e n e x t bes t approx i r r~a t io r l o f t h e n e t b e n e f i t o f a u n i t ou tpu t .

However, t h e l i m i t s on t h e range o f va lues presented i n t h e

Principle and Standards r ep resen t 50 pe rcen t inc reases i n t h e

l i m i t s t h a t were con ta ined i n Supp. 1 t o S.D. 97 and t h i s l a r g e

unexpla ined change tends t o make them appear a r b i t r a r y . The

absence o f v a l i d procedures f o r choosing a va lue f rom w i t h i n t h e

ranges adds ano ther degree o f a r b i t r a r i n e s s t o t h e approach. I n

many cases, p lanners a r e f r e e t o make a r b i t r a r y (and sometimes

fa1 l a c i o u s ) s e l e c t i o n , d e f i n i t i o n , and appl i c a t i o n of v a l u a t i o n

c r i t e r i a . Use o f such a r b i t r a r y va lues i s l i k e l y t o l ead t o i n -

e F f i c i e n t a1 l o c a t i o n of resources.

Federal agencies have a t va r i ous t imes at tempted t o p rov i de

guidance f o r s e l e c t i n g a va lue f rom t h e range o f u n i t day va lues

( p rob l em 2 ) by deve lop ing p o i n t systems. These systems s p e c i f y

a number o f c r i t e r i a by which t o rank an a l t e r n a t i v e . The a l -

t e r n a t i v e i s ass igned p o i n t s on t h e bas i s o f t h e degree t o which

i t possesses c h a r a c t e r i s t i c s t h a t measure a t t a i nmen t o f each

c r i t e r i o n . The p o i n t s assigned f o r t h e va r i ous c r i t e r i a a r e

summed, and t h e t o t a l i s assoc ia ted w i t h a p a r t i c u l a r u n i t day

va lue ( o r ve ry narrow range o f va lues) . For an example o f t h e

use o f a p o i n t system, see Char t I on page 28.

A1 though t h e y a r e w i d e l y used by f e d e r a l agencies, t h e r e i s

p r e s e n t l y 1 i ttl e t h e o r e t i c a l o r e m p i r i c a l j u s t i f i c a t i o n f o r

5 ~ h i s i n t e r p r e t a t i o n i s based on a l e t t e r t o t h e a u t h o r s from D r . Robert K. Dav is , O f f i c e o f t h e Secre ta ry , U.S. Department o f t h e I n t e r i o r , on September 24, 1976.

these p o i n t systems. There i s l i t t l e cons i s t ency among agencies

o r among t he o f f i c e s w i t h i n some agencies i n t h e cho i ce and

we igh t i ng of c r i t e r i a . None o f t h e schemes i s adequa te ly based

on a t heo ry of r e c r e a t i o n demand o r e m p i r i c a l demand s tud ies .

The d e f i n i t i o n of p o i n t system c r i t e r i a and i n d i c a t o r s o f t h e i r

a t t a i nmen t a r e unc lea r . Consequent ly, d i f f e r e n t p lanners app ly -

i n g t h e same p o i n t system t o a p a r t i c u l a r a l t e r n a t i v e may n o t

g e t s i m i 1 a r va l ues. Subsequent d i scuss ion p rov i des a more de-

t a i l e d a n a l y s i s of p o i n t systems.

The c r u c i a l problems assoc ia ted w i t h t h e development o f p o i n t

systems a r e choos ing t h e c r i t e r i a f o r i n c l u s i o n i n t h e system,

d e c i d i n g how t o " r a t e " an a1 t e r n a t i v e i n terms o f each c r i t e r i o n ,

de te rm in i ng t h e f u n c t i o n a l r e l a t i o n s h i p between t h e c r i t e r i a ,

and a s s i g n i n g we igh ts t o each. These problems a r e i n a d d i t i o n

t o f i n d i n g an a p p r o p r i a t e range o f va lues. Some i dea o f how

these problems a r e handled by systems c u r r e n t l y i n use can be

ga ined from Char ts I and 11, which a re based on m a t e r i a l con-

c e r n i n g p o i n t systems p rov i ded by t h e Bureau o f Outdoor Recrea-

t i o n , t h e Corps o f Engineers, and t h e S o i l Conserva t ion Serv ice .

A b r i e f d e f i n i t i o n o f t h e c r i t e r i a l i s t e d i n t h e c h a r t f o l l o w s .

These d e f i n i t i o n s a r e ske tchy because t h e p o i n t systems them-

se lves a r e sketchy:

~ccess -The amount o f access and t h e qual i t y o f roads t o and

w i t h i n t he p r o j e c t .

~ a c i l i t i e s - T h e amount and q u a l i t y o f man-made f a c i l i t i e s

a v a i l a b l e , w i t h g r e a t e r f a c i l i t y development r e c e i v i n g more

p o i n t s .

Recreat ion a c t i v i t i e s - T h e number and q u a l i t y o f a c t i v i t i e s

a v a i l a b l e a t t h e s i t e .

~ e s t h e t i c s - I n some cases t h i s ca tego ry r e f e r s t o t h e n a t u r a l

environment, i . e . , t h e p leasantness o f t h e landscape. I n o the rs

i t r e f e r s t o t h e " q u a l i t y . o f t h e r e c r e a t i o n exper ience . " Env i -

ronmental qua l i t y i s sometimes i n c l uded under t h i s heading.

~nv i r onmen ta l qua l i t y -The e x t e n t t o which t h e p r o j e c t area

i s f r e e of p o l l u t i o n o r environmental degrada t ion o r

d e t e r i o r a t i o n .

A l t e r n a t i v e rec rea t ion oppor tun i t ies -The e x t e n t t o which

o t h e r wa te r -o r i en ted and/or general r e c r e a t i o n s i t e s can be

found i n t h e v i c i n i t y o f t h e p r o j e c t , w i t h more a l t e r n a t i v e s

r e s u l t i n g i n fewer p o i n t s .

Radius of RMA (Recrea t ion Market Area)-The r a d i u s ( i n t r a v e l

t i m e o r m i l e s ) from which t h e m a j o r i t y o f t h e p r o j e c t ' s users

a re expected t o come. Normal ly t h e RMA i s de f i ned t o i n c l u d e

80% o r more o f expected v i s i t a t i o n . Two o f t h e t h r e e p o i n t

systerrls i r l co rpo ra t i ng t h i s c r i t e r i o n ass ign more p o i n t s f o r a

h i ghe r r ad ius ; t h e o t h e r ass igns more p o i n t s f o r a sma l le r RMA.

Pro ject operat ions-For r e s e r v o i r p r o j e c t s , t h e e x t e n t o f

drawdown o r v a r i a t i o n i n wate r su r face area d u r i n g t he rec rea-

t i o n season. An extreme change i n su r f ace area means fewer

p o i n t s because t h e q u a l i t y o f r e c r e a t i o n i s l i k e l y t o s u f f e r .

Fish and w i l d l i f e - T h e e x t e n t t o which o p p o r t u n i t i e s f o r

obse rva t i on o f w i l d 1 i f e o r hun t i ng and f i s h i n g w i l l be ava i l ab le .

Level of s ign i f i cance-H i s t o r i c o r s c i e n t i f i c s i g n i f i c a n c e on

a s ta te , r e g i o n a l , o r n a t i o n a l l e v e l . Th is c r i t e r i o n i s o f t e n

i nc l uded under a e s t h e t i c s .

S i t e modi f icat ion-The degree t o which s i t e improvements a re

des igned f o r p r o t e c t i o n o f t h e s i t e r a t h e r than t h e comfo r t o f

users; t h e lower t h e comfo r t and convenience, t h e h i ghe r t h e

p o i n t s .

It can be seen f rom Char t I 1 t h a t w h i l e a number o f c r i t e r i a

have been i nc l uded i n these p o i n t systems, severa l a r e common t o

most of t h e systems l i s t e d . On t h e o t h e r hand, we igh t i ng

schemes f o r t h e c r i t e r i a va ry w ide l y . About h a l f t h e systems

weigh each c r i t e r i o n equal l y , wh-i 1 e t h e o t h e r ha1 f ass ign vary-

i n g we igh ts t o each o f t h e c r i t e r i a . A l l presume t h a t t h e

CHART I . EXAMPLE OF A POINT SYSTEM AND ITS USE ?

CRITERIA

A. Q u a n t i t y and L im i t ed access p ro - Access t o one area q u a l i t y o f access v ided t o one area w/token rec . f a c i l . and r e c r e a t i o n a l o n l y . No rec re - dev. ( s a n i t a t i o n f a c i 1 i t i e s a t i ona l f a c i 1 i t y o n l y , i . e . , t r ash ,

1 prov ided development. chemical t o i l e t s ) . 1 1

Po in t s 1-3 p o i n t s 4-6 1 B. Number o f rec- S igh tsee ing on l y . No water con tac t

r e a t i ona 1 a l lowed. Land based oppor tun i t i e s r e c r e a t i o n a l a c t i v - a v a i l a b l e . i t i e s l i m i t e d .

Po in t s 1-3 Po in t s 4-6

C . A e s t h e t i c , Aes the t i c values Some aes the t i c s c i e n t i f i c and o f low qua1 i t y . va lues o f l o c a l s i g - educat iona l Ex tens ive env i r on - n i f i c a n c e . No major va l ues. menta 1 d i sturbances; env i ronmenta 1

p o l l u t i o n , e ros ion , d is tu rbances . 1 ogged area, f i re , dredged, p i t mined, garbage dump. Po in t s 1-3 P o i n t s 4-6

D. Level o f Loca 1 s i g n i f i c a n c e

Po in t s 1-3

County

Po in t s 4-6

E. Operat ions Extreme changes i n Extreme changes i n water su r f ace dur- water su r f ace dur - i n g r e c r e a t i o n i n g p a r t o f rec re - season cons ide rab l y a t i o n season w i t h a f f e c t i n g rec re - some e f f e c t on a t i o n p o t e n t i a l . r e c r e a t i o n

p o t e n t i a l . P o i n t s 1-3 P o i n t s 4-6

D o l l a r va lue $0.50 o r $0.75 $0.75 o r $1.13 assigned each recrea t i on day

Example o f t he use o f t h i s system: P r o j e c t : Bowes Reservo i r i I

C r i t e r i o n A B C D

Po in t s 9

1 1 6 3

13 To ta l -42 4 2

Average - = 8.4 5

M a t r i x f o r Q u a n t i f y i n g Recrea t ion Values (used by BOR Southeast ~ e g i o n )

JUDGMENT FACTORS

Access t o more than one area w/low q u a l i t y f a c i l . dev. o r h i g h over use f a c t o r probable .

Access t o severa l areas one o f which has h i g h q u a l i t y r e c r e a t i o n a l f a c i 1 . development.

Access t o severa l w/ I

h i g h q u a l i t y f a c i l - i t i e s ( f l u s h t o i l e t s , landscaping, s tove, tab le , mu1 t i lane ramps, and campground). P o i n t s 13-15

Cond i t ions h i g h l y conduc ive t o m u l t i - p l e a c t i v i t es .

P o i n t s 7-9 P o i n t s 10-12

Cond i t i ons pe rm i t m u l t i p l e a c t i v i t i e s b u t o p p o r t u n i t y l im i t ed . P o i n t s 7-9

Cond i t ions s u i t a b l e f o r m u l t i p l e a c t i v i t i e s .

P o i n t s 10- 12 P o i n t s 13-15

A e s t h e t i c a l l y p l easan t . O f r e g i o n a l s i g n i f i - cance

A t t r a c t i v e ; a e s t h e t i c va lues h i g h . Some archeo- l o g i c a l , e c o l o g i c a l , geo log i ca l o r h i s - t o r i c a l va lues p resen t .

High1 y a t t r a c t i v e ; a e s t h e t i c a l l y r e - ward ing. Unique o r ou t s tand ing archeo- l o g i c a l , e c o l o g i c a l ; geo l . , o r h i s t o r i c a l va 1 ues .

P o i n t s 7-9 P o i n t s 10-12 P o i n t s 13-15

Reg i ona 1 S ta te Na t i ona l

P o i n t s 7-9 P o i n t s 10-12 P o i n t s 13-15

Moderate change i n wa te r su r f ace du r - i ng r e c r e a t i o n season w i t h some e f f e c t on rec re - a t i o n p o t e n t i a l .

Moderate change i n water su r f ace dur - i n g p a r t o f r ec re - a t i o n season w i t h m i no r e f f e c t on r ec r e a t i o n p o t e n t i a l . P o i n t s 10-12

S tab le water su r f ace f o r r e c r e a t i o n ' as p r imary purpose.

P o i n t s 7-9 P o i n t s 13-15

From t h e t a b l e i t can be seen t h a t averages between 7 and 9 a r e ass igned a u n i t va l ue o f $1.60 under t h e c u r r e n t range o f $.75 t o $2.25 per r ec re - a t i o n day.

DERIVED FROM: I n fo rma t i on prepared by t h e Env i ron- mental Resources Branch, P lann ing D i v i s i o n , Army Eng ineer ing D i v i s i o n , South A t l a n t i c

CHART I I . POINT SYSTEMS FOR CHOOS 1 NG A UN IT DAY VALUE' W

C r i t e r i a and T h e i r Weight ing o

I >- Rec rea t i o n a * al x I

V, ul -- > ri A c t i v i t i e s

ul U - .- C .- . a * & 4-

U U 0 a n 0 U.-

V, .- L 2 - al s C O V, U * V, - al -- L L 3 ala I 0) -- n - 4~ . a . .- -7 I al U U 5 a z 2 ",g, r

Agency Using t he System u a 4~ a z c 3 a w 6 e ri a o o

Bureau o f Outdoor Recre- t i o n M idcon t i nen t Region 25 25 2 5 25 25 25 25 F i sh & W i l d l i f e (25) Northwest Region

U.S. Fores t Serv ice 16 14 16 18 20 16

Corps o f Engineers 202 10 25 15 30

C a l i f . Dept. o f F i s h and Water Resources

P a c i f i c Southwest I n t e r - Agency Committee

18 14 3 0

Bureau o f Outdoor Recre- a t i o n Washington O f f i c e

-f

Bureau o f Outdoor Recre- a t i o n Southeast Region 15

Corps o f Engineers 5

Special iz 'ed Values Guide a l s o inc luded

5 0 "This ca tegory depends a l s o on t he q u a l i t y o f access and f a c i l i t i e s

his system r a t e d t he ' ' ' ' ' p r o j e c t i n one o f 3 do1 l a r ranges (low, median o r h i gh ) r a t h e r than a s s i g n i n g p o i n t s

15 15 Level o f S i g n i f i c a n c e (15)

5 5 5 S o i l Conservat ion Serv ice 30 30 20 S i t e M o d i f i c a t i o n (20) lThese systems, w i t h t h e excep t i on o f t he second one, r e f e r e x c l u s i v e l y t o genera l r e c r e a t i o n days. umbers between two c r i t e r i a i n d i c a t e t h a t t he two were eva lua ted toge ther .

v a r i a b l e s c o n t r i b u t e t o w i l l ingness t o pay such t h a t p o s i t i v e ,

a d d i t i v e weights can descr ibe t h e r e l a t i o n s h i p .

The c r i t e r i a and weights used f o r p o i n t systems presen t a

number o f problems. They a re based on t h e judgments o f p lan-

ners r a t h e r than t h e expressed preferences o f users . They

l a c k emp i r i ca l j u s t i f i c a t i o n and a r e i n many cases n o t con-

s i s t e n t w i t h t he r e s u l t s of p rev ious i n v e s t i g a t i o n s o f r ec re -

a t i o n behavior . The c r i t e r i a a r e n o t w e l l de f i ned and d i f f e r -

e n t p lanners may i n t e r p r e t them q u i t e d i f f e r e n t l y , and thus

d e r i v e s i g n i f i c a n t l y d i f f e r e n t va l ues f o r t h e same p r o j e c t .

However, even i f the c r i t e r i a c o u l d be adequate ly se lec ted

and de f ined , t h e r e a r e s t i l l f u r t h e r problems o f e v a l u a t i o n

p r i n c i p l e s w i t h p o i n t systems, such as t he f o l l o w i n g . Again,

these problems a re i n a d d i t i o n t o s e l e c t i n g t he a p p r o p r i a t e

range of va lues t o use i n c o n j u n c t i o n w i t h t he p o i n t system:

1 ) Many p o i n t systems assume t h a t u n i t day va lues (average

w i l l i n g n e s s t o pay) inc rease w i t h t h e s i z e o f t h e s i t e and t h e

number and d i v e r s i t y o f man-made f a c i l i t i e s . Whi le i t i s 1 i k e l y

(a l though n o t c e r t a i n ) t h a t i n c r e a s i n g t he s i z e o r f a c i l i t i e s a t

a s i t e w i l l i nc rease number o f v i s i t s and t o t a l w i l l i n g n e s s t o

pay f o r t h e s i t e , i t i s n o t c l e a r t h a t average w i l l i n g n e s s t o

pay w i l l n e c e s s a r i l y inc rease . It i s n o t c l e a r t h a t l a r g e r

s i t e s w i l l always inc rease at tendance. R e c r e a t i o n i s t s may n o t

use a l l o f t h e c a p a c i t y prov ided. Th is cou ld be t h e case f o r

1 i ttl e-used w i lderness areas. On t h e o t h e r hand, average

w i l l i n g n e s s t o pay would d e c l i n e w i t h increased s i z e o r f a c i l -

i t i e s i f use were t o inc rease a t a f a s t e r r a t e than t o t a l w i l l -

ingness t o pay. For example, t h e r e may be fewer people i n t e r -

es ted i n p a r t i c i p a t i n g i n w i lderness a c t i v i t y than v i s i t i n g a

h i g h l y developed r e c r e a t i o n f a c i l i t y . Yet t h e w i lderness users

may be w i l l i n g t o pay a l a r g e amount f o r t he o p p o r t u n i t y t o

e n j o y a more unique s e t t i n g and f o r hav ing an exper ience f r e e

o f crowding.

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r e l e v a n t and s i g n i f i c a n t demand v a r i a b l e s . Such v a r i a b l e s would i n c l u d e t h e d i s t r i b u t i o n o f popu la t i on , t h e d i s t r i b u t i o n and

r e l a t i v e a t t r a c t i v e n e s s o f s u b s t i t u t e s i t e s , and t h e d i s t r i b u -

t i o n o f preferences. Wi thou t such work, t h e u n i t day va lue

approach i s an u n s a t i s f a c t o r y method f o r e v a l u a t i n g b e n e f i t s due

t o i t s a r b i t r a r y na tu re . Fur ther , s i nce many v a r i a b l e s which

a f f e c t demand have ambiguous o r compl i c a t e d re1 a t i o n s h i ps t o

average w i l l ingness t o pay, t h e r e seems l i t t l e p o i n t t o d i r e c t -

i n g f u t u r e e f f o r t i n t h i s d i r e c t i o n . The e m p i r i c a l demand

s t u d i e s which would be r e q u i r e d t o p rov i de a s a t i s f a c t o r y b a s i s

f o r a u n i t day va lue method can be more d i r e c t l y used t o e s t i -

mate bo th use and w i l l i n g n e s s t o pay. Th i s i s t h e p re fe rab le

approach.

Two genera l methods a r e p r e s e n t l y ava i 1 a b l e f o r deve lop ing

modzls t o es t ima te t h e user b e n e f i t s f rom r e c r e a t i o n : ( 1 ) t h e

t r a v e l c o s t method, and ( 2 ) t h e survey method. The t r a v e l c o s t

procedure es t ima tes w i l l ingness t o pay f rom t h e a c t u a l behav ior

o f p a r t i c i p a n t s . The survey procedure uses responses o f p a r t i -

c i p a n t s t o ques t ions as a means f o r e s t i m a t i n g t h e i r w i l l i n g n e s s

t o pay. These methods have been used i n a number o f s t u d i e s t o

deve lop models t o e s t i m a t e t h e w i l l i n g n e s s o f users t o pay f o r

r e c r e a t i o n . It i s usual t o es t ima te n e t w i l l i n g n e s s t o pay

which i s added t o expend i tu res on e n t r y and use r fees t o e s t i -

mate g ross w i l l i n g n e s s t o pay. I n o r d e r t o compare these

s t u d i e s w i t h t h e i n t e r i m u n i t day va lue approach p r e s e n t l y be ing

used by f e d e r a l agencies, a number o f pub l i shed s t u d i e s have

been examined t h a t p e r m i t c a l c u l a t i o n o f average w i l l i n g n e s s t o

pay p e r day. T h i s c a l c u l a t i o n i s n o t necessary f o r v a l u a t i o n

s i n c e i t i s t o t a l va lues t h a t a r e sought; however, i t i s usefu l

f o r comparison here. These s t u d i e s a r e summarized i n Table 1 i n

t h e appendix t o t h i s chap te r . S i m i l a r l y , ano ther group o f

s t u d i e s which o n l y p rov ided s u f f i c i e n t i n f o r m a t i o n f o r f i n d i n g

average w i l l i n g n e s s t o pay p e r t r i p a r e summarized i n Table 2 i n

t h e chap te r appendix.

Whi le most of these s t u d i e s deal w i t h what would be c l a s s i -

f i e d as "genera l r ec rea t i on , " more of t h e va lues 1 i e o u t s i d e t h e

c u r r e n t range of $. 75-2.25 t h a n w i t h i n . Un fo r t una te l y , few of

these f i g u r e s a r e f u l l y comparable f o r a number of reasons:

1 ) D i f f e r e n t model s a r e used ( i .e., d i f f e r e n t v a r i a b l e s o r

s p e c i f i c a t i o n s of t h e f u n c t i o n a l form of t h e r e l a t i o n s h i p among

v a r i a b l e s ) .

2) D i f f e r e n t va lues a re used f o r v a r i a b l e t r a v e l c o s t per

m i l e and t i m e c o s t per hour (where t ime i s i n c l u d e d ) .

3 ) D i f f e r e n t d i s t r i b u t i o n s o f p o p u l a t i o n e x i s t i n t h e market

areas o f each s i t e .

4 ) D i f f e r e n t ranges o f a1 t e r n a t i v e s a r e a v a i l a b l e t o users of

each s i t e .

5 ) The t a s t e s and socio-economic c h a r a c t e r i s t i c s o f users may

d i f f e r i n each marke t area.

6 ) The s t u d i e s were c a r r i e d o u t i n d i f f e r e n t years . Dur ing

t h i s t i m e per iod , p r i c e s , incomes, l e i s u r e t imes, and t a s t e s may

we1 1 have changed.

Another problem w i t h a few o f t h e p rev ious s t u d i e s a r i s e s

from t h e f a c t t h a t some of t h e f i g u r e s presented seem n o t t o

have been c a l c u l a t e d c o r r e c t l y . E r r o r s i n c l u d e : c a l c u l a t i n g t h e

consumer's s u r p l u s o f t h e person i n c u r r i n g average t r a v e l cos t s

r a t h e r than average consumer I s s u r p l us ( f o r example, G i bbs and

McGui r e , 1973; Levenson, 1971 ); u s i n g one-way r a t h e r than round-

t r i p t r a v e l cos t s , l e a d i n g t o an underest in ia te o f b e n e f i t s

(Smi th and Kavanagh, 1969); and u s i n g o p e r a t i n g c o s t s per

v e h i c l e t o c o n v e r t d i s t a n c e t r a v e l e d i n t o t r a v e l c o s t s w i t h o u t

d i v i d i n g by t h e average s i z e o f p a r t y (Mans f ie ld , 1971) .

The e m p i r i c a l s t u d i e s o u t l i n e d i n Tables 1 and 2 do n o t pro-

v i d e a s u f f i c i e n t background f o r e s t i m a t i n g w i l l i n g n e s s o f par -

t i c i p a n t s t o pay f o r t h e r e c r e a t i o n o p p o r t u n i t i e s . As has been

po in ted o u t , t h e s t u d i e s have n o t used c o n s i s t e n t methodology.

Furthermore, t h e y have n o t d e a l t w i t h a s u f f i c i e n t l y wide range

o f r e c r e a t i o n o p p o r t u n i t i e s t o encompass a l l aspects o f p l ann ing

f o r wa te r and r e l a t e d l and resources . The wide range i n va lues

most l i k e l y r e f l e c t s t h e v a r y i n g c i rcumstances a t each s i t e .

S ince these c i rcumstances a r e n o t always i d e n t i f i e d i n t h e e s t i -

mated model , few conc lus i ons can be drawn.

However, t h e b e s t o f these s t u d i e s p r o v i d e a sound background

f o r t h e a d d i t i o n a l e m p i r i c a l work t h a t i s necessary f o r t h e

development o f v a l u a t i o n procedures. Such procedures a re essen-

t i a l i n o r d e r t h a t agencies can p r o p e r l y assess proposed changes

i n t h e a v a i l a b i l i t y o f r e c r e a t i o n o p p o r t u n i t i e s . The research

t h a t has been done t o da te and t h a t i s c u r r e n t l y underway w i l l

be an i n v a l u a b l e a i d i n t h e f i n a l development o f these proce-

dures. De ta i 1 ed g u i del i n e s f o r use o f t h e t r a v e l c o s t and

survey methods t o develop t h e needed models f o r p r e d i c t i n g w i l l -

ingness t o pay a r e presented i n Chapters 4 and 5. The recom-

mended procedures a r e i n t r oduced here.

What i s necessary t o es t ima te r e c r e a t i o n ' s c o n t r i b u t i o n t o

n a t i o n a l economic development i s t h e development o f models

( equa t i ons ) t o p r e d i c t w i l l ingness t o pay. Th i s i s n o t a pro-

posal f o r a r a d i c a l new approach; r a t h e r , i t i s a recommendation

t o make t h e b e s t use o f procedures and models t h a t a r e p r e s e n t l y

a v a i l a b l e . These equa t ions would e x p l a i n i n d i v i d u a l w i l l ingness

t o pay f o r many types o f r e c r e a t i o n as f u n c t i o n s o f s i t e charac-

t e r i s t i c s , t h e socio-economic c h a r a c t e r i s t i c s o f t h e i n d i v i d u a l

user , t h e a v a i l a b i l i t y and q u a n t i t y o f s u b s t i t u t e a c t i v i t i e s and

s i t e s , and t h e l o c a t i o n o f t h e i n d i v i d u a l i n r e l a t i o n t o t h e

s i t e under s tudy. Note t h a t i t i s t h e i n d i v i d u a l demand behav-

i o r t h a t i s l e s s ambiguously r e l a t e d t o these v a r i a b l e s than i s

average w i l l i n g n e s s t o pay over a1 1 users . To ta l w i 11 ingness t o

pay f o r a s i t e would then be a f u n c t i o n o f these v a r i a b l e s , t he

number o f users , and t h e d i s t r i b u t i o n o f users w i t h i n t he market

area. These f u r ~ c t i o r ~ s cou ld be d e r i v e d f rom t r a v e l c o s t demand

f u n c t i o n s (which would a l s o p r o v i d e es t imates o f use) o r cou ld

be e x p l i c i t w i l l i ng r ress - t o -pay f u n c t i o n s s i m i l a r t o those which

a r e d e r i v e d by Dav is (1963) u s i n g t h e survey method (which must

be supplemented by use es t ima tes ) . These approaches a r e d i s -

cussed i n d e t a i l i n Chapters 4 and 5 and g u i d e l i n e s f o r t h e i r

use p rov ided . The func,t ions need n o t be es t imated a t each s i t e .

Once t h e models have been developed, t hey can be used t o eva l u-

a t e new p r o j e c t s w i t h o n l y min imal da ta c o l l e c t i o n .

Us ing t h e procedures o u t l i n e d i n t h i s r e p o r t , a c e n t r a l da ta

bank o f t h e r e s u l t s o f demand s t u d i e s f o r s p e c i f i c r eg ions c o u l d

be developed f o r use i n e v a l u a t i o n o f a1 t e r n a t i v e s , aga in by

r e g i o n . The r e s u l t s shou ld be s t o r e d i n a fo rm which c o u l d be

a p p l i e d t o p r e d i c t t h e w i l l i n g n e s s t o pay o f s p e c i f i c users o f a

planned s i t e w i t h i n t h e r eg ion , w i t h o u t r e q u i r i n g newly e s t i -

mated models f o r each s i t e . Th i s da ta bank would be o f immense

use t o p lanners . The development o f t h e da ta bank and o t h e r

e f f o r t s t o f a c i l i t a t e t h e implementat ion o f t h e recommended p ro -

cedures i s d iscussed i n Chapter 7. P r e d i c t i o n o f w i l l i n g n e s s t o

pay a t t h e i n d i v i d u a l l e v e l based on e m p i r i c a l s t u d i e s o f s i m i -

l a r s i t e s shou ld be s i g n i f i c a n t l y b e t t e r than an a t t emp t t o

e s t i m a t e t h e average w i l l i n g n e s s t o pay by a m o d i f i e d u n i t va l ue

approach. By p r e d i c t i n g a t a d isaggrega ted l e v e l we avo id t h e

problems i n p r e d i c t i n g t h e average w i l l i n g n e s s t o pay which

a r i s e because o f v a r y i n g s p a t i a l d i s t r i b u t i o n o f users , s u b s t i -

t u t e s i t e s , and t a s t e s t h a t make c u r r e n t p o i n t systems i n v a l i d .

Model c o n s t r u c t i o r ~ i n v o l v e s t h e sampl ing o f users and some

s t a t i s t i c a l and economic e x p e r t i s e . However, once t he model s

have been developed, i t i s a f a i r l y s imp le t a s k t o g a t h e r t h e

necessary da ta f o r a p p l y i n g t h e model t o a new s i t e , s u b s t i t u t e

i t i n t h e rnodel, and generate an answer. The use o f these

models i s w e l l w i t h i n t h e e x p e r t i s e and t ime c o n s t r a i n t s o f

agency p lanners , and t h e models w i l l p r o v i d e es t imates o f w i l l - ingness t o pay t h a t a r e c o n c e p t u a l l y f a r s u p e r i o r t o those c u r -

r e n t l y be ing developed w i t h t h e i n t e r i m u n i t day v a l u e approach.

Past e f f o r t s a t model c o n s t r u c t i o n have i n d i c a t e d t h a t a

f a i r l y smal l number of v a r i a b l e s have a s i g n i f i c a n t impact on

r e c r e a t i o n use and va lue. Th is simp1 i f i e s model c o n s t r u c t i o n

and use. Much of t h e needed da ta i s r e a d i l y a v a i l a b l e from

agency records o r census documents. Federal agencies w i l l most

l i k e l y f i n d i t h i g h l y use fu l t o share a v a i l a b l e data, models,

and expe r t i se . Model c o n s t r u c t i o n can s t a r t w i t h one o r two

ma jo r inf luences,e.g., t h e use rs ' p r o x i m i t y t o the s i t e ; then,

as exper ience and da ta develop, models can be made more i n c l h -

s i ve . Even f a i r l y s imp le model s t h a t can be developed and used

a t ve ry low c o s t would be a g r e a t improvement over p resen t

procedures.

The f o l l o w i n g d i scuss ion p resen ts f o u r examples o f models

t h a t can be used t o es t ima te t h e w i l l i n g n e s s o f users t o pay f o r

r e c r e a t i o n . The f i r s t two models (Davis, 1963; Hammack and

Brown, 1974) were developed from t h e survey method and a r e based

on t h e responses o f users t o ques t ions . The n e x t two models

(Knetsch, Brown, and Hansen, 1976; Corps o f Engineers, 1976)

were based on t h e a c t u a l behav io r o f r e c r e a t i o n i s t s ( i . e . , t he

t r a v e l c o s t method).

The f o l l o w i n g models i l l u s t r a t e t h e use o f t h e survey method

t o es t ima te w i l l i n g n e s s o f users t o pay.

The Value of Recreation In The Maine Woods

I n a s tudy o f t h e va lue o f r e c r e a t i o n i n a p a r t o f t h e Maine

Woods, Rober t K. Davis developed t h e f o l l o w i n g equat ion t o ex-

press t h e w i l l ingness o f a household t o pay f o r a v i s i t (Davis,

1964, p. 397). Davis used t h e survey method t o develop h i s

model. The model, which was based on 185 i n t e r v i e w s , has t he

f o l 1 owing form:

Where :

W = household w i l l i n g n e s s t o pay an a d d i t i o n a l amount f o r a v i s i t

E = years o f acquain tance w i t h t h e area v i s i t e d Y = income o f 'the household i n thousands o f d o l l a r s L = l e n g t h o f v i s i t i n days Standard e r r o r o f the equa t i on i s 39.7057 Standard e r r o r s o f the c o e f f i c i e n t s a re shown i n

parentheses.

Thus, us i ng t h e equa t i on descr ibed above, one cou ld es t ima te

t h e w i l l i n g n e s s of households t o pay f o r r e c r e a t i o n i n a p a r t o f

t h e Maine Woods ( o r a s i m i l a r a rea ) p rov ided t h a t t he number o f

households expected t o v i s i t t h e area was a v a i l a b l e a long w i t h

es t imates of t h e i r income, yea rs o f acquain tance w i t h t h e area,

and l e n g t h o f v i s i t . T h i s e s t i m a t i o n would r e q u i r e an add i -

t i o n a l l a r g e r survey o f t h e user popu la t i on . The equa t i on would

p rov i de es t ima tes o f t h e a d d i t i o n a l w i l l i n g n e s s t o pay o f each

household f o r a t r i p . These would be summed f o r a l l users t o

d e r i v e an es t ima te o f t o t a l n e t w i l l i n g n e s s t o pay.

Dav is (1964) a l s o a p p l i e d h i s model t o t h e v a l u a t i o n o f b i g

game hun t i ng on a 500,000 a c r e p r i v a t e f o r e s t i n Maine. To

a p p l y t h e model t o t h i s p a r t i c u l a r s i t u a t i o n (which d i f f e r e d

s l i g h t l y from t h e c i rcumstances under which t h e model was deve l -

oped) i n f o rma t i on was r e q u i r e d on t h e income, l e n g t h o f s tay,

and yea rs of exper ience f o r t h e hun te rs . T h i s i n f o r m a t i o n was

c o l l e c t e d by a q u e s t i o n n a i r e adm in i s t e red t o a sys temat i c sample

o f hun te r s s t opp ing a t t h e t r a f f i c check ing s t a t i o n . Usable

ques t i onna i r es were ob ta i ned f rom 390 hun te rs . The e n t i r e

hun te r popul a t i o n was t hen d i s t r i b u t e d acco rd i ng t o t h e sample

d i s t r i b u t i o n o f income, l e n g t h o f s t ay , and years o f acqua in t -

ance w i t h t h e area. T o t a l w i l l i n g n e s s t o pay was then es t imated

f o r t h e hun te r popu la t i on .

Thus, once a model such as t h a t developed by Dav is i s a v a i l -

ab le , t h e e v a l u a t i o n process i s as f o l l o w s : 1 ) t h e p l anne r

s e l e c t s t h e a p p r o p r i a t e model, i n t h i s case t h e one developed by

Davis; 2 ) gathers i n f o r m a t i o n on t h e a p p r o p r i a t e v a r i a b l e s ; and

3 ) p lugs t h e da ta i n t o t h e model and generates an es t ima ted

w i l l i n g n e s s o f p a r t i c i p a n t s t o pay. We now t u r n our a t t e n t i o n

t o ano ther appl i c a t i o n o f t h e su rvey method t o es t ima te w i l l i n g -

ness o f p a r t i c i p a n t s t o pay f o r r e c r e a t i o n .

T h e V a l u e o f W a t e r f o w l

I n t h e i r s tudy of t h e va lue o f wa te r fow l hun t ing , Hammack and

Brown (1974) developed t h e f o l l o w i n g equa t i on f o r e s t i m a t i n g t h e -

v a l ue o f a season of hun t i ng . They developed t h e i r model f rom

2,455 responses t o m a i l ques t i onna i r es d i s t r i b u t e d t o wa te r fow l

hun te r s i n t h e seven western s t a t e s t h a t l i e w h o l l y w i t h i n the

boundar ies o f t h e P a c i f i c Flyway. Th i s i n c l u d e s t h e s t a t e s o f

Ar izona, C a l i f o r n i a , Idaho, Nevada, Oregon, Utah, and Washington. -

Where :

V = n e t va l ue o f a season o f wa te r fow l h u n t i n g Y = household income ( a f t e r taxes) i n thousands o f

do1 l a r s S = number o f seasons o f wa te r f ow l h u n t i n g C = c o s t o f a season's wa te r f ow l h u n t i n g K = wa te r f ow l sho t and bagged d u r i n g the season D = number o f days hunted d u r i n g the season

( ) = t va lue

Note t h a t t h e equa t i on resembles t h e one developed by Dav is

(1963) i n t h a t income, exper ience, and amount o f h u n t i n g were

s i g n i f i c a n t v a r i a b l e s . A p lanner a p p l y i n g Hammack and Brown's

model t o a n a l y s i s o f an a l t e r n a t i v e t h a t would a f f e c t hun t i ng

would need t o develop es t ima tes o f t he f o l l o w i n g types o f

i n f o r m a t i o n about t h e hun te rs a f f e c t e d : number o f hunters ,

household income a f t e r taxes, number o f seasons o f water fowl

hun t ing , wa te r fow l sho t and bagged d u r i n g t h e season, and t h e

number of days hunted d u r i n g t h e season.

A v a r i a t i o n of t h e model developed by Hammack and Brown was

used i n a M i g r a t o r y B i r d , H a b i t a t P r e s e r v a t i o n s t u d y conducted by

t h e U.S. Department of the I n t e r i o r ' s F i s h and W i l d l i f e Serv ice

i n 1975. Data on income ( Y ) and expend i tu res ( C ) o f water fowl

hun te rs were taken from t h e 1970 N a t i o n a l S u r v e y o f H u n t i n g and

F i s h i n g . Data on wate r fow l bagged were ob ta ined f rom the 1970

survey of waterfowl hun te rs . The es t imated number o f seasons a

hun te r had hunted was ob ta ined from t h e Hammack and Brown study.

Note t h a t i n t h i s i n s t a n c e very l i t t l e da ta c o l l e c t i o n was

requ i red.

The model s developed by Davis and Ham~nack and Brown es t ima te

i n d i v i d u a l n e t w i l l i n g n e s s t o pay. Use o f t he models r e q u i r e s

some i n d i c a t i o n of t h e number o f i n d i v i d u a l s expected t o be

a f f e c t e d by t h e a1 t e r n a t i v e . Th i s i n f o r m a t i o n may be developed

f rom another survey, which was t h e procedure f o l l o w e d by Davis

(1 963), o r ano ther approach such as t h e t r a v e l c o s t method.

We now t u r n ou r a t t e n t i o n t o t r a v e l c o s t models t h a t s imu l -

t aneous l y d e r i v e es t ima tes o f use as w e l l as va lue o f t h i s use.

The p rev ious models were developed f rom i n t e r v i e w s and p resen t

es t imates o f an i n d i v i d u a l ' s n e t w i l l i n g n e s s t o pay. It i s a l s o

p o s s i b l e t o es t ima te w i l l i n g n e s s t o pay f rom t h e a c t u a l demand

behav io r o f r e c r e a t i o n i s t s . Th i s i s t h e approach taken w i t h t he

t r a v e l c o s t method. The bas i c model i n t h i s procedure es t imates

t h e number o f v i s i t s t h a t r e s i d e n t s o f a p a r t i c u l a r area

( u s u a l l y a coun ty o r town) w i l l make t o a p a r t i c u l a r s i t e .

T h e V a l u e o f R e s e r v o i r R e c r e a t i o n

A t r a v e l c o s t model was developed by t he Corps o f Engineers

f o r a s e r i e s o f r e s e r v o i r s i n Cal i f o r r ~ i a . The model, which was

based on users o f seven r e s e r v o i r s i n t h e Corps o f Engineers

Sacramento D i s t r i c t ( i n c l u d i n g 168 p a i r i n g s o f o r i g i n s and des-

t i na t i ons ) ,may be expressed by t h e f o l l o w i n g equa t i on (Knetsch,

Brown, and Hansen, 1976, p. 109) . The da ta f o r c o n s t r u c t i n g t h i s

model were ob ta i ned f rom a survey o f users and f a c i l i t i e s .

Where :

V i j = t h e number o f v i s i t o r s f rom o r i g i n i t o r e s e r v o i r j

Pi = t h e p o p u l a t i o n o f o r i g i n i

D i j = t h e d i s t ance i n m i l e s f rom o r i g i n i t o r e s e r v o i r j

Aj = t he s i z e ( i n ac res ) o f t h e r e c r e a t i o n poo l )

S i = t he number and p r o x i m i t y o f s u b s t i t u t e r ec re - a t i o n areas a v a i l a b l e t o the popu la t i ons o f va r i ous o r i g i n s ( i ) w i t h respec t t o r e s e r v o i r j

I n a d d i t i o n t o p r e d i c t i n g use, t h e above equa t ion can be

used t o es t ima te w i l l i r ~ g n e s s t o pay. The model i s used t o

es t ima te a demand curve f o r t h e s i t e and t hen t h e area und.er

t h a t cu r ve i s an es t ima te o f w i l l ingness t o pay when e n t r y

fees a r e ze ro . I f a c t u a l o n - s i t e fees e x i s t , expend i t u re fees

should be added t o n e t w i l l i n g n e s s t o pay t o d e r i v e gross

w i l l i n g n e s s t o pay.

Expected use o f a p a r t i c u l a r s i t e a t e x i s t i n g f ee s t r u c -

t u r e s , which i s one p o i n t on t h e demand curve, i s c a l c u l a t e d

by e s t i m a t i n g t h e use from each o r i g i n ( u s i n g t h e above equa-

t i o n ) and then summing t h e use f rom a1 l o r i g i n s t o g e t t o t a l

use o f t h e s i t e . Use f rom any o r i g i n i s es t imated by s u b s t i -

t u t i n g t h e p o p u l a t i o n o f t h a t o r i g i n (Pi), t h e d i s t a n c e from

t h e o r i g i n t o t h e r e s e r v o i r (Di j ) , t h e s i z e o f t h e r e s e r v o i r

(Aj),and t h e measure of t h e a v a i l a b i l i t y o f t he a l t e r n a t i v e

water s i t e s ( S . .) i n t o t h e equat ion. 1J

Other p o i n t s on t h e demand curve a r e es t imated by succes-

s i v e r e c a l c u l a t i o n s o f t h e use by inc rement ing Dij by a f i x e d

amount and c a l c u l a t i n g a new es t imate o f t o t a l use. Succes-

s i v e increments and summations y i e l d a d d i t i o n a l p o i n t s on t he

demand curve f o r t h e fac ' i l ity a t i ssue . T h i s procedure

e s s e n t i a l l y inc reases t h e v a r i a b l e t r a v e l cos ts faced by r e s i -

dents o f each o r i g i n . Th i s inc rease i n cos t , which i s viewed

as a proxy f o r p r i c e p a i d o r e n t r y fee, reduces es t imated use

( q u a n t i t y demanded a t t h a t p r i c e ) and permi ts c o n s t r u c t i o n o f

a demand curve which es t imates t o t a l p a r t i c i p a t i o n a t va r i ous

p r i c e s . The area under t h e d e r i v e d demand curve i s then an

es t ima te o f n e t w i l l i n g n e s s t o pay.

I n app l y i ng t h e t r a v e l c o s t model t o t h e v a l u a t i o n o f a

proposed r e s e r v o i r , t h e p lanner would develop a demand curve

f o r t he new f a c i l i t y by t h e same procedures descr ibed above.,

Th i s r e q u i r e s t h a t t h e p lanner ( 1 ) i d e n t i f y t h e o r i g i n s from

which users a r e expected t o come ( i . e . , d e f i n e t h e u n i t o f

obse rva t i on as d i s t a n c e zones, coun t ies , e t c . ) , ( 2 ) o b t a i n

p o p u l a t i o n es t imates f o r those o r i g i n s ( f r om census sources) ,

('3) c a l c u l a t e t h e d i s t a n c e from each o r i g i n t o t h e r e s e r v o i r

(from a road a t l as ) , ( 4 ) o b t a i n an es t ima te o f t he expected s i z e

o f t h e r e s e r v o i r , ( 5 ) i d e n t i f y an index o f a1 t e r n a t i v e s a v a i l -

a b l e f o r each o r i g i n , and ( 6 ) i d e n t i f y t he d o l l a r and t ime

expend i tu res r e q u i r e d by t h e r e s i d e n t s o f each o r i g i n i n o rde r

t o reach t h e r e s e r v o i r . The p r e v i o u s l y es t imated t r a v e l c o s t

model i s used and t h e e v a l u a t i o n o f t h e s i t e demand curve f o r

t h e new f a c i l i t y i s based on mechanical s u b s t i t u t i o n .

T h e V a l u e of Urban P a r k s

The Corps o f Engineers (1976) has developed t h e model p re -

sented below f o r p r e d i c t i n g t o t a l a c t i v i t y hours v i s i t a t i o n

from an o r i g i n t o an urban park as a f u n c t i o n o f t he popula-

t i o n a t t h a t o r i g i n , t h e s i z e of ma in ta ined t u r f area a t t he

d e s t i n a t i o n , and t h e median road m i l e d i s t ance between o r i g i n

and d e s t i n a t i o n . It represen ts another appl i c a t i o n o f t h e

t r a v e l c o s t approach. The model was based on a n a l y s i s of f i v e

parks and 40 o r i g i n s which p rov ided 200 p a i r i n g s of o r i g i n s

and d e s t i n a t i o n s .

Where :

V i j = t o t a l a c t i v i t y hours o f v i s i t a t i o n from o r i g i n i t o d e s t i n a t i o n j

Pi = popu la t ion o f o r i g i n i

D i j = d is tance i n mi les from o r i g i n i t o d e s t i n a t i o n j

Tj = acres o f maintained t u r f a t d e s t i n a t i o n j

Th i s model can a l s o be used t o develop an aggregate demand

curve as D i j i s incremented f o r each o r i g i n by f i x e d amounts

and es t imates o f use a r e der iv.ed.

The da ta requi rements f o r e v a l u a t i n g an e x i s t i n g o r pro-

posed f a c i l i t y a r e p a r t i c u l a r l y low. The p lanner needs o n l y

t o determine (1 ) t h e o r i g i n s f rom which users a r e expected t o

come, ( 2 ) t h e popu la t i on o f each o r i g i n , ( 3 ) t he d i s tance from

each o r i g i n t o t h e park , and ( 4 ) t h e number o f acres o f main-

t a i n e d t u r f a t t h e park .

Des i rab le c r i t e r i a f o r procedures t o es t ima te r e c r e a t i o n ' s

c o n t r i b u t i o n t o n a t i o n a l economic development have been ou t -

l i n e d . Cur ren t e s t i m a t i o n procedures which make a lmost exc lu -

s i v e use o f t h e " i n t e r i m u n i t day va lue approach," sometimes

augmented by p o i n t systems, do n o t meet these c r i t e r i a and a r e

i n a p p r o p r i a t e . Rev is ion and m o d i f i c a t i o n o f t h e " i n t e r i m u n i t

day va lue approach" i s n o t a use fu l means o f developing

improved procedures. Instead, model s which es t imate the w i 11 - i r~gness o f i n d i v i d u a l p a r t i c i p a n t s o r groups t o pay f o r r e c r e -

a t i o n must be developed. These models, examples o f which have

been g iven, can be developed f rom the survey o r t r a v e l c o s t

approaches. The models can be used by agency p lanners t o

develop app rop r i a te es t imates of r e c r e a t i o n ' s c o n t r i b u t i o n t o

n a t i o n a l econorr~ic development. Subsequent chapters w i 11

descr ibe how these models can be developed and used.

Th is appendix presents t h e r e s u l t s o f a number o f r ecen t

s tud ies of r e c r e a t i o n b e n e f i t s . Table 1 con ta ins s tud ies f o r

which u n i t day values cou ld be der ived, w h i l e Table 2 presents

s tud ies f o r which u n i t v i s i t values were der ived .

-0-0 N (Dm- 7 7 - V) fi - - \ 2 3 -.

iA niA ,

d 3.

. (DO vl a4 W - I

5 g

TABLE 1 . CONTINUED

Loca t i on and Type o f Source Date o f Survey Act iv i t ies : ;

Auto T i me Average ode 1 cos t * cos PC consumers1 su rp lus

Ka 1 t e r and Goss

(1 969)

Levenson (1971)

Mansf i e l d (1971)

Merewi t z ( 1966)

New York S t a t e 1960 ( p r o j e c t e d t o 1985)

Hempstead, New York- 1965

Lake D i s t r i c t , Engl and- 1966

I I

M i ssou r i 1950-54, 56

f u l l -day t r i p s

ha 1 f -day t r i p s

f i s h i n g , boa t i ng , s u r f i n g , water-

v l o g -= Bo + B, l ogy P

+B2 l o g C + B 3 l o g D

+B, l o g R + B, l o g A

+B, l o g X + B, l o g S

+B, l o g E

or d e s c r i p t i o n o f v a r i a b l e s see end o f Tab le 2. "Where s p e c i f i e d .

3c/mi $1.02/hr per ca r

I I $ l . l l / h r

per c a r

1 . 5 c / m i $. 86/hr

Per person

$7.35 (boa t i ng )

$15.95 ( h i k i n g )

$5.56 ( f i s h i n g )

$6.52 (swimming)

$2.68 (boat i ng) $2.26 ( f i s h i n g )

F C -l n rD

0 PI I- t-t 0 rD n

PI 0 rt -h -*

0 V) 3 C 1 PI < 3

a -<

D n -4 rt -< -. -0 < rD -. rt 0 -* -h rD m :+

3

:: rD d

-I-

n D 0 c m rt rt 0 :+

n -4 0 -. m 3 rt rD ::-

n 2 m

5 D rD < -l rD m -l -PI

m m rD C -l -0 - c m

-4 mm< PI (DPIPI 0- =I<- - OrDC rn -ram

PI h, rtoo m3-h

a a < * -. -. 1<m -. n, -. -01rt

mrto rD 1 a

3 PI -. 3 - a

m

: -01 c L. C

t-t II :

TABLE 1. CONTINUED

Locat ion and Type of Auto Time Average Source Date of Survey Activities" ode 1 t cos t ;'; cost;'; consumers' surplus

Ul lman Missouri- hypothetical value of visitor miles $.6~/mi $.85/hr $1.94 and Vol k 1950-54, 56 reservoi r saved on diverted Per (1962) trips person

t ~ o r description of variables see end of Table 2. ::Where specified.

TABLE 2. UNIT VISIT VALUES D E R I V E D FROM EMPIRICAL WORK

Loca t i on and Type o f Auto Time Consumers ' su rp lus Source Date o f Survey A c t i v i t i e s * ode 1' cos t " cos t * pe r v i s i t

Common Grafham Water, t r o u t (1 973) Eng 1 and- f i s h i n g

1967 (see S m i t h and ~ a v a n a ~ h )

Davis Ma i ne- Hunt ing (1961) 1961

Gibbs F l o r i d a - K i ss immee (1974) 1970 R i ve r

Basin

Gibbs I I

and McGu i r e

( 1973)

Gum and Ar izona- h u n t i n g Mart i n 1970

(1 975) ( a l s o i n M a r t i n , Gum, and Smith 1974)

f i s h i n g

genera 1 .rec rea t i o n '

RnL = Bo + BICl + B2C2

+ B3Y+B 1 4N RnL = Bo+ BICl + B2C2+ BsY 7 C / m i

1 + B4-+ B,G, + B,G2 + B,G3 N

$10.32 pe r househo 1 d

$6.39-$57.43 per household t r i p (median $23.89)

$45.92-$50.13

$66.54

or d e s c r i p t i o n o f v a r i a b l e s see end o f Table 2. "Where s p e c i f i e d .

TABLE 2. CONTINUED

UI N

Locat i o n and Type o f Auto Time Consumers1 surp lus Source Date o f Survey Ac t i v i t ies ; : Mode 1 cos t * cos t * per v i s i t

Knetsch ( 1 964)

Knetsch and Davis

( 1966)

Mansf i e l d (1971)

Smith and Kavanagh

(1969)

Smi t h (1 970)

V i r g i n i a and rese rvo i r No r th Carol i na- 1963-4

Ma i ne- hun t ing , 1961 f i s h i n g

camp i ng I I I I

Lake D i s t r i c t , Eng 1 and- 1966

Grafham Water, t r o u t England- f i s h i n g 1967

i n t e r v i e w method: W = B +B,L+B,D

0

t r a v e l cos t method 5c/mi

3c/mi 9Oc/hr per c a r

l o g [;+ 1) = B o +

B, l o g C

I I

I I

f ~ o r d e s c r i p t i o n o f v a r i a b l e s see end o f Table 2. ;:Where speci f i ed .

$3.10 per p a r t y v i s i t

TABLE 2. CONTINUED

Locat i o n and Type o f Source Date o f Survey A c t i v i t i e s *

Auto Time Consumers' su rp lus ~ o d e l ' c o s t * cos t * per v i s i t

S u b l e t t e Ar izona- and 1972 M a r t i n

(1975)

Wennergren Utah- e t . a l . 1973

(1975)

camp i ng , !!= B + BIC + B2c2 + f i s h i n g , H o

.camp i ng , i n t e r v i e w method: h i k i n g V-L = B + BIW + B2w2

0

boa t i ng n o t g i ven

$26.14 per household-day ( ~ u n a Lake) $42.14 (B lack Canyon Lake) $46.93 ( ~ n o l l Lake) $9.85 ( ~ o r s e t h i e f Bas i n )

$1.49 (Brushy Bas i n )

or d e s c r i p t i o n o f v a r i a b l e s see t he nex t page. f:Whe r e spec i f i ed .

aw03u! = A

a3e~ = X

Aed oj ssau6u!(l !M = M

uo!jea~3a~ 40 sAep = 1 A

Sj!S!A = A

saA!jeuJajle 40 xapu! = 1

xas = S

a3ua~aja~d 40 xapu! = tl

Aj! lenb 40 xapu! = D Ajjsuap uo!jelndod = ad

uo!jelndod = d

dno~6 uo!jea~3a~ 40 az!s = N

J!S!A ad Aejs 40 yj6ual = 1

ployasnoy = H

sa!wwnp leuoseas = 'E3 '23 'I3

uo!jr2e~ p!ed 40 sAep = ZI

uo!je3npa = 3

a3uejs!p = a Z

1so3 a~!s-uo Al!ep = 3

jso~ la~e~j = I3

aj!s e 6uiy3ea-1 40 jso3 = 3

sjua!3!44ao3 uo!ssa~6a~ = ! 0

a6e = V

CHAPTER 4 THE SURVEY METHOD

The survey method i s used t o es t ima te t h e va lue o f a r e c r e -

a t i o n exper ience from responses t o a ques t i onna i re o r a per -

sonal i n t e r v i e w . The method migh t perhaps be more app rop r i -

a t e l y c a l l e d t h e i n t e r v i e w s e l f - e s t i m a t e method s i n c e some

t y p e of survey ( u s u a l l y i n c l u d i n g a ques t i onna i re ) i s a l s o

used f o r t h e t r a v e l c o s t method. However, t h e term survey

method i n t h e c o n t e x t used here i s w i d e l y understood by rec re -

a t i o n p lanners . The method has s i g n i f i c a n t advantages over

t h e t r a v e l c o s t method i n s i t u a t i o n s t h a t i n v o l v e : (1 ) cons id-

e r i n g t h e va lue o f smal l changes i n q u a l i t y a t e x i s t i n g s i t e s

which would n o t be expected t o a f f e c t t h e t r a v e l cos t s o f

v i s i t o r s no r t h e i r number o f v i s i t s , p a r t i c u l a r l y i f these

changes have i m p l i c a t i o n s f o r r e c r e a t i o n exper iences a t a

number o f s i t e s ; ( 2 ) e s t i m a t i n g t h e va lue o f a s i t e o r area

t h a t i s one o f many d e s t i n a t i o n s v i s i t e d on a t r i p ; and

( 3 ) cons ide r i ng t h e e f f e c t s o f conges t ion (crowding) on s i t e

b e n e f i t s . Examples o f t h e f i r s t ca tegory would i n c l u d e

e f f o r t s t h a t enhance wate r fow l o r f i s h popu la t i ons which then

move t o a v a r i e t y o f s i t e s where t h e y c o n t r i b u t e t o r e c r e -

a t i o n a l exper iences.

Two surveys a r e r e q u i r e d t o eva lua te a p a r t i c u l a r r e c r e -

a t i o n area. An i n i t i a l survey i s conducted w i t h a sarr~ple o f

users o f e x i s t i n g s i t e s o r r e c r e a t i o n areas. Th i s survey i s

aimed a t e l i c i t i n g t h e use rs ' v a l u a t i o n o f t h e r e c r e a t i o n area

and c o l l e c t i n g da ta on v a r i a b l e s which a r e expected t o e x p l a i n

i n d i v i d u a l d i f f e rences i n v a l u a t i o n . The r e s u l t s o f t h i s su r -

vey a r e used t o develop an equat ion which can be used t o pre-

d i c t any o t h e r u s e r ' s v a l u a t i o n o f a p a r t i c u l a r r e c r e a t i o n

area ( i n terms o f w i l l ingness t o pay e n t r y f ees ) based on t h e

p a r t i c u l a r valhes o f t h e exp lana to ry v a r i a b l e s f o r t h a t

i n d i v i d u a l .

A second survey should be aimed a t a l a r g e r sample o f the

user popu la t i on i n o r d e r t o es t imate t he va lues o f t he explan-

a t o r y v a r i a b l e s f o r t h e complete user popu la t i on . Us ing t he

r e s u l t s o f t h i s survey and app l y i ng t he es t imated equat ion

which e x p l a i n s i n d i v i d u a l w i l l i n g n e s s t o pay, t h e v a l u a t i o n o f

each user i s c a l c u l a t e d and these a r e summed t o p rov ide an

es t ima te of t o t a l w i l l i n g n e s s t o pay. Th i s procedure presumes

t h a t t h e s i z e of t h e use r popu la t i on can be i d e n t i f i e d . To do

so may r e q u i r e f u r t h e r s t a t i s t i c a l procedures.

I n p r i n c i p l e , t h e w i l l i n g n e s s - t o - p a y equa t i on may be e s t i -

rr~ated i n one r e c r e a t i o n area and app l i ed t o proposed develop-

ments elsewhere. I n t h a t case, t h e second survey would be

aimed a t i d e n t i f y i n g user c h a r a c t e r i s t i c s ( va lue o f t h e ex-

p l ana to ry v a r i a b l e s ) f o r p o t e n t i a l users o f t he new r e c r e a t i o n

area. Obvious ly t h e problem o f i d e n t i f y i n g t h e p o t e n t i a l user

p o p u l a t i o n o f a new s i t e i s somewhat more d i f f i c u l t than iden-

t i f y i n g t h e users of an e x i s t i n g s i t e .

User i r~ fo rma t i on f o r t h e same exp lana to ry v a r i a b l e s should

be c o l l e c t e d i n bo th surveys. These should be v a r i a b l e s which

a r e expected t o e x p l a i n d i f f e r e n c e s i n i n d i v i d u a l va lua t i ons .

For example, t hey may i n c l u d e s tandard demographic i n f o r m a t i o n

(age, sex, income, educat ion, f a m i l y s i ze , e t c . ) as w e l l as

number and l e n g t h o f v i s i t s , years o f exper ience w i t h t h e s i t e ,

d i s t ance t r a v e l e d t o t h e s i t e , i n f o r m a t i o n needed t o d e r i v e a

measure o f t h e a c c e s s i b i l i t y o f s u b s t i t u t e s i t e s , and (pe r -

haps) a phys i ca l measure o f t he success o f a t r i p (such as

number o f wa te r fow l bagged, o r whether a deer hun t i ng t r i p was

successfu l ) . The cho i ce o f v a r i a b l e s w i l l depend upon t h e i r

appropr ia teness i n t h e s p e c i f i c a p p l i c a t i o n .

We should s t r e s s t h a t a t p resen t t h e r e i s n o t a very l a r g e

amount o f p r a c t i c a l exper ience i n app l y i ng t he survey method

t o t h e v a l u a t i o n o f r e c r e a t i o n areas. I n p a r t i c u l a r , t h e r e i s

l i t t l e exper ience i n e v a l u a t i n g t he expected va lue o f proposed

p r o j e c t s . The i n c l u s i o n o f v a r i a b l e s r e f l e c t i n g d i s t a n c e

t r a v e l e d and an index o f access ib i 1 i t y o f a1 t e r n a t i v e s would

seem t o be he1 p fu l a d d i t i o n s . They would a1 low a p p l i c a t i o n of t h e es t imated models t o newly-proposed p r o j e c t s which m igh t

d i f f e r i n l o c a t i o n r e l a t i v e t o t h e user popu la t i on and s u b s t i -

t u t e s i t e s .

There i s , however, renewed i n t e r e s t i n t he use o f t he sur -

vey method. I n t h e f o l l o w i n g sec t i ons we d iscuss some issues

i n t h e use of t h e survey method and p resen t examples o f e x i s t -

i n g a p p l i c a t i o n s o f t h e method.

The survey method i s p red i ca ted on two key assumptions:

( 1 ) t h a t consumers can ass ign an accura te va lue t o t he r e c r e -

a t i o n exper ience, and ( 2 ) t h a t t h i s v a l u a t i o n can be e l i c i t e d

from them w i t h a p r o p e r l y cons t ruc ted ques t ion o r s e r i e s o f

ques t ions .

The r e c r e a t i o n survey l i t e r a t u r e has n o t g i ven a g r e a t deal

of a t t e n t i o n t o t h e f i r s t assumption. Instead, t h e focus has

been on t h e second assumption, concern ing t h e a b i l i t y o f t h e

survey t o e l i c i t t h e v a l u a t i o n f rom the p a r t i c i p a n t . Th is

second assumpti on has generated cons iderab le debate. The

arguments may be ca tego r i zed i n t o two areas: ( 1 ) t h e values

t h a t t h e ques t ions a c t u a l l y measure, and ( 2 ) t h e e f f e c t i v e n e s s

o f t h e survey i n g e t t i n g unbiased answers t o t h e ques t ions .

We w i l l now t u r n our a t t e n t i o n t o t h e two ma jo r assurrlptions o f

t h e survey method. The i n i t i a l d i scuss ion focuses on ques-

t i o n s t h a t can be r a i s e d w i t h r espec t t o t he consumer's a b i l -

i t y t o ass ign values.

The survey method poses some d i f f i c u l t ques t ions f o r p a r t i -

c i p a n t s . They a r e asked t o make e x p l i c i t d o l l a r va lua t i o r l s on

t h e bas i s o f d e s c r i p t i o n s o f h y p o t h e t i c a l c i rcumstances. The

cha l l enge i n us i ng t h e survey method i s t o a s s i s t t h e consumer

i n t h i n k i n g i n terms of d o l l a r v a l u a t i o n s , and ensu r i ng t h a t

he responds i n a manner t h a t r e f l e c t s what h i s a c t u a l behav io r

would be under t h e c i rcumstances ou t1 i ned . Wi th t he survey

method, p a r t i c i p a n t s a r e asked t o ass i gn a d o l l a r va l ue t o a

r e c r e a t i o n exper ience. For example, t hey a r e expected t o i n -

d i c a t e t h e maximum a d d i t i o n a l amount t h a t t h e y would be w i l l -

i n g t o pay r a t h e r t han be excluded from p a r t i c i p a t i o n . Th i s

p resen ts a ques t i on concern ing t h e ease w i t h which i n d i v i d u a l s

can a c c u r a t e l y ass i gn such a va lue. Th i s q u e s t i o n i s c e n t r a l

t o t h e development o f su rvey methodology.

I n t h e case of r e c r e a t i o n , i t i s n o t obv ious t h a t a con-

sumer should be immed ia te ly a b l e t o ass ign a d o l l a r va lue t o

p a r t i c i p a t i o n . I n p a r t , t h i s i s because t h e r e i s no c l e a r -

c u t market p r i c e f o r t h e o p p o r t u n i t y t o p a r t i c i p a t e . Recre-

a t i o n a c t i v i t i e s a r e o f t e n a v a i l a b l e a t no charge o r f o r smal l

e n t r y o r user fees. Furthermore, t r a v e l expenses and t ime a r e

t h e ma jo r components i n t h e c o s t s o f r e c r e a t i o n . The consumer

may have d i f f i c u l t y a s s i g n i n g va lues t o these c o s t s and r e -

f l e c t i n g them i n an es t ima te o f w i l l i n g n e s s t o pay.

The amount t h a t a p a r t i c i p a n t i s w i l l i n g t o pay t o use a

r e c r e a t i o n a l resource i s c o n d i t i o n e d by t h e a v a i l a b i l i t y o f

a1 t e r n a t i v e s . P a r t i c i p a n t s may have d i f f i c u l t y i d e n t i f y i n g

and e v a l h a t i n g t h e a l t e r n a t i v e s a v a i l a b l e , e s p e c i a l l y when

ques t ioned about a p a r t i c u l a r a c t i v i t y o r s i t e t o which t h e y

have become accustomed ove r a l ong p e r i o d o f t ime . Yet these

p a r t i c i p a n t s would subsequent ly s w i t c h t o a1 t e r n a t i v e a c t i v -

i t i e s o r s i t e s i f t h e p r i c e o f p a r t i c i p a t i o n a t a p a r t i c u l a r

s i t e i nc reased s u f f i c i e n t l y . Th i s p o i n t i s v e r y impo r tan t .

The r e l e v a n t va lue o f r e c r e a t i o n t h a t i s sought by t he survey

i s t h e n e t va lue , t h e e x t r a w e l f a r e t h a t i s ga ined f rom p a r t i -

c i p a t i o n i n a p a r t i c u l a r a c t i v i t y r a t h e r than t h e n e x t b e s t

a1 t e r n a t i v e . T h e r e f o r e , t h e i n d i v i d u a l must be aware o f t h e

va lue o f t h e n e x t bes t a l t e r n a t i v e and should be d i r e c t e d t o

t h i n k i n terms of h i s a v a i l a b l e a l t e r n a t i v e s .

Perhaps t h e most d i f f i c u l t problem t h a t consumers face w i t h

t h e survey method i s w i t h ques t ions which a t tempt t o es t ima te

wi 11 ingness t o s e l l . W i 11 i ngness t o s e l l r i g h t s t o p a r t i c i - pa te i n an a c t i v i t y i s a h i g h l y emotional sub jec t . The t ype

of ques t ions a t i s s u e a r e those which ask i n d i v i d u a l s t o s t a t e

t h e minimum amount t hey would r e q u i r e t o g i v e up t h e i r r i g h t s

t o p a r t i c i p a t e i n an a c t i v i t y assoc ia ted w i t h a s i t e , area, o r

resource. Such a ques t i on r r~ i gh t n o t produce u s e f u l answers

s i n c e no one o f fe rs t o g i v e up r i g h t s t o any th i ng cheaply, and

no one has a s u f f i c i e n t concep t ion of what i t means t o do so.

There i s reason t o b e l i e v e t h a t t h e emotional na tu re of t he

ques t i on may induce an overstatement o f t h e necessary compen-

s a t i o n . Hammack and Brown (1974) reach t h i s conc lus ion a f t e r

ask ing ( i n a m a i l ques t i onna i re ) a sample o f duck hun te rs t o

s t a t e t h e i r w i l l i n g n e s s t o pay and t h e i r w i l l i n g n e s s t o s e l l

f o r a season o f duck hun t i ng . Th is i s an area which would

b e n e f i t f rom f u t u r e research.

Knetsch and Davis (1 966) a r e o p t i m i s t i c w i t h r e s p e c t t o t h e

i n d i v i d u a l ' s a b i l i t y t o make an es t ima te o f w i l l i n g n e s s t o

pay. They s t a t e t h a t t h e w i l l ingness t o pay f o r a t r i p i s a

" s u f f i c i e n t l y r e a l and s t a b l e phenomenon t h a t t h e measurement

i s u s e f u l . " The reasoning i s t h a t many r e c r e a t i o n l ands have

l i m i t e d access and users have "no t r o u b l e v i s u a l i z i n g t h e

e x i s tence o f t h e power t o exc lude them." Under these c i rcum-

stances, t hey b e l i e v e t h a t t h e consumer should be aware o f h i s

w i l l i n g n e s s t o pay t o avo id exc lus ion . I t i s t o t h e problem'

o f e l i c i t i n g t h i s va lue w i t h a survey t h a t we now t u r n .

THE ABILITY OF THE SURVEY TO ELICIT VALUES

The a b i l i t y o f t h e survey t o e l i c i t u s e f u l va lues i s

s t r o n g l y i n f l u e n c e d by t h e methodology employed i n ask ing t h e

quest ion. It i s e s s e n t i a l t h a t t he ques t ions be fo rmu la ted

w i t h regard t o t he c o r r e c t d e f i n i t i o n s o f consumer b e n e f i t s 1

and t h a t the i n d i v i d u a l be ing i n te r v i ewed (1 ) c l e a r l y under- stand t h e ques t ions , and ( 2 ) does n o t employ a gaming s t r a t e g y

i n responding.

Understanding the Questions

I n e s t i m a t i n g t h e i n d i v i d u a l w i l l i n g n e s s o f p a r t i c i p a n t s t o

pay f o r r e c r e a t i o n , what i s des i r ed i s t h e maximum amount t h a t

t h e p a r t i c i p a n t would be w i l l i n g t o pay above t h e a c t u a l c o s t

o f p a r t i c i p a t i o n r a t h e r than be depr ived o f u s i n g a s i t e , area,

o r resource. It i s e s s e n t i a l t h a t t h e p a r t i c i p a n t understand

whether a ques t i on i s in tended t o r e f e r t o a s p e c i f i c oppor tu-

n i t y , such as hun t i ng ducks a t a p a r t i c u l a r marsh, o r t o a

genera l a c t i v i t y , such as duck hun t ing . Th i s p o i n t i s impor-

t a n t s i n c e water resource management a l t e r n a t i v e s t h a t a r e

be ing eva lua ted t y p i c a l l y i n v o l v e o n l y a p o r t i o n o f t h e poss i -

b l e o p p o r t u n i t i e s f o r an a c t i v i t y , and t h e a p p r o p r i a t e va lua-

t i o n concerns o n l y those s p e c i f i c o p p o r t u n i t i e s which a r e t o

be a f f e c t e d by a p r o j e c t . It i s p a r t i c u l a r l y impo r tan t t h a t

these c i rcumstances be i d e n t i f i e d i n t h e es t imated model if i t

i s t o be u s e f u l l y a p p l i e d t o o t h e r areas.

The i n f l uence o f a l t e r n a t i v e s on r e c r e a t i o n b e n e f i t s i s

impo r tan t and i t has y e t t o be d e a l t w i t h s u f f i c i e n t l y i n ap-

p l i c a t i o n s o f t h e survey method. It should be c l e a r t h a t i f

an i n d i v i d u a l were t o be denied t h e o p p o r t u n i t y t o use j u s t

one s i t e f o r which t h e r e a r e many s a t i s f a c t o r y s u b s t i t u t e s

a v a i l a b l e , then he has l o s t r e l a t i v e l y l i t t l e i n the way o f

b e n e f i t s because he can s h i f t t o t h e s u b s t i t u t e s . It i s , o f

course, p o s s i b l e t h a t a p r o j e c t may have an impact on many

s i t e s . For example, a s i n g l e p r o j e c t may have an adverse

or p r e c i s e d e f i n i t i o n s o f t h e va r i ous measures o f n e t bene- f i t s see Appendix D . T h i s p o i n t , which should be e v i d e n t , i s no t d iscussed below.

impact on t h e q u a l i t y o f duck hun t i ng over a m u l t i s t a t e reg ion.

I n t h i s case, t he n e t l o s s o f b e n e f i t s t o t h e user w i l l be

g rea te r , b u t t h e r e i s no d i f f e r e n c e i n p r i n c i p l e . If he were

t o be comple te ly denied t h e o p p o r t u n i t y t o use a l l s i t e s a t

which a s p e c i f i c a c t i v i t y can be performed he has l o s t s t i l l

more. He w i l l , i n t h i s case, have t o s h i f t t o a c t i v i t i e s

which do n o t g i v e him as much s a t i s f a c t i o n as h i s p resen t r e c -

r e a t i o n a c t i v i t y . I n a l l cases, t he r e l e v a n t va lhe i s t he

d i f fe rence i n w e l f a r e gained f rom p a r t i c i p a t i n g i n t h e pres-

e n t l y a v a i l a b l e r e c r e a t i o n o p p o r t u n i t i e s r a t h e r than those

which would be used f o l l o w i n g t h e development o f t h e r e c r e -

a t i o n rnar~agerrlent p l a n t h a t i s be ing evaluated. It would be a

p o t e n t i a l l y se r i ous e r r o r t o app ly a f i g u r e in tended t o r e -

f l e c t a va lue o f t h e genera l a v a i l a b i l i t y o f an a c t i v i t y t o

eva lua te t h e va lue o f t h a t same a c t i v i t y a t a s p e c i f i c s i t e .

Thus t h e respondent t o a ques t i on regard ing w i l l i r ~ g r ~ e s s t o

pay should be made aware o f t h e sca le o f t h e s i t e , area, o r

resource be ing eva lua ted and i t s l i k e l y e f f e c t on t h e p a r t i -

c u l a r s e t of r e c r e a t i o n a c t i v i t i e s p r e s e n t l y a v a i l a b l e t o hirr~.

It should be c l e a r whether i t i s a s p e c i f i c s i t e o r the gen-

e r a l a v a i l a b i l i t y of a resource over a p e r i o d o f t ime t h a t i s

t o be evaluated. Th i s i s e s s e n t i a l f rom t h e s tandpo in t o f

g e t t i n g a v a l i d response. I t i s t h e t ask o f t he survey prac-

t i t i o n e r t o make sure t h e respondent t h i n k s o f t he a l t e r n a -

t i v e s i n an a p p r o p r i a t e manner; t h i s may be p a r t i c u l a r l y d i f -

f i c u l t w i t h m a i l surveys.

It should a l s o be c l e a r t h a t se r i ous p o t e n t i a l problems can

a r i s e i n t h e a p p l i c a t i o n o f w i l l i ngness - to -pay equat ions t o

o t h e r areas un less t h e sca le o f impact i s s i m i l a r . For exam-

p l e , i t i s n o t c o r r e c t t o t ake t h e va lue o f duck hun t i ng i n

general as any r e f l e c t i o n on the va lhe o f duck hun t i ng a t one

p a r t i c u l a r s i t e . The va lue o f t h e p a r t i c u l a r s i t e w i l l depend

on c h a r a c t e r i s t i c s o f t h a t s i t e and i t s l o c a t i o n r e l a t i v e t o

users and s u b s t i t u t e areas.

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c o n f i d e n t t h a t t h e t r u e v a l u e l i e s . It may a l s o be use fu l t o

pose q u e s t i o n s t h a t can be answered w i t h a s imp le yes o r no.

Th is p resen ts t h e respondent w i t h a s imp le and l o g i c a l cho ice ,

and p r o v i d e s fewer o p p o r t u n i t i e s f o r a gaming s t r a t e g y .

There i s much room f o r improvement i n t h e des ign o f r e c r e -

a t i o n surveys t o m i n i m i z e t h e problems o u t l i n e d above.

Some f u r t h e r problems e x i s t which need p r e s e n t no g r e a t

d i f f i c u l t y , b u t which can have s i g n i f i c a n t i n f l u e n c e on t h e

accuracy o f t h e survey method i f t h e y a r e n o t taken i n t o

account . Fo r example, a sampl ing problem a r i s e s i f consumers

make numerous v i s i t s o r v i s i t s o f d i f f e r e n t l e n g t h . The i n i -

t i a l survey procedure must be s t r u c t u r e d so t h a t a t r u e c r o s s

s e c t i o n o f users i s i n t e r v i e w e d . Sampling shou ld be made a t

d i f f e r e n t t i m e s d u r i n g t h e season t o r e f l e c t t h e p o s s i b i l i t y

t h a t t h e f i r s t t r i p t o a s i t e o r a rea d u r i n g a season may be

va lued d i f f e r e n t l y t h a n l a t e r t r i p s . The sample d e s i g n shou ld

r e f 1 e c t t h e problem o f c o l l e c t i n g i n f o r m a t i o n f rom a represen-

t a t i v e m i x o f users who make v i s i t s o f d i f f e r e n t l e n g t h s .

Wi th an a p p r o p r i a t e sampl ing program, and t h e c a p a b i l i t y f o r

e s t i r r ~ a t i r ~ g t o t a l v i s i t s a c c u r a t e l y , t h e r e shou ld be no m a j o r

problem.

EXAMPLES APPLYING THE SURVEY METHOD TO RECREATION

The survey techn ique has been used i n a number o f i n s t a n c e s

t o e v a l u a t e r e c r e a t i o n b e n e f i t s . The methods used t o o b t a i n

i n f o r m a t i o n , and t h e techn iques used t o d e r i v e a d o l l a r mea-

s u r e o f b e n e f i t s f rom t h i s i n f o r m a t i o n , v a r y c o n s i d e r a b l y .

The f o l l o w i n g d i s c u s s i o n i s a b r i e f r e v i e w o f t h r e e s t u d i e s

which have a t tempted t o e l i c i t d i r e c t l y a measure o f consumer

s u r p l u s . The purpose o f t h i s d i s c u s s i o n i s t o p o i n t o u t some

of t h e d e t a i l s of a p p l y i n g t h e survey method t o r e c r e a t i o n

b e n e f i t es t ima t i on .

The Davis Study

Davis (1963) was t h e f i r s t t o use t h e survey technique t o

compute a demand cu rve d i r e c t l y f o r a r e c r e a t i o n s i t e . H i s

p i onee r i ng e f f o r t cons i s ted o f a c ross -sec t i on survey o f

r e c r e a t i o n i s t s i n and around Bax te r S t a t e Park i n n o r t h e r n

Maine between June and November o f 1961. Users were asked t o

i n d i c a t e how t h e i r dec i s i ons w i t h r espec t t o v i s i t i n g t he s i t e

would be a f f e c t e d i f t h e i r cos t s assoc ia ted w i t h us ing t he

area increased by c e r t a i n amounts (Davis, 1963). The personal

i n t e r v i e w s i nc l uded a b i d d i n g game. The amounts were system-

a t i c a l l y r a i s e d o r lowered u n t i l t h e consumer swi tched h i s

r e a c t i o n from p a r t i c i p a t i o n t o n o n - p a r t i c i p a t i o n o r v i c e versa.

The i n i t i a l ques t i on ing was hampered by a gaming behavior i n -

duced by t h e o b j e c t i o n s o f p a r t i c i p a n t s t o fees. Davis notes:

The procedure f o r e s t i m a t i n g w i l l i n g n e s s t o pay con- s i s t e d o f s e l e c t i n g a s t a r t i n g f i g u r e based on 1 cent pe r m i l e t r a v e l e d and success ive ly doub l i ng and redoub l i ng t h i s f i g u r e u n t i l t he respondent r e p l i e d t h a t t he s t a t e d amount would cause h im t o reduce h i s use o f the area. The e x t r a sum was i n i t i a l l y t o be c a l l e d an en t rance fee; bu t t h i s was q u i c k l y d lscarded t o avo id understatements by those t r y i n g t o i n f l u e n c e p o l i c y and a l s o t o avo id g e t t i n g tang led up w i t h p r i n c i p l e o b j e c t i o n s t o fees. (Davis, 1963)

The survey sub jec t s were pooled t o i n c l u d e campers, f i s h e r -

men, and hunters , s ince mu1 t i p l e reg ress ion a n a l y s i s y i e l d e d

no s i g n i f i c a n t r e l a t i o n s h i p between a c t i v i t y t ype and r e -

sponses t o ques t ions .

The t ype o f ques t ions used by Davis which asked t h e respon-

den t t o s t a t e t h e i r r e a c t i o n (would you come more o f t en , l e s s

o f t e n , o r no change) t o each s t a t e d c o s t inc rease y i e l d e d a

d iscon t inuous , o r al l -or-nothing,demand curve f o r each user.

The respondent was found t o be w i 11 i n g t o pay a maximum sum

f o r a v i s i t and if cos ts rose above t h a t amount, t o s top corn-

i n g a l t o g e t h e r r a t h e r than shor ten t h e l e n g t h o f s tay . Davis

argued t h a t t h e response was r e a l i s t i c i n l i g h t o f t he t ime

c o n s t r a i n t s exper ienced by rnost v i s i t o r s . The use o f t he s i t e

was such t h a t v i s i t o r s cou ld be assumed t o make j u s t one four

t o f i v e day v i s i t pe r year . The f a c t t h a t s i n g l e v i s i t s were

made s i m p l i f i e d t he e v a l u a t i o n procedure.

The r e s u l t i n g observa t ions were graphed as a f requency d i s -

t r i b u t i o n showing t h e number o f v i s i t o r s who have s t a t e d a

common f i g u r e as t h e i r maximum w i l l i n g n e s s t o pay. These

data, which were ob ta ined f rom a smal l sample o f t h e user pop-

u l a t i o n , were n o t s u f f i c i e n t t o compute an aggregate w i l l i n g -

ness t o pay f o r t h e e n t i r e user popu la t ion . Rather, t h i s was

used t o develop a reg ress ion equat ion which exp la i ned add i -

t i o n a l w i l l i n g n e s s t o pay as a f u n c t i o n o f user c h a r a c t e r i s -

t i c s . A l a r g e r sample, aimed a t user c h a r a c t e r i s t i c s , was

used t o impute a maximum a d d i t i o n a l w i l l i n g n e s s t o pay f o r

each user .

The f o l l owing reg ress ion equat ion exp l a i ned 60% o f t h e

v a r i a t i o n :

Net w i l l i n g n e s s t o pay ( W ) , was found t o be a f u n c t i o n o f i n -

come ( Y ) , l e n g t h o f v i s i t ( L ) , and t h e number o f years o f

exper ience w i t h t h e a rea ( E ) . As m igh t be expected, a1 1 t h r e e

v a r i a b l e s were p o s i t i v e l y r e1 a ted t o w i 11 i ngness t o pay.

Upon cumula t ing t h e es t imated maximum a d d i t i o n a l wi 11 i ng -

ness t o pay o f a l l users, based on t h e user c h a r a c t e r i s t i c s

and t h e above equat ion, i t was found t h a t t h e average maximum

a d d i t i o n a l w i l l i n g n e s s t o pay ( p e r i n d i v i d u a l ) was $2.98, w i t h

a range o f $0 and $16.66.

I f i t i s expected t h a t users p lace s i g n i f i c a n t l y d i f f e r e n t

va lues on d i f f e r e n t v i s i t s t o t h e same s i t e and v i s i t s of d i f -

f e r e n t leng ths , a more s o p h i s t i c a t e d sampl i n g techn ique would

be r e q u i r e d i n o rder t o app l y t h e Davis methodology t o s i t e s

where i n d i v i d u a l s may make severa l v i s i t s and v i s i t s t h a t may

va ry i n l eng th .

I n o rde r t h a t survey i n f o r m a t i o n on w i l l i n g n e s s t o pay a t

an e x i s t i n g s i t e o r area may be a p p l i e d t o v a l u a t i o n o f a new

s i t e , i t would be h e l p f u l i f n e t w i l l i n g n e s s t o pay were r e -

gressed on a g r e a t e r number o f exp lana to ry v a r i a b l e s . These

v a r i a b l e s would i n c l u d e those express ing t h e a v a i l a b i l i t y and

r e l a t i v e q u a l i t y of a l t e r n a t i v e s as w e l l as t h e c o s t i n t ime

and money f o r each i n d i v i d u a l t o reach t h e s i t e . The t r a v e l

c o s t method i n d i c a t e s t h e importance o f these v a r i a b l e s i n

de te rm in ing w i l l ingness t o pay. Wi th t h i s exp lana t i on o f

w i l l i n g n e s s t o pay, t h e i n f o r m a t i o n from e x i s t i n g s i t e s c o u l d

be a p p l i e d t o s i m i l a r planned s i t e s which d i f f e r i n l o c a t i o n

r e l a t i v e t o t h e user p o p u l a t i o n and s u b s t i t u t e s i t e s . To do

so would r e q u i r e i n f o r m a t i o n on t h e expected r a t e o f use f rom

each v i s i t o r o r i g i n (such as a town o r county i n t h e market

area o f t h e planned s i t e ) and t h e r e l e v a n t c h a r a c t e r i s t i c s o f

t h e expected users. These a r e t h e c h a r a c t e r i s t i c s which a r e

exp lana to ry v a r i a b l e s i n t h e w i l l i n g n e s s - t o - p a y equat ions .

The t r a v e l c o s t method i n d i c a t e s t h e importance o f d i s t ance

f rom t h e s i t e and r e l a t i v e a v a i l a b i l i t y o f a l t e r n a t i v e s as

f a c t o r s i n f l u e n c i n g w i l l i n g n e s s t o pay. The survey method,

u n l i k e t h e t r a v e l c o s t method, r e q u i r e s a separate es t ima te of

use. That es t ima te may come f rom a survey o r another method.

A t p resen t , t h e Davis methodology o f a b i d d i n g game appears

t o be t h e most accep tab le a p p l i c a t i o n o f t h e survey technique.

Among i t s advantages a r e t h e f o l l ow ing : o n l y users a re i n t e r -

viewed, thus reduc ing t h e h y p o t h e t i c a l na tu re o f t h e ques-

t i o n s ; ca re was taken t o e s t a b l i s h a r a p p o r t w i t h t h e respon-

dent be fo re t h e b i d d i n g game was in t roduced; t h e b i d d i n g game

r e q u i r e d more ca re fu l d e c i s i o n making than an open ended ques-

t i o n and reduces t h e o p p o r t u n i t y f o r gaming s t r a t e g y .

The Horvath Study

A second example of u s i n g t h e survey techn ique t o p rov ide a

measure of r e c r e a t i o n b e n e f i t s i s t he s tudy by Horvath (1974).

Horvath chose a random sample o f 12,068 households f rom 11

southeastern s t a t e s and r e c e i v e d responses f rom 9,322 o f them.

The survey was d i r e c t e d a t f i n d i n g t h e monetary v a l u a t i o n o f

w i l d l i f e r e c r e a t i o n and t h e a c t u a l expend i tu res made f o r ou t -

door r e c r e a t i o n . Responses were ob ta i ned t o ques t ions

concern i rig :

a) t h e average d a i l y monetary v a l u e rece i ved f rom

p a r t i c i p a t i o n ;

b ) t he average d a i 1 y va 1 ue ass igned by those who d i d

n o t p a r t i c i p a t e d u r i n g t h e s tudy year b u t who

wanted t o do so;

c ) t h e average da i 1 y va l ue requ i r ed t o g i v e up par-

t i c i p a t i o n ; and

d) t he average number o f days pay l o s t because o f

p a r t i c i p a t i o n .

Ques t ions were aimed a t t h e responden t ' s monetary eva lua-

t i o n o f n i n e o u t d o o r r e c r e a t i o n a c t i v i t i e s . The ques t ions were

n o t s p e c i f i e d as t o s i t e , area, o r resource. I n a l l cases,

t h e monetary va lues g i ven by a c t u a l p a r t i c i p a n t s i n t h e a c t i v -

i t y were g r e a t e r than t h e va lues g i ven by n o n p a r t i c i p a n t s .

Va lua t i ons g i ven by those engaged i n a c t i v i t i e s t h a t r e q u i r e d

" w i l d l i f e ha rves t i ng " ( i .e., f i s h i n g and h u n t i n g ) were gener-

a l l y l e s s than those engaged i n "non-harvest ing" a c t i v i t i e s

( i .e., w i l d l i f e en joyment) . I n a l l cases, t h e amounts r e q u i r e d

by p a r t i c i p a n t s t o g i v e up an a c t i v i t y exceeded t h e maximum

w i l l i n g n e s s t o pay f o r t h e o p p o r t u n i t y t o engage i n t h a t

a c t i v i t y . A summary o f t h e d a i l y va lues per household de r i ved

i n t h e s tudy i s g i ven i n Table 3.

Horvath computed t h e gross bene f i t s o f t h e n i n e r e c r e -

a t i o n a l a c t i v i t i e s by p r o j e c t i n g h i s sample es t imates t o en-

compass t h e 16.3 m i l l i o n households i n t he southeastern Un i ted

S ta tes . The r e s u l t s o f t he Horvath s tudy d i f f e r s i g n i f i c a r ~ t l y

f rom those of Davis. Whi le Davis (1 963) found a range of n e t

w i l l ingness-to-pay va lues from zero t o $16.66, w i t h a modal

va lue between one and two d o l l a r s pe r day per household,

Ho rva th ' s es t imates o f average d a i l y va lue rece i ved by p a r t i -

c i p a n t s ranged from $33.58 t o $80.34.

Several c r i t i c a l comments can be made on t he Horvath s tudy.

1 ) Horvath s t a t e s (1974, p. 189) t h a t h i s d a i l y va lues a re

more usefu l f o r p o l i c y making than t h e suggested va lues i n

Senate Document No. 97, Supplement No. 1. I n f a c t , t h e two

se t s of va lues a re n o t comparable. Horva th 's f i g u r e s a r e n o t

v a l u a t i o n s of a s p e c i f i c s i t e o r o f a c t i v i t i e s a v a i l a b l e i n a

s p e c i f i c reg ion . They a r e n o t d e r i v e d f rom ques t ions concern-

i n g p r o j e c t - s p e c i f i c impacts; r a t h e r t hey a t tempt t o p u t a

va lue on t h e general a v a i l a b i l i t y o f w i l d 1 i f e . On t h e o t h e r

hand, t h e va lue o f r e c r e a t i o n assoc ia ted w i t h a wate r resource

management a1 t e r n a t i ve depends on i t s p a r t i c u l a r c h a r a c t e r i s-

t i c s and l o c a t i o n r e l a t i v e t o users and s u b s t i t u t e s . The

va lue o f r e c r e a t i o n assoc ia ted w i t h a p a r t i c u l a r a l t e r n a t i v e

i s n o t d e r i v a b l e frorn a rneasure o f o v e r a l l b e n e f i t s . The

va lue f o r general a v a i l a b i l i t y o f r e c r e a t i o n o p p o r t u n i t i e s ,

such as those which Horvath has at tempted t o est imate, w i l l

exceed t he va lue o f t h a t a c t i v i t y a t any s p e c i f i c s i t e o r area.

There i s no v a l i d way f o r a p p l y i r ~ g these " a c t i v i t y va lues" t o

t h e r e c r e a t i o n o p p o r t u n i t i e s assoc ia ted w i t h a management

TABLE 3. RESULTS CF THE HORVATH STUDY

Average number Average d a i l y Average da i 1 y Average da i 1 y days l o s t f o r

Recrea t iona l va l ue rece i ved va lue assigned va lue t o g i v e up p a r t i c i p a t i o n a c t i v i t y by p a r t i c i p a n t s by n o n p a r t i c i p a n t s b y p a r t i c i p a n t s ( b y t h o s e l o s i n g p a y )

Fishing

sa l twate r

warm f r e s h water

c o l d f r e s h water

Hunt ing

sma l l game

b i g game

wate r fow l

W i I d1 i f e Enjoyment

b i rds

an imals

f i s h

a l t e r n a t i v e . I n sho r t , Ho rva th ' s va lues a r e n o t useful i n

p lann ing f o r wa te r and r e l a t e d l a n d resources.

2) Respondents a r e asked f o r an average value, r a t h e r than

a va lue f o r a s p e c i f i c t r i p . Furthermore, i t i s n o t c l e a r

what these values measure. The average d a i l y va lue r e q u i r e d

t o g i v e up p a r t i c i p a t i o n i s presumably a measure o f w i l l i n g -

ness t o s e l l . The average d a i l y monetary va lue rece i ved from

p a r t i c i p a t i o n i s vaguely d e f i n e d and cannot be i n t e r p r e t e d .

The s tudy would g a i n more c r e d i t a b i l i t y i f t h e ac tua l ques-

t i o n s were c l e a r l y s t a t e d and i f i t were i n d i c a t e d how they

r e l a t e d t o t h e a p p r o p r i a t e measures o f we l f a re .

3 ) There i s no i n d i c a t i o n t h a t t h e r e was any concern w i t h

o r awareness o f t h e p o t e n t i a l f o r b iased responses.

4 ) The re levance o f t h e responses o f n o n p a r t i c i p a n t s i s n o t

c l e a r . Horvath asks what va lue t hey would have rece i ved if

they d i d use t h e resource. Since, i n f a c t , t hey d i d n o t use

t h e resource, t hey rece i ved no b e n e f i t s f rom use. There may,

i n f a c t , be s i g n i f i c a n t nonuser b e n e f i t s f rom n a t u r a l areas.

The na tu re o f these b e n e f i t s i s n o t discussed.

The Hammack and Brown S t u d y

A t h i r d s tudy which used t h e survey technique i s Hammack

and Brown (1974). A m a i l ques t i onna i re was sen t t o a sarr~ple

o f 4,900 water fowl hun te rs i n seven western s t a t e s . Usable

responses were rece i ved f rom 2,455 hun te rs . The survey was

d i r e c t e d a t e l i c i t i n g both t h e n e t w i l l i ngness - to -pay and t he

w i l l i n g n e s s - t o - s e l l measures o f consumers' su rp lus . Respon-

den ts were asked t o s t a t e t h e i r b e n e f i t s f rom a f u l l season o f

duck hun t ing . The survey was n o t concerned w i t h t he va lue o f

a s p e c i f i c s i t e . Instead, two models a r e presented f o r e s t i -

mat ing t h e va lue o f duck hun t ing . One model p rov ides

es t imates of t h e va lue of a season of wa te r fow l hun t i ng2 w h i l e

t h e o t h e r i s used t o es t ima te t h e va lue o f an a d d i t i o n a l duck

bagged.

The f o l l ow ing example i n d i c a t e s how t h e equat ions developed

by Hammack and Brown would be used t o es t ima te t h e va lue of

duck hun t i ng bene f i t s c rea ted by h a b i t a t enhancement. Assume

t h a t i t i s est imated t h a t t h e p a r t i c u l a r p r o j e c t w i l l produce

1,000 ducks. F i r s t i t i s necessary t o i d e n t i f y t h e number of

these (1,000) ducks t h a t would be harvested, t h e number of

hun te rs t h a t would ha rves t them, and t h e number o f a d d i t i o n a l

ducks t h a t would be harves ted by each hun te r . F i n a l l y , char-

a c t e r i s t i c s of t h e hun te rs who would ha rves t t h e ducks must be

determined. These would i n c l ude t h e i r househol d. income ( a f t e r

t axes ) , number of seasons o f water fowl hun t ing , c o s t o f a

season of waterfowl hun t ing , waterfowl sho t and bagged d u r i n g

t h e season, and number o f days hunted d u r i n g t h e season.

E i t h e r of t h e equat ions developed by Hammack and Brown cou ld

then be used. The method would n o t be a p p r o p r i a t e f o r eva lb -

a t i n g very localized changes i n t h e q u a l i t y o f duck hun t i ng .

Where :

V = v a l u e (consumer's s u r p l u s ) o f a season o f wa te r fow l h u n t i n g

Y = household income ( a f t e r taxes) i n thousands S = number o f seasons o f wa te r fow l h u n t i n g C = c o s t o f a season's wa te r fow l h u n t i n g K = wa te r f ow l shot and bagged d u r i n g t he season D = number o f days hunted d u r i n g t h e season () = t s t a t i s t i c s

Where :

- dv - - va lue o f an add i t i ona l buck bagged dk

V , Y , S, C , and K a r e d e f i n e d i n no te 2 , above.

Such a va lue would depend on t h e l o c a t i o n and c h a r a c t e r i s t i c s

o f t h e p a r t i c u l a r s i t e .

The ques t ions asked by Han~rr~ack and Brown a r e c o n s i s t e n t

w i t h t h e consumers' su rp lus p r i n c i p l e s , which a re very thought-

f u l l y d iscussed i n t h e opening chap te rs o f t h e i r s tudy. The

two ques t ions (Hammack and Brown, 1974, p. 91) on v a l u a t i o n

were :

1 ) What i s t h e sma l l es t amount you t h i n k you would take t o

g i v e up you r r i g h t t o hun t waterfowl f o r a season?

2 ) About how much g r e a t e r do you t h i n k you r c o s t s would

have had t o have been be fo re you would have decided n o t t o

have gone hun t i ng a t a l l d u r i n g t h a t [ t h e p rev ious ] season?

These ques t ions were accompanied by statements emphasizing

t h a t t h e y r e f e r r e d t o p u r e l y f i c t i t i o u s s i t u a t i o n s . The ques-

t i o n s w i t h r espec t t o va l u a t i o r ~ were preceeded by o t h e r more

genera l i n f o r m a t i o n a l ques t ions i n o rde r t o p u t t h e respon-

den t a t ease. Hammack and Brown were w e l l aware o f t h e errlo-

t i o n a l response caused by t h e w i l l i ngness - to - se l l ques t ion and

do n o t c l a i m t h a t t hey have found a v a l i d answer. However,

t h e n e t w i l l i ngness - to -pay response was f e l t t o p rov ide a

s a t i s f a c t o r y approx imat ion o f b e n e f i t s . The i r success a t

f i n d i n g a s a t i s f a c t o r y equa t ion t o e x p l a i n w i l l i n g n e s s t o pay

con f i rms t h e i r s a t i s f a c t i o n . The average a d d i t i o n a l w i l l i n g -

ness t o pay f o r t h e season was $247, w h i l e t h e average w i l l - ingness t o s e l l ( a f t e r d i s c a r d i n g some extreme h i g h va lues)

was $1,044 pe r season.

The ,methodology used by Hammack and Brown presents two

problems. The ques t i on used t o e l i c i t w i l l i n g n e s s t o pay i s

ve ry open ended and does n o t p l ace t h e respondent i n a market-

t ype d e c i s i o n process. The use o f a m a i l survey t o es t imate

w i l l i n g n e s s t o pay a l s o appears t o have a disadvantage over

t h e personal i n t e r v i e w which permi ts t he es tab l i shment o f

r a p p o r t w i t h t h e respondent and use o f t h e b i d d i n g technique.

Rapport can be es tab l i shed , i n p a r t , however, by c a r e f u l

o r d e r i n g o f t h e ques t ions .

E v a l u a t i o n o f the S u r v e y T e c h n i q u e

I n e v a l u a t i n g t h e survey technique one must ask, "What does

t h e technique a t tempt t o do and how we1 1 does i t do i t ? " The

answer t o t he f i r s t h a l f o f t he ques t i on i s r a t h e r s t r a i g h t -

forward: t h e survey technique a t tempts t o a r r i v e a t an e s t i -

mate o f maximum n e t w i l l i n g n e s s t o pay o r , i n some cases,

w i 11 ingness t o s e l l , t h a t i s commensurate w i t h o t h e r b e n e f i t

va lues. The second h a l f o f t he ques t i on i s , u n f o r t u n a t e l y ,

n o t as e a s i l y deal t w i t h .

A problem w i t h t h e survey technique r e l a t e s t o t h e p o s s i b l e

b iases t h a t may a r i s e i f t h e ques t ion i s " imp rope r l y " worded.

I f ca re i s taken t o assure t h e respondent t h a t h i s answer w i l l

n o t a f f e c t f u t u r e en t rance fees, l i censes , e t c . , ( t h u s min-

i m i z i n g t h e downward b i a s ) , and t h a t i t w i l l n o t imp l y more o r

b e t t e r s i t e s i n t he f u t u r e , ( t h u s r r ~ i n i r n i z i r ~ g t he upward b i a s ) ,

t h i s problem can be reduced i n magnitude.

A f u r t h e r problem a r i s e s because o f t h e g r e a t v a r i a b i l i t y

i n responses t h a t can occur w i t h var ious f o r m u l a t i o n s o f ques-

t i o n s aimed a t o b t a i n i n g maximum n e t w i l l i n g n e s s t o pay. As

t h e Horvath and Romm s t u d i e s have shown, t h e c a l c u l a t i o n o f

r e c r e a t i o n b e n e f i t s depends t o a l a r g e e x t e n t on t h e t ype of

ques t i ons asked.

For c e r t a i n b e n e f i t s t u d i e s t h e survey method has some

c l e a r advantages over t h e t r a v e l c o s t method which i s t he

o t h e r economic methodology c u r r e n t l y a v a i l a b l e . The t r a v e l

c o s t method, which i s discussed i n Chapter 5, i s d i f f i c u l t o r

imposs ib l e t o app l y t o s i t e s which are, f o r many users, one o f

many d e s t i n a t i o n s v i s i t e d on a s i n g l e t r i p . Also, the survey

method may have c e r t a i n advantages f o r c o n s i d e r i n g t h e e f f e c t s

o f congest ion. The survey method a1 so has an advantage i n

s i t u a t i o n s where a p r o j e c t a f f e c t s a l t e r n a t i v e r e c r e a t i o n

b e n e f i t s a t a number o f widespread l o c a t i o n s o r r e s u l t s i n a

smal l change i n q u a l i t y a t e x i s t i n g s i t e s . An example would

be t h e p r e v i o u s l y - c i t e d case o f an e f f o r t t h a t increased duck

p roduc t i on i n a p a r t i c u l a r area. I n such a case we rrlay wish

t o va lue t h e bene f i t s t o duck hunters . The ducks may be shot

by hun te rs i n widespread p a r t s o f t h e f l yway . It would be i m -

p o s s i b l e t o separate t he a d d i t i o n a l ducks f rom o t h e r ducks and

1 i kew ise d i f f i c u l t t o i d e n t i f y changes i n behav io r o f duck

hun te rs a t t r i b u t a b l e t o t h e e x t r a ducks. The most l o g i c a l

approach appears t o be a survey such as t h a t undertaken by

Hammack and Brown (1 974).

The survey method i s l i k e l y t o be c o s t l y compared t o t h e

t r a v e l c o s t method and r e q u i r e s e x t r a c a u t i o n i n f o r m u l a t i n g

t h e methodology. Desp i te a p re fe rence by most economists t o

p l ace more f a i t h i n i n f o r m a t i o n revea led by what people do

r a t h e r than what t h e y say, t h e survey method i s u s e f u l . It

has value, bo th f o r e v a l u a t i n g those s i t e s f o r which t h e

t r a v e l c o s t i s i n a p p r o p r i a t e and a l s o as a check upon t h e

t r a v e l c o s t es t imates which themselves have some i n h e r e n t

inaccurac ies . I f economic va lues a r e needed, i t i s b e s t t o

use an economic method01 ogy r a t h e r than guesswork. Research

should be d i r e c t e d toward d e r i v i n g survey methodologies which

maximize t h e l i k e l i h o o d of accura te responses.

SUMMARY OF SUGGESTIONS FOR USE OF THE SURVEY METHOD

1 ) The survey method i s more accep tab le a t p resen t f o r

e s t i m a t i n g w i l l ingness t o pay r a t h e r than w i l l ingness t o s e l l .

It i s recommended t h a t more research be devoted t o procedures

f o r e s t i m a t i n g w i l l i n g n e s s t o s e l l .

2 ) Est imated equat ions should be developed t o express t h e

re1 a t i o n s h i p between w i l l ingness t o pay and c h a r a c t e r i s t i c s o f

t h e users based on i n fo rma t i on gathered f rom t h e survey of

users . A l a r g e r survey should be aimed a t e s t i m a t i n g t h e d i s -

t r i b u t i o n of these c h a r a c t e r i s t i c s over t h e user popu la t i on .

3 ) The bene f i t s a t planned s i t e s and f a c i l i t i e s need t o be

eva l hated u s i n g i n fo rma t i on from e x i s t i n g s i t e s . In o rde r

t h a t t h e w i l l i ngness - to -pay equat ions may be a p p l i e d t o pro-

posed s i t e s which may be' l o c a t e d d i f f e r e n t l y w i t h r espec t t o

users and s u b s t i t u t e s i t e s , we recommend t h a t t r a v e l d i s t ance

and access i b i 1 i t y t o s u b s t i t u t e s be cons idered as exp lana to ry

v a r i a b l e s i n t h e w i l l i ngness - to -pay equat ions. The t r a v e l

c o s t method i l l u s t r a t e s t h e importance o f these v a r i a b l e s i n

i n f l u e n c i n g i n d i v i d u a l w i l l . i ngness t o pay.

4 ) The survey ques t ions should r e l a t e c l e a r l y t o s p e c i f i c

r e c r e a t i o n a c t i v i t i e s t h a t a r e t o be a f f e c t e d by a management

a l t e r n a t i v e . That i s , i t should be e x p l i c i t l y s t a t e d t h a t ,

when e s t i m a t i n g w i l l i n g n e s s t o pay, t h e respondent should con-

s i d e r t h e a p p r o p r i a t e range o f s u b s t i t u t e s i t e s and a c t i v i t i e s .

Caut ion should be used t h a t r e s u l t s a r e n o t a p p l i e d inappro-

p r i a t e l y t o proposed changes.

5 ) I n s t r u c t i o n s and ques t ions should be fo rmu la ted t o a v o i d

b iased responses which m igh t r e s u l t f rom t h e respondent an-

swering i n a manner which he perce ives migh t f u r t h e r h i s se l f -

i n t e r e s t . The respondent should be p laced i n a r e a l i s t i c

d e c i s i o n framework t h a t s imu la tes a thought p a t t e r n t h a t

approximates t h e market process.

6 ) It i s b e s t t o survey a c t u a l b e n e f i c i a r i e s on ly , i n o rde r

t o reduce t h e h y p o t h e t i c a l na tu re o f t h e ques t i on ing .

7 ) For s i t e s which i n v o l v e mu1 t i p l e v i s i t s and v i s i t s of

d i f f e r e n t l eng th , c a u t i o n should be taken t h a t a t r u l y r ep re -

s e n t a t i v e sample of v i s i t s and v i s i t o r s i s chosen.

8) I n some cases t he b e s t u n i t t o be eva lua ted may be the

s i n g l e t r i p . I n o t h e r c i rcumstances, i t may be d e s i r a b l e t o

va lue a season o f a c t i v i t y .

CHAPTER 5 THE TRAVEL COST METHOD

When t h e survey method i s used t o es t ima te r e c r e a t i o n bene-

f i t s , an es t ima te o f use must be developed t o be used w i t h t h e

es t imates of i n d i v i d u a l w i l l i n g n e s s t o pay. Th is need f o r an

es t ima te of use i s a l s o one o f t h e s i x major problems assoc i -

a ted w i t h use of t h e i n t e r i m u n i t day va lue approach. These

problems a r e o u t l i n e d i n Chapter 3. The t r a v e l c o s t method,

on t h e o t h e r hand, i s based on a model f o r p r e d i c t i n g use o f a

s i t e o r area. It w i l l subsequent ly be shown t h a t t h e t r a v e l

c o s t method has a number o f advantages over t h e survey method.

Consequently, t h e t r a v e l c o s t method i s s t r o n g l y recommended

f o r use whenever app rop r i a te . The circumstances f o r appro-

p r i a t e use o f t h e survey method a r e o u t l i n e d i n Chapter 4.

Chapter 6 presents recommendations concern ing t h e cho ice o f a

va l u a t i o n method.

The t r a v e l c o s t model can be descr ibed by an express ion

such as:

Where :

V i j = t he number o f s i t e v i s i t s o r t r i p s f rom a popu la t i on source o r cen te r i t o a r e c r e a t i o n s i t e j

C i j = t r i p cos t , the c o s t o f t r a v e l between the o r i g i n i and the s i t e j, p lus e n t r y fees a t s i t e j.

Pi = t he popu la t i on o f o r i g i n i

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t h a t i s i nvo l ved . Consequently, if t r a v e l t i m e i s om i t t ed as

a v a r i a b l e , es t imates o f use a t h i ghe r do1 l a r c o s t s w i l l be

understated. Thus, t o i g n o r e t ime 1 eads t o an underes t in ia t io r~

o f b e n e f i t s . Methods o f d e a l i n g w i t h t h i s problem w i l l be ex-

p l a i n e d i n subsequent examples.

THE ASSUMPTIONS OF THE TRAVEL COST METHOD

A number of assumptions have been e i t h e r i m p l i c i t l y o r ex-

p l i c i t l y made i n t h e t r a v e l c o s t l i t e r a t u r e . The t h r e e ma jo r

assumptions a r e l i s t e d below. These must be s a t i s f i e d i n

o r d e r f o r t h e method t o p rov ide u s e f u l es t imates o f use and

b e n e f i t s .

1) E n t r y F e e s : I t i s assumed t h a t an i n d i v i d u a l

would r e a c t t o an inc rease i n e n t r y fees i n the

same manner as t o an inc rease i n t r a v e l cos t s .

2 ) S p e c i f i c a t i o n : The assumption i s made t h a t a l l

r e l e v a n t and s t a t i s t i c a l l y s i g n i f i c a n t v a r i a b l e s

which a f f e c t t r i p -mak ing behav io r a re p r o p e r l y

s p e c i f i e d i n t he t r a v e l c o s t model. Under t h i s

assumption, unbiased es t imates o f t h e s lope o f

t h e s i t e demand curve may be found.

3) C a p a c i t y C o n s t r a i n t s : I t i s assumed t h a t observed

da ta p o i n t s used t o es t ima te t he o r i g i n a l model

a r e t r u e demand p o i n t s . That i s , t h e r e i s no

unobserved demand t h a t i s u n s a t i s f i e d due t o

c a p a c i t y r e s t r i c t i o n s .

The i ~ n p l i c a t i o n s o f these assumptions a re b r i e f l y d iscussed i n

t h e f o l l o w i n g s e c t i o n .

E n t r y F e e s - S i t e U s e B e n e f i t s vs. T r i p B e n e f i t s

The t r a v e l c o s t rnethod p rov ides a demand curve f o r t h e com-

p l e t e r e c r e a t i o n t r i p , i n c l u d i n g t r a v e l t o and f rom t h e s i t e .

Th i s i s a r e s u l t of us i ng t he c o s t o f t r a v e l as a proxy f o r

t h e c o s t of s i t e use. As a r e s u l t , t h e b e n e f i t es t imates w i l l

i n c l u d e t h e n e t b e n e f i t s f rom t h e complete t r i p , i n c l u d i n g

t r a v e l as w e l l as s i t e use. For t h e t r a v e l c o s t method t o

p rov ide an accura te es t ima te of s i t e b e n e f i t s , i t i s r e q u i r e d

t h a t t h e consumer's b e n e f i t s f rom the t r a v e l be o f f se t by t h e

amount p a i d f o r t r a v e l . That i s , n e t b e n e f i t s f rom t r a v e l

should be zero. I f , however, t h e r e a r e many i n t e r v e n i n g

o p p o r t u n i t i e s i n which t h e consumer p a r t i c i p a t e s w h i l e making

t h e t r i p , and t h e consumer rece i ved b e n e f i t s frorn these i n

excess o f t h e i r c o s t , then t h e t r a v e l c o s t method would over-

es t ima te s i t e b e n e f i t s .

I n p r a c t i c e , i t i s usual t o i g n o r e t h e problem o f separat -

i n g s i t e use b e n e f i t s f rom o t h e r t r i p b e n e f i t s . Th i s assump-

t i o n i s p robab ly more accep tab le f o r o r d i n a r y s i t e s which draw

f rom a l o c a l market area than f o r those e s p e c i a l l y a t t r a c t i v e

si-ces which draw f ror r~ a n a t i o n a l market area.

Specification

From t h e p o i n t o f v iew o f p r e d i c t i n g use, i t i s c l e a r t h a t

e r r o r s can a r i s e from n o t r ecogn i z i ng t h a t a l l s i t e s i n a

market area compete f o r t h e same p o t e n t i a l users . As a p re -

d i c t i o n model, t h e t r a v e l c o s t method i s improved markedly by

i n c l u d i n g v a r i a b l e s r e f l e c t i n g t h e a v a i l a b i l i t y and r e l a t i v e

q u a l i t y o f s u b s t i t u t e s i t e s . Many o t h e r v a r i a b l e s m igh t be

expected t o i n f l u e n c e demand; among these a r e t r a v e l t ime, i n -

come l e v e l s o f users, p a s t exper ience w i t h t h e a c t i v i t i e s

a v a i l a b l e a t a s i t e , age and f a m i l y s t r u c t u r e , and s i z e o f t h e

town i n which t h e p o t e n t i a l v i s i t o r l i v e s . As w i t h any s ta -

t i s t i c a l model b u i l d i n g , t h e process o f choosing s i g n i f i c a n t

v a r i a b l e s and c o r r e c t l y s p e c i f y i n g t h e i r i n t e r r e l a t i o n s h i p i s ,

p a r t l y , an a r t .

S i m i l a r i l y , t h e bene f i t s r ece i ved f rom r e c r e a t i o n cannot be

measured c o r r e c t l y w i t h o u t a p r o p e r l y es t imated demand curve.

I n p a r t i c u l a r , t h e b e n e f i t s an i n d i v i d u a l r ece i ves f rom r e c r e -

a t i o n cannot be e v a l l ~ a t e d w i t h o u t cons ide r i ng t he a v a i l a b i l i t y

of s u b s t i t u t e a c t i v i t i e s .

The need t o c o r r e c t l y spec i f y t h e model argues s t r o n g l y f o r

t h e modern r e g i o n a l e s t i m a t i o n approach.

Capaci t y

I n t h e estimation of t h e t r a v e l c o s t model, da ta should n o t

be taken from s i t e s which have i n s u f f i c i e n t c a p a c i t y t o meet

dernand. That i s , da ta a r e r e q u i r e d t h a t i n d i c a t e t h e f u l l

demand a t e x i s t i n g f e e l e v e l s . Th i s requ i re r r~en t i s n o t se-

v e r e l y r e s t r i c t i v e . Whi le most s i t e s a r e used t o c a p a c i t y a t

c e r t a i n peak t imes, t h e r e a r e u s u a l l y many o t h e r pe r i ods when

t h e s i t e i s n o t used t o c a p a c i t y . I t i s l i k e l y t h a t t h e num-

be r o f people who a r e denied e n t r y i s smal l r e l a t i v e t o t h e

number of people who do en te r . I f t h a t i s t h e case, t h e mis -

e s t i m a t i o n w i l l n o t be se r i ous .

There i s no se r i ous problem i n applying t h e t r a v e l c o s t

method t o a proposed s i t e t h a t w i l l have i n s u f f i c i e n t capac i ty .

The procedure f o r accompl ish ing t h i s i s d iscussed i n example 2

be1 ow.

THE APPROPRIATE USE OF THE TRAVEL COST METHOD

Whenever a p p l i c a b l e , t h e t r a v e l c o s t method i s s t r o n g l y

recommended f o r b e n e f i t e s t i m a t i o n because o f i t s c l e a r theo-

r e t i c a l base. The method exp l i c i t l y recogn izes t he s p a t i a l

c h a r a c t e r i s t i c s o f t h e r e c r e a t i o n market . That i s , each i n d i -

v i d u a l faces a d i f f e r e n t range o f p r i c e s and a1 t e r n a t i v e s de-

pending upon h i s l o c a t i o n . The method a l s o d e r i v e s b e n e f i t s

based on t h e a c t u a l market behav io r o f i n d i v i d u a l s r a t h e r than

f rom responses t o ques t ions ( i . e . , t h e survey method) o r t he

op in i ons of p lanners ( i .e., t h e i n t e r i m u n i t day va lue

approach). One c l e a r advantage o f t he t r a v e l c o s t procedure

over t h e survey method i s t h a t t h e t r a v e l c o s t method does n o t

r e l y as h e a v i l y upon t h e personal s k i l l s o f t h e p r a c t i t i o n e r

i n e l i c i t i n g i n fo rma t i on f rom i n d i v i d u a l s . As a r e s u l t , t h e

t r a v e l c o s t procedure i s p robab ly l e s s 1 i k e l y t o y i e l d bad l y

i naccu ra te answers when implemented i n t h e f i e l d . The method

a l s o has t h e advantage o f be ing a b l e t o p r e d i c t bo th use and

b e n e f i t s .

A t present , t h e bes t v a r i a t i o n s o f t h e t r a v e l c o s t method

a r e those o f Cesar io and Knetsch (1 976), B u r t and Brewer

(1971, 1974), C i c c h e t t i , F isher , and Smith (1976), and Knetsch,

Brown, and Hansen (1 976). I t i s these ve rs i ons t h a t a r e

s t r o n g l y recommended f o r e s t i m a t i n g r e c r e a t i o n ' s c o n t r i b u t i o n

t o n a t i o n a l economic development. I n subsequent d i scuss ion

these w i 11 be r e f e r r e d t o as reg iona l e s t i m a t i o n procedures.

I n genera l , t h e t r a v e l c o s t method i s t h e a p p r o p r i a t e bene-

f i t e v a l u a t i o n technique whenever: ( 1 ) t h e r e i s s u f f i c i e n t

v a r i a t i o n i n t r a v e l c o s t s among users t o a l l o w e s t i m a t i o n o f

demand, ( 2 ) t h e proposed changes be ing evaluated a r e s i g n i f i -

c a n t enough t o a l t e r t r a v e l c o s t t o some i n d i v i d u a l s , o r t o

a l t e r t h e number o f t r i p s t h a t w i l l be made a t t h e e x i s t i n g

t r a v e l cos t , and (3 ) t h e t r a v e l expenses have been made ma in l y

f o r t h e purpose o f r e c r e a t i o n a t t h e resource which i s t o be

evaluated. The t r a v e l c o s t method seems much more b road l y

appl icab ' le than t h e a p p l i e d l i t e r a t u r e i n d i c a t e s , a l though

c l e a r l y i t w i l l be most successfu l f o r r u r a l s i t e s where users

may come f rom a wide range o f d is tances .

However, t h e t r a v e l c o s t method i s d i f f i c u l t t o app ly ac-

c u r a t e l y i n some s i t u a t i o n s . ( 1 ) The t r a v e l c o s t method w i l l

be most successfu l when users come f rom a wide range o f d i s -

tances. It may be l e s s u s e f u l f o r urban parks where t h e r e

migh t be t o o l i t t l e v a r i a t i o n i n t r a v e l c o s t s t o a l l o w f o r 1 demand es t ima t i on . Urban parks a r e a l s o l i k e l y t o p rov ide

s i g n i f i c a n t bene f i t s t o non-users by c r e a t i n g a more a t t r a c -

t i v e l o c a l environment. Th i s b e n e f i t w i l l n o t be captured by

e i t h e r t he t r a v e l c o s t method o r t h e survey m e t h ~ d . ~ ( 2 ) If t r a v e l i s n o t made f o r t h e s i n g l e purpose o f v i s i t i n g t h e s i t e

which i s t o be valued, then i t i s d i f f i c u l t t o dec ide how much

of t h e t r a v e l c o s t shoul'd be a t t r i b u t e d t o t h a t p a r t i c u l a r

s i t e . Th i s problem w i l l be most severe f o r those unique o r

widely-known s i t e s t h a t a t t r a c t users f rom a very l a r g e rnarket

area, and f o r o t h e r s i t e s i n t h e v i c i n i t y o f these un ique

resources. ( 3 ) When i t i s necessary t o eva lua te t h e impact of

conges t ion on s i t e b e n e f i t s , a survey procedure may be p re fe r -

ab le . ( 4 ) When smal l changes i n t h e f a c i l i t i e s o r qual i t y of

r e c r e a t i o n occur which would have l i t t l e impact on t r i p -mak ing

behav io r b u t m i g h t a l t e r t he i n d i v i d u a l ' s v a l u a t i o n o f t h e

r e c r e a t i o n exper ience, t h e survey method i s most app rop r i a te .

( 5 ) F i n a l l y , i t i s d i f f i c u l t t o app l y t h e t r a v e l c o s t method

t o resources t h a t a r e l a r g e o r have a l a r g e number o f w i d e l y

separated p o i n t s o f e n t r y . Th i s i s a problem o f da ta c o l l e c -

t i o n ; t h e method i s a p p l i c a b l e as l ong as s u f f i c i e n t v a r i a t i o n

i n t r a v e l cos t s i s observable (and t he o t h e r qual i f i c a t i o n s do

n o t a p p l y ) .

I n o t h e r cases, p a r t i c u l a r l y f o r r u r a l s i t e s which a t t r a c t

users from a l o c a l market area, t h e t r a v e l c o s t method i s

s t r o n g l y recommended as t he bes t a v a i l a b l e method f o r eva lu -

a t i n g r e c r e a t i o n b e n e f i t s . I n o r d e r t o be acceptable, t he

t r a v e l c o s t procedure must take e x p l i c i t account o f t h e

'see, however, U.S. Army Corps o f Engineers (1976) which has a p p l i e d t he t r a v e l cos t method t o an urban park . Z i p codes were used as o r i g i n s . 2 The b e n e f i t s o f urban parks have been measured by t he change i n land va lues a t t r i b u t a b l e t o t he presence o f a park . See Knetsch (1964), Da r l i n g (1973), Hendon (1973), and Appendix C o f t h i s s tudy .

a v a i l a b i l i t y and qua1 i ty o f s u b s t i t u t e resources. The s imp le

form of t h e t r a v e l c o s t method which does n o t t ake s u b s t i t u t e s

i n t o account i s n o t accep tab le i n cases where s u b s t i t u t e s

e x i s t ( i .e., most cases) because i t can l ead t o se r i ous i nac -

curacy i n use p r e d i c t i o n and b e n e f i t e s t i m a t i o n . An accept-

a b l e procedure f o r e v a l u a t i n g t h e r e c r e a t i o n b e n e f i t s assoc i -

a ted w i t h a proposed p r o j e c t should a l s o eva lua te t h e l o s t

bene f i t s a r i s i n g f rom t rans fo rming a s i t e f rom i t s n a t u r a l

s t a t e . It should a l s o be r e a l i z e d t h a t t h e t r a v e l c o s t

method (and a l s o t h e survey method) i d e n t i f i e s user b e n e f i t s .

I f s i g n i f i c a n t nonuser bene f i t s a l s o e x i s t , these a d d i t i o n a l

bene f i t s should be eva lua ted by o t h e r methods, where poss ib l e .

These nonuser b e n e f i t s a r e o f t e n n o t i nc l uded i n t he n a t i o n a l

economic development account.

We now t u r n ou r a t t e n t i o n t o t h e bas i c procedure o f b u i l d -

i n g a t r a v e l c o s t model and app l y i ng i t t o t h e v a l u a t i o n o f a

proposed s i t e . The d i scuss ion focuses on a s e r i e s o f examples

t h a t s t a r t s w i t h very s imp le cases and works up t o t h e modern

r e g i o n a l t r a v e l c o s t approach.

The f o l l o w i n g sec t i ons i n t r o d u c e t h e bas i c procedure o f t h e

t r a v e l c o s t method and i n d i c a t e how i t can be used t o eva lua te

t h e b e n e f i t s o f a planned s i t e . These i n t r o d u c t o r y examples

a r e h e a v i l y s i m p l i f i e d and do n o t cons ide r t h e importance o f

t h e a v a i l a b i l i t y o f a1 t e r n a t i v e s , t h e d i s t r i b u t i o n o f t as tes ,

t h e e f f ec t o f t r a v e l t ime o r t h e d isp lacement o f e x i s t i n g

f a c i 1 i t i e s by a planned p r o j e c t . These exampl es a r e represen-

t a t i v e o f e a r l y uses o f t h e t r a v e l c o s t method, and a r e pre-

sented here o n l y t o i n t r o d u c e t h e bas ics o f t h e method.

Subsequent d i scuss ion w i l l i n d i c a t e t h e n e c e s s i t y o f modi-

f y i n g t h e bas i c procedure t o deal w i t h t h e a v a i l a b i l i t y o f

a l t e r n a t i v e s i t e s , t r a v e l t ime, and o t h e r s i g n i f i c a n t

i n f luences on demand. I t i s concluded t h a t t h i s i s b e s t

accompl ished by a r e g i o n a l e s t i m a t i o n procedure i n a form from

which t h e demand f o r any s p e c i f i c s i t e o r a rea may be de r i ved .

Example 1. Development of a Simple Travel Cost Model from an Existing Site

The t r a v e l c o s t method i s a p p l i e d t o e x i s t i n g s i t e s i n

o r d e r t o develop model s f o r p r e d i c t i n g r e c r e a t i o n b e n e f i t s

assoc ia ted w i t h t h e planned development of s i t e s . The t r a v e l

c o s t model i s u s u a l l y presented as a two-stage process. I n

t h e f i r s t stage, t h e t r i p demand cu rve i s generated t o show

t h e number o f v i s i t s t h a t t h e i n d i v i d u a l would make a t va r i ous

l e v e l s of t r i p c o s t . I t s d e r i v a t i o n r e q u i r e s da ta on: ( 1 ) t h e

t o t a l number o f v i s i t s made f rom severa l ( n o t n e c e s s a r i l y a11 )3

p o p u l a t i o n o r i g i n s a t d i f f e r e n t d i s t ances f rom t h e s i t e ;

( 2 ) t h e t o t a l p o p u l a t i o n a t each o r i g i n ; ( 3 ) t h e t r i p c o s t

from t h e o r i g i n , i n c l u d i n g round t r i p monetary t r a v e l cos t ,

expend i t u re f o r use o f t h e s i t e , and any d i f f e r e n t i a l among

i n d i v i d u a l s i n necessary c o s t s a p a r t f rom those f o r s i t e use. 4

The t o t a l number o f v i s i t s i s measured ove r a s p e c i f i e d t ime

p e r i o d such as a season o r yea r . The o r i g i n s f o r t r i p s a r e

o f t e n taken t o be towns, coun t i es , o r c o n c e n t r i c r i n g s around

t h e s i t e . To f a c i l i t a t e subsequent d i scuss ion , we w i l l assume

t h a t towns a r e t h e p o i n t s o f o r i g i n . I n d i v i d u a l obse rva t i ons

p rov i de t h e most i n f o r m a t i o n , and any aggrega t ion of observa-

t i o n s must be made i n l i g h t o f t he t r a d e o f f between l owe r

3 ~ a t a a re r e q u i r e d o n a s u f f i c i e n t number o f o r i g i n - d e s t i n a t i o n combinat ions t o d e f i n e t he demand curve. T o t a l use from the o r i g i n s may be es t imated f rom a sample o f households.

40n l y d i f f e r e n t i a l s i n c o s t a re impor tan t f o r development o f t he model. Costs which a r e common t o a l l o r i g i n s may be neg lec ted w i t h o u t l oss . I t would be most c o r r e c t t o s u b t r a c t f rom a l l cos ts , o t h e r than s i t e cos ts , any element o f consum- e r s ' su rp lus . Hammack and Brown (1974, pp. 9 -12) p r o v i d e a good d i scuss ion o f a p p r o p r i a t e cos t s .

c o s t s o f da ta hand1 i n g and hav ing a reduced amount o f i n fo rma-

t i o n a v a i l a b l e .

Some h y p o t h e t i c a l da ta a r e presented below (Tab le 4 )

f o l l o w e d by ad jagram o f t h e r e g i o n i n which t h e s i t e i s

l o c a t e d (F i gu re 2 ) . I n t h i s s imp le example we assume t h a t

users come f rom one o f t h r e e towns and a l l users f rom a pa r -

t i c u l a r town f ace t h e same t r a v e l cos t s . The e n t r y f e e i s

taken t o be zero. I f t h e r e had been an e n t r y fee, i t would

have been added t o t h e t r a v e l c o s t . The r e s u l t i n g es t ima te of

w i l l i n g n e s s t o pay f o r t h e s i t e would be n e t w i l l ingness t o

pay. Gross w i l l i n g n e s s t o pay may be es t imated by adding t he

t o t a l spent on e n t r y fees t o n e t w i l l i n g n e s s t o pay.

TABLE 4. BASIC DATA FOR THE SIMPLE TRAVEL COST METHOD

Number V i s i t s O r i g i n P o p u l a t i o n o f V i s i t s p e r C a p i t a T r i p Cost

The f i r s t s t ep i s t o d e r i v e t he t r i p demand cu rve o r t he

f i r s t - s t a g e demand cu rve shown i n F i g u r e 4.

S t a g e I- he T r i p Demand C u r v e . P l o t t i n g v i s i t s pe r c a p i t a

a g a i n s t c o s t ( f r om Table 1 ) a i ves t h r e e p o i n t s , one f o r each

o r i g i n . Extending a l i n e th rough these p o i n t s p rov i des a

f u n c t i o n t h a t i s used t o p r e d i c t an average v i s i t r a t e f o r an

i n d i v i d u a l f a c i n g a s p e c i f i c t r i p c o s t ( F i g u r e 3 ) .

FIGlJKfi 2. TIE bIARKE'I' ARER FOR SITE I

A e-- B

population----- $8 - - $6 --* 1 , 0 0 0 SITE I

----------- population

2,000

population 3,000

FIGURE 3. TEE 'TRIP D W D FOR SITE I

10

Visits Per Capita

T h i s t r i p demand f u n c t i o n can be expressed by t he equa t ion :

Where:

j = I , i = A , B, C ,

v i j = v i s i t s p e r c a p i t a f rom o r i g i n i t o s i t e j

C i j = t h e t r a v e l c o s t o f t r a v e l i n g f r o m o r i g i n i t o s i t e j

Use of a s t r a i g h t l i n e demand f u n c t i o n i s f o r s i m p l i c i t y on l y .

A more complex f unc t i on would u s u a l l y be f i t t e d t o many da ta

p o i n t s ( i .e. , o r i g i n - d e s t i n a t i o n combinat ions) , p o s s i b l y f rom

severa l s i t e s . Th is demand f u n c t i o n which p r e d i c t s v i s i t a t i o n

as a f unc t i on o f t r a v e l cos t s i s t h e bas i s o f t h e t r a v e l c o s t

method. Subsequent examples w i l l add a d d i t i o n a l v a r i a b l e s and

s i t e s ; b u t t h e model w i l l be used i n e s s e n t i a l l y t he same way.

S t a g e 2-The Aggregate S i t e Demand Curve. The second s tage

i n v o l v e s c o n s t r u c t i o n o f an aggregate demand curve (F igu re 4 )

f o r t h e s i t e , showing how many t o t a l v i s i t s would be rr~ade a t

va r i ous l e v e l s o f a hypo the t i ca l s i t e use fee. It i s deve l -

oped by a procedure t h a t p o s t u l a t e s increments i n cos t s f a c i n g

i n d i v i d u a l s a t each o r i g i n . Then, us i ng t h e f i r s t stage

curve, t h e p e r c a p i t a v i s i t r a t e f o r each i n d i v i d u a l f a c i n g

t he new c o s t i s found. Th i s procedure i s based on t h e assump-

t i o n t h a t i f an i n d i v i d u a l were charged more f o r s i t e use,

thereby r a i s i n g h i s t o t a l t r i p cos ts , he would then p a r t i c i -

pa te a t t h e same r a t e ( i . e . , v i s i t s per c a p i t a ) as an i n d i v i d -

ua l l o c a t e d more d i s t a n t l y f rom t h e s i t e who o r i g i n a l l y faced

t h a t l e v e l o f monetary t r i p cos ts . We a r e a c t u a l l y d e a l i n g

w i t h average p a r t i c i p a t i o n f rom an o r i g i n and a re r e f e r r i n g t o

average behav io r o f those l o c a t e d a t an o r i g i n . Thus i f t h e

v i s i t o r s f rom o r i g i n C, who f ace a t r i p c o s t o f $2 per v i s i t

a r e charged a f e e o f $4 pe r v i s i t , i t i s assumed t h a t , s i nce

t hey now face a c o s t o f $6 per t r i p j u s t l i k e t h e r e s i d e n t s o f

o r i g i n B, t hey w i l l reduce t h e i r v i s i t s per c a p i t a t o t he r a t e

o f r e s i d e n t s o f o r i g i n B. Th is procedure i n v o l v e s adding t h e

h y p o t h e t i c a l e n t r y fee t o t h e a c t u a l c o s t per t r i p , and then

s o l v i n g f o r vij, u s i n g t h e t r i p demand f u n c t i o n , V i j = 10 - C i j .

It should be c l e a r t h a t t h i s s imple assumption i s n o t r e a l i s -

t i c . The reduced number of t r i p s made by more d i s t a n t r e s i -

dents i s a r e s u l t o f rnore than t h e e x t r a t r a v e l cos t . The

more d i s t a n t r e s i d e n t s a l s o must spend e x t r a t ime t r a v e l i n g ,

may be c l o s e r t o s u b s t i t u t e s i t e s , and t h e i r t a s t e s may be

d i f f e r e n t .

FIGURE 4. THE AGGmGATE DEMAND CURVE FOR SITE I

u S

4 - r

F 2 - e e

I I 0 5 10 15 2 0 2 5 3 0 35

Thousands of Visits

The f o l l o w i n g t a b l e shows t h e c o n s t r u c t i o n o f t h e second

s tage o r aggregate s i t e demand curve us ing one d o l l a r i n c r e -

ments i n cos t . The e x i s t i n g l e v e l o f user f ee i s zero. The

i n d i v i d u a l demand f o r v i s i t s i s g i ven by v i j = 10 - C i j The ,

area under t h e aggregate demand curve i s $114,000, which i s

es t imated n e t w i l l i n g n e s s o f users t o pay f o r use o f t h e s i t e .

Th is va lue can be d e r i v e d g r a p h i c a l l y f rom F igu re 4 as t h e

area under t h e aggregate demand curve f o r S i t e I. Equiva len t l y ,

t h e areas under every i n d i v i d u a l ' s t r i p demand cu rve above

t r i p c o s t may be summed. I n t h i s case, t h e r e a r e no e n t r y o r

user fees and n e t w i l l i n g n e s s t o pay equa ls g ross w i l l i n g n e s s

t o pay.

Po in t s on t h e aggregate s i t e demand curve, which r e f l e c t

t o t a l use f o r each l e v e l o f incrementa l cos t , a r e found by

f i r s t m u l t i p l y i n g t h e popu la t i on a t each and every o r i g i n by

t h e a p p r o p r i a t e per c a p i t a v i s i t r a t e ( i .e., a t t h e h y p o t h e t i -

ca l f e e l e v e l ) t o f i n d v i s i t s f rom each o r i g i n a t t h a t fee and

TABLE 5 . THE TRAVEL COST METHOD: STAGE 2. THE AGGREGATE SITE DEMAND CURVE FOR AN EXISTING SITE

O r i g i n A O r i g i n B O r i g i n C V i s i t s V i s i t s V i s i t s

T r i p P e r T r i p Per T r i p Pe r T o t a 1 User Fees Cost C a p i t a V i s i t s Cost C a p i t a V i s i t s Cost C a p i t a V i s i t s V i s i t s

then summing these f i gu res over a1 1 o r i g i n s t o g e t an es t ima te

of t o t a l use a t t h a t fee. (see Table 5 ) . Ignored a t p resen t a r e va r i ous sources of inaccuracy t h a t m igh t cause t h e i n d i -

v i dua l t o behave d i f f e r e n t l y than i s assumed by t h i s ( s imp le )

t r a v e l - cos t model . The most impo r tan t sources o f such i nac-

cu rac ies a r e d i f fe rences i n t h e a v a i l a b i l i t y o f s u b s t i t u t e s a t

each o r i g i n , t h e d i f f e r e n t t ime r e q u i r e d t o reach t he s i t e

f rom each l o c a t i o n , and nonhomogeneity o f t a s t e s and income i n

t h e popu la t i on . These problems w i l l be d e a l t w i t h i n subse-

quent d iscuss ions .

Example 2. Application of the Model to a Proposed Site With No Substitutes

We now t u r n our a t t e n t i o n t o app l y i ng t h e r e s u l t s o f t h i s

a n a l y s i s t o a new s i t e . The bas i c purpose o f t h e t r a v e l c o s t

method i s t o develop models f o r p r e d i c t i n g t h e va lue ( o r use)

o f a newly developed s i t e o r resource. For simp1 i c i t y , we

w i l l assume t h a t t h e s i t e i s i n a r e g i o n where i t has no sub-

s t i t u t e s . Subsequent examples w i l l b r i n g competing r e c r e a t i o n

areas i n t o t h e a n a l y s i s .

To eva lua te t h e aggregate demand f o r a proposed s i t e , the

f i r s t s tage demand curve de r i ved f rom a s i m i l a r s i t e and

r e g i o n i s a p p l i e d t o t he market area f o r t h e proposed s i t e .

It appears most a p p r o p r i a t e t o app l y a curve d e r i v e d from

e x i s t i n g s i t e s i n t h e same market area i n which t he new s i t e

i s t o be b u i l t . Under these circumstances we may reasonably

assume t h a t t h e p re fe rences o f t h e market p o p u l a t i o n served by

t h e new s i t e w i l l be s i m i l a r t o those o f i n d i v i d u a l s who used

t h e s i t e s from which t h e model was der ived . That i s t o say,

t a s t e s w i l l develop a p a t t e r n s i m i l a r t o t h a t e x i s t i n g around

t h e s i t e s on which t h e t r i p demand curve was developed.

An impo r tan t p o i n t i s t h a t i t i s t h e t r i p demand curve

( i .e., f i r s t - s t a g e cu rve ) es t imated from another s i t e ( o r

s i t e s ) t h a t i s app l i ed t o t h e new s i t e , r a t h e r than t h e o t h e r

s i t e ' s aggregate demand curve. The second-stage s i t e demand

curve f o r t h e new s i t e w i l l depend upon t h e i n d i v i d u a l t r i p

demand curve and on t he distribution of population i n t he

market area. Thus t h e aggregate s i t e demand curves may d i f f e r

between s i t e s even though t h e i n d i v i d u a l ' s demand curves and

t h e s i t e s be ing eva lua ted a r e i d e n t i c a l . Th i s p o i n t was men-

t i o n e d i n Chapter 3 and i s d e a l t w i t h i n more d e t a i l l a t e r i n

t h i s chapter , s i nce i t has impo r tan t i m p l i c a t i o n s f o r u n i t day

va l ues .

To i l l u s t r a t e t h e p o i n t , t h i s example uses t h e i n d i v i d u a l ' s

t r i p demand curve de r i ved i n Example 1 and a p p l i e s i t t o t h e

same t o t a l market popu la t ion , b u t i n a new market area con-

s i s t i n g o f two towns represen ted by F igure 5 and t he da ta i n

Table 6 below. The r e s u l t i n g es t imate o f w i l l ingness t o pay

i s q u i t e d i f f e r e n t f rom t h e p rev ious example and t he d i f f e r -

ence i s e n t i r e l y due t o t he d i f f e r e n t s p a t i a l d i s t r i b u t i o n o f

t h e popu la t i on . The i n d i v i d u a l ' s t r i p demand i s taken t o be

v i j = 10 - Ci j. Table 6 shows t h e popu la t i on o f t h e two towns

served by t h e proposed s i t e and t h e expected t r i p cos t s t o t h e

s i t e f rom each. That da ta i s r e q u i r e d f o r every o r i g i n o f

users and i s t h e o n l y a d d i t i o n a l i n f o r m a t i o n needed t o app l y

t h e bas i c t r a v e l c o s t model t o a proposed s i t e . Table 7 below

d e t a i l s t h e c o n s t r u c t i o n o f t h e demand curve. A user charge

o f zero i s assumed i n t h i s and a l l subsequent examples. I f

t h e r e had been a use r charge, i t would be added t o t h e t r i p

c o s t f o r each o r i g i n . The second stage demand curve would

then p rov ide an es t imate o f n e t w i l l i n g n e s s t o pay. Actua l

user charges would be added t o n e t w i l l i n g n e s s t o pay t o

d e r i v e an es t ima te o f gross b e n e f i t s .

To d e r i v e t h e aggregate s i t e demand curve ( F i g u r e 6 ) us ing

t h e method descr ibed, t o t a l v i s i t s a r e p l o t t e d a g a i n s t hypo-

t h e t i c a l l e v e l s o f a s i t e user f e e ( f rom Table 7 ) . The area

under t h e demand curve i s $18,000, which i s es t imated

w i l l i n g n e s s o f users t o pay. Note t h a t t h i s d i f f e r s s i g n i f i -

c a n t l y frorr~ t h e $114,000 e s t i m a t e d w i l l i n g n e s s t o pay t h a t was

o b t a i n e d f o r S i t e I. Use i s 14,000 visit^.^ The same i n d i -

v i d u a l ' s t r i p demand cu rve was used f o r each s i t e and b o t h

s i t e s served t h e same p o p u l a t i o n . However, t h e d i s t r i b u t i o n

o f t h e p o p u l a t i o n served by each s i t e d i f f e r e d .

FIGURE 5. THE blARKE?' AREA FOR SITE I I

n E

p o p u l a t ioF ' . -W 3 6

ecc 1,000

$8 p o p u l a t i o n

5,000 SITE I1

TABLE 6. DATA FOR APPLYING THE SIMPLE TRAVEL COST MODEL TO A PROPOSED SITE

O r i g i n Popu la t i on T r i p Cost

I n sum, i t i s a r e l a t i v e l y s imp le procedure t o d e r i v e an

aggregate demand c u r v e f o r a new s i t e . An e x i s t i n g t r i p

demand c u r v e i s a p p l i e d t o t h e p o p u l a t i o n o f t h e new area.

Wi th a rnore r e a l i s t i c rnodel which r e f l e c t s s u b s t i t u t e s , t r a v e l

t ime , e t c . , a d d i t i o n a l c a l c u l a t i o n t o f i n d t h e va lues o f these

would be r e q u i r e d ; b u t t h e procedure i s e s s e n t i a l l y t h e same.

As i n d i c a t e d i n t h e example, t h e aggregate demand cu rves w i l l

1 t may be t h a t t he planned c a p a c i t y o f the proposed s i t e i s l e s s than 14,000 v i s i t s . I f t h i s i s the case, t he es t ima ted average consumers' su rp l us per t r i p ($18,000/14,000 = $1.29) should be m u l t i p l i e d by s i t e c a p a c i t y . Th is procedure i s v a l i d as long as t he r a t i o n i n g o f e n t r y reduces t r i p s from a l l o r i g i n s by t h e same percentage. See C i c c h e t t i , F i she r , and Smith (1976) f o r an example.

be in f luenced by t h e s p a t i a l d i s t r i b u t i o n o f the popu la t i on as

w e l l as t h e i n d i v i d u a l demand curve. Th i s has some i r npo r ta r~ t

imp1 i c a t i o n s f o r b e n e f i t eva lua t i on . I n p a r t i c u l a r , i t makes

i t r a t h e r d i f f i c u l t t o choose a u n i t day va lue f o r r e c r e a t i o n

w i t h any degree o f economic r a t i o n a l i t y . Th i s m a t t e r w i l l be

d iscussed l a t e r . The f o l l o w i n g s e c t i o n d iscusses t he evalua-

t i o n of a proposed s i t e which w i l l compete w i t h an i d e n t i c a l

s u b s t i t u t e s i t e .

TABLE 7. THE TRAVEL COST METHOD-EXAMPLE 2: APPLICATION OF THE MODEL TO A NEW SITE

O r i g i n D O r i g i n E V i s i t s V i s i t s

User T r i p pe r T r i p per To ta l Fee Cost Cap i t a V i s i t s Cost Cap i ta V i s i t s V i s i t s

FIGURE 6. THE SITE DEMAND CURVE (STAGE 2)

Thousands of Visits

muok~~un4 puewap dpq ayj o~uk sa3n3kqsqns a3npo~~uk LLLM

saldwexa juanbasqns '3~03 jseal 3~ pay3ea~ aq ue3 jey~ a3ks

ay3 asn 03 asooy:, [LLM LenpkAkpuk UP 'sk qeyl '3~03 LaAeJq

40 skseq ay3 uo saqks o~q ay3 uaaMJaq apkAkp 1 L~M JayJew

ay3 'sa3njLjsqns 33aj.iad aJe sa3Ls ay3 asne~aq '~ey3 dpew

sk uo~gdwnsse 6u~L~~~dw~s ayq asne3aq aJay 1~3~3~~3 os 3ou

sk 3~141 *aqks aqnqkqsqns e 40 q3a44a ayq aqe~kpu~ oq alqe

-peA ou sey a~~n3 puewap ayl -sqda~uo~ 3kseq qno qukod 03

JapJo ui pakgkldwks L~y6~y 'uke6e 's! saldwexa L~o~3npo~qul

ayq 40 uo~qenukquo3 sky1 'rjoo'bb uaaq aAey plnoM qso3 oJaz

~e I aqis 40 asn le~oq pue 'padota~ap 6ukaq 11 aqks qnoyqLM

I aqkS Jo4 OSL' ZZ L$ uaaq aAey p [no# sq gauaq ~eqoq ' 1 a ldlilex3

uk SUMOJ asayq papnl~u! pey aM 41 -pkLeA sk a~~n3 pueuap

dpq atues ayq qey3 pawnsse sk qk qnq 'ea~e qayJew sky3 ukyqk~

aq oq uayeq ade 3 pue a 'suMoq ~euokg kppe o~q ail1 'aldhexa

sky7 40 asod~nd ayq JOJ pa6uey3 aq LLLM I aqLS punoJe eaJe

3ay~e~ ayl -8 alqel u~ paz+eMwns aJe e3ep queAaLaJ ayq pue

'(L a~nb~j) Molaq u~e~p sk eaJe qayJeui ayl 'aqks pasoao~d ayq

aqentena oq pasn aq oq sk sky2 pue Ck3 - 01 = sk 1 aqks qe paqewkqsa uokq3un~ pueuiap dp3 ayl '1 a3iS 'a31s ~e3kquapk up

40 L~CUC~~A ay3 uk q~knq aq oq aJaM '11 aqks 'aqks Mau ayq J!

paJaqLe uaaq aAey 31.46~~ 2 alduexj ~oy ~apisuo~ MOU LL~M aM

'uokqelndod qayJew ay3

oq aLqelkeAe sawo~aq saAkqeuvla3Le 40 a~koy:, Japp P se sasea~3

-ui saqn3kqsqns 40 sq3ajja ayq 6uk~apksuo3 40 a3ueq~odwk ayl

.aa4 sky2 Led uey3 JayqeJ a3ks Jayqoue 03 qjkys pLnoM sJasn

3eyq 33adxa pLnoM ah\ ' y6noua yGky paskeJ si a3ks auo qe aa4

a143 $1 *aqLs ~eln3k~~ed e JOJ Led oq ssau6ui~~k~ s, LenplACpuk

up uo punoq ~addn awos sqas aqnqkqsqns e 40 L3k~~qel~e~e ayq

qey3 pazkLeaJ aq qsnw qk 's3Ljauaq aq~s bukq3kpa~d UI -sJasn

~ekquaqod JOJ aqadwo~ saqis LLP 3~1.43 azku603a~ oq L~essa~au

sk 31 6L[~n~~~a~3n~ a3ks MaU e 40 asn q3~pa~d oq JapJo UI

FIGURE 7. TIIE I v m T I\REA FOR SITES I AND I1

SITE I

$7.50 $8.50 /

'. \

population 1,000

population 5,000

. / /

SITE I1

TABLE 8. THE TRAVEL COST METHOD-EXAMPLE 3: APPLICATION OF THE MODEL TO A NEW SITE WITH A SUBSTITUTE

O r i g i n D O r i g i n E V i s i t s V i s i t s

User T r i p per T r i p per Fee Cost Cap i ta V i s i t s Cost Cap i ta V i s i t s V i s i t s

$2. ooi': 0 0 0

$:Once t h e t r i p c o s t exceeds $7.50, r e s i d e n t s o f o r i g i n D w i l l s w i t c h t o S i t e I.

+once t he t r i p c o s t exceeds $8.50, r e s i d e n t s . o f o r i g i n E w i l l sw i t ch t o S i t e I.

Residents o f towns D and E p resen t l y face t r a v e l cos ts o f

$7.50 and $8.50 t o S i t e I (F igure 7 ) and the t r i p demand curve

vij = 10 - C i j i n d i c a t e s t h a t they make an average o f 2% and

1 % t r i p s r e s p e c t i v e l y t o t h a t s i t e . They w i l l beg in u s i n g

S i t e I 1 when i t i s developed.

Table 8 d e t a i l s t h e c o n s t r u c t i o n o f t h e S i t e I 1 demand

curve. A ze ro charge i s assumed. The aggregate demand curve

i s d e r i v e d by t h e usual method, a1 though i t should be noted

t h a t demand from an o r i g i n drops r a p i d l y t o ze ro once t he f e e

f o r t h e s i t e i s r a i s e d s u f f i c i e n t l y h i g h so t h a t t h e s u b s t i -

t u t e can be used a t l e s s c o s t . That i s t o say, when t h e sub-

s t i t u t e can be consumed a t a l owe r t o t a l c o s t ( e n t r y f e e p l u s

t r a v e l c o s t ) than t h e s i t e be ing eva luated, users w i l l go t o

t h e s u b s t i t u t e s i t e .

The s i t e demand curve i n F i gu re 8 should be compared t o

F i g u r e 6 which shows t h e s i t e demand c u r v e d e r i v e d f o r S i t e I 1

w i t h o u t c o n s i d e r i n g s u b s t i t u t e s . The area under t h e p resen t

s i t e demand c u r v e ( F i g u r e 8 ) i n d i c a t e s t h a t w i l l i n g n e s s t o pay

i s reduced t o $9,250 compared t o t h e $18,000 d e r i v e d (F i gu re 6 )

when s u b s t i t u t e s were ignored . P red i c t ed use a t a zero f e e i s

s t i l l 14,000, b u t es t imated use a t h i ghe r fees i s reduced be-

cause users would s w i t c h t o t h e s u b s t i t u t e s i t e ( S i t e I)

r a t h e r than pay t h e h i g h e r fees a t S i t e 11. C l e a r l y , t h e

presence o f even more r e a d i l y a c c e s s i b l e s u b s t i t u t e s cou ld

s t e e p l y reduce bo th t h e use and b e n e f i t s o f a new s i t e .

The new f a c i l i t y would have two e f f e c t s on consumers' bene-

f i t s . F i r s t , t h e r e would be t h e c o s t sav ings on s h i f t e d

demand i n t h e form o f t he t r i p s which were be ing made f rom

town D and E t o S i t e I, b u t would now be made t o S i t e I 1 a t a

l owe r c o s t . T h i s sav ings i s a b e n e f i t because these consumers

use fewer resources i n t r a v e l i n g f o r r e c r e a t i o n , and the saved

resources may now be used elsewhere. The second source o f

b e n e f i t s would be f rom induced demand. The c loseness o f t h e

new s i t e and t h e reduced t r a v e l c o s t w i l l r e s u l t i n e x t r a

r e c r e a t i o n t r i p s by r e s i d e n t s o f D and E. They g a i n consumers'

s u r p l u s f rom these new t r i p s . The d i f f e r e n c e between t he

101

presen t example and p rev ious example (Example 2 ) a r i s e s f rom

t h e presence of t he s u b s t i t u t e s i t e .

FIGURE 8. THE SITE DEMAND CURVE (STAGE 2)

S

Thousands of Visits

The apparent l o s s i n b e n e f i t s a t t r i b u t a b l e t o reduced use

o f S i t e I should n o t be o f concern. Any b e n e f i t s a t t r i b u t -

a b l e t o reduced conges t ion a t S i t e I should be cons idered.

These b e n e f i t s , which have y e t t o be measured success fu l l y ,

a r e a p p r o p r i a t e l y a t t r i b u t e d t o t h e new s i t e .

We have neglected t h e va lue o f t he p resen t use o f t h e s i t e

t h a t i s t o be developed. Any l o s s o f b e n e f i t s t o p resen t

users o f t h e s i t e should be sub t rac ted as an o p p o r t u n i t y c o s t

o f development.

I n summary, i t should be c l e a r t h a t s u b s t i t u t e s i n f l u e n c e

use and b e n e f i t p r e d i c t i o n . They i n f l u e n c e t h e shape o f t h e -

demand curve f o r each s p e c i f i c s i t e , and t h e i r i n f l u e n c e on

b e n e f i t s may be v e r y s i g n i f i c a n t . A s imple procedure, such as

t h a t descr ibed i n t h i s example may p rov ide a use fu l f i r s t

6 ~ o r a d iscussion o f t h i s p o i n t , see Knetsch (1977).

approx imat ion t o t h e r e s u l t s o f more complex rnodels and would

be g r e a t l y p re fe rab le t o i g n o r i n g s u b s t i t u t e s .

The preceding t h r e e examples i n t r oduced t h e t r a v e l c o s t

method i n i t s s imp les t form. The f i r s t stage, o r t r i p demand

curve, and t h e second stage, o r aggregate s i t e demand curve,

a re d e r i v e d f o r an e x i s t i n g s i t e . It was shown t o be a s imp le

procedure t o d e r i v e an aggregate demand curve f o r a proposed

s i t e us ing a t r i p demand curve es t imated a t an e x i s t i n g s i t e .

Consumers' su rp lus i s presented as an a p p r o p r i a t e measure

of n e t bene f i t s . Procedures f o r d e r i v i n g consumers' su rp lus

from the s i t e demand curve a r e demonstrated f o r t he case of

zero e n t r y fee . More gene ra l l y , consumers' su rp lus i s t h e area

under t h e s i t e demand curve above t he ac tua l f e e l e v e l ( i f any) .

Gross bene f i t s o r w i l l i n g n e s s t o pay may be found by adding

t h e consumers' su rp lus t o t h e expected f e e r e c e i p t s ( i f any).

The examples i l l u s t r a t e t h r e e impo r tan t p o i n t s concern ing

b e n e f i t es t ima t i on : ( 1 ) t he s i g n i f i c a n c e o f t h e l o c a t i o n of

t h e user popu la t i on w i t h respec t t o t he proposed s i t e ; ( 2 ) t h e

importance o f s u b s t i t u t e s i t e s ; and ( 3 ) t h e comp lex i t i es i n

choosing a u n i t day value. We w i l l now examine these p o i n t s

i n more d e t a i 1 .

The Location of Users

Examples 1 and 2 i l l u s t r a t e t h e importance o f t h e l o c a t i o n

of t h e user popu la t i on r e l a t i v e t o t h e r e c r e a t i o n a l f a c i l i t y .

Given t h e t r i p demand curve, i t can be noted t h a t a new s i t e

w i l l be more va luab le t h e c l o s e r i t i s l o c a t e d t o i t s users.

Th is i s t h e r e s u l t of g r e a t e r t o t a l use due t o l owe r t r a v e l

expense, and a l s o t o t he g r e a t e r n e t b e n e f i t s t o i n d i v i d u a l s

who can make v i s i t s a t l e s s t r a v e l expense than t hey would be

w i l l i n g t o pay.

S u b s t i t u t e S i t e s

S u b s t i t u t e s were i n t r oduced i n Example 3. The conc lus ion

i s t h a t i t i s m is l ead ing t o cons ider one s i t e i n i s o l a t i o n

f rom o the rs . To do so can l e a d t o a s i g n i f i c a n t overes t imate

o f use and b e n e f i t s .

U n i t Day V a l u e s

Average w i l l i n g n e s s t o pay per day has been presented as

t h e most a p p r o p r i a t e b a s i s f o r u n i t day va lues. Examples 1,

2, and 3 p o i n t o u t t h e c o m p l e x i t i e s o f choosing a u n i t day

va lhe. Assuming t r i p s o f one day, average consumers' su rp lus

pe r day ( u n i t day va lue) i s c a l c u l a t e d by d i v i d i n g t o t a l con-

sumers' su rp lus by t h e number o f t r i p s . The t h r e e examples

a l l deal w i t h an i d e n t i c a l s i t e and i t i s assumed t h a t a l l

users have t h e same t a s t e s and preferences ( i .e., t he same

t r i p demand cu rve ) . However, u n i t day va lues f o r t h e t h r e e

examples a r e as f o l lows: Example 1 = $3.35, Example 2 = $1 .29,

and Example 3 = $0.66. Example 2 has a lower u n i t day va lue

than Example 1 s o l e l y because o f t he s p a t i a l l o c a t i o n o f t he

p o p u l a t i o n r e l a t i v e t o t he s i t e . The average user o f S i t e I 1

must t r a v e l a g r e a t e r d i s t a n c e than t he users o f S i t e I and

consequent ly i n c u r s g r e a t e r t r a v e l expenses. As a r e s u l t , h i s

n e t b e n e f i t s ( w i l l i n g n e s s t o pay i n excess o f p resen t c o s t s )

a r e reduced. The s i t e i n Example 3 i s i d e n t i c a l t o and has

t he same s p a t i a l d i s t r i b u t i o n o f p o p u l a t i o n r e l a t i v e t o the

s i t e i n Example 2; however, t h e i n t r o d u c t i o n o f an a l t e r n a t i v e

7 ~ o r Example 1 , 5114,000 = $3 .35 ; Example 2, -- $18,000 = 51-29; 34,000

$ 9,250 Example 3, 7 = $0.66. 1 ,000

s i t e reduces t h e u n i t day va lue cons ide rab l y . Thus, i t i s

c l e a r t h a t i t i s d i f f i c u l t t o s e l e c t an a p p r o p r i a t e u n i t day

va lue w i t h o u t a n a l y z i n g demand. Average consumers' s u r p l u s i s

n o t e a s i l y p r e d i c t e d , even f o r v e r y s i m i l a r p r o j e c t s . 8

The examples t h a t f o l l o w d e t a i l some a c t u a l ( r e g i o n a l )

t r a v e l c o s t models. They i l l u s t r a t e more genera l approaches

t o s u b s t i t u t e s i t e s (which a r e n o t n e c e s s a r i l y p e r f e c t sub-

s t i t u t e s ) and a l s o p resen t methods t o account f o r t h e e f f ec t

o f t r a v e l t ime . There i s a severe b i a s i n t h e e s t i m a t i o n o f

s i t e demand curves i f t ime, a l t e r n a t i v e s , and o t h e r s i g n i f i -

c a n t v a r i a b l e s a r e o m i t t e d f rom the s p e c i f i c a t i o n of t he

t r a v e l c o s t model . F o l l o w i n g t h e examples t h e r e i s a genera l

d i s c u s s i o n of t h e p o t e n t i a l e r r o r s which may a r i s e from ex-

c l u d i n g such , va r i ab l es . The s e c t i o n begins w i t h an o u t l i n e of

t h e da ta requ i rements and c a l c u l a t i o n s necessary f o r t he

development and use o f r e g i o n a l t r a v e l c o s t models.

A t v a r i o u s p o i n t s i n t h i s r e p o r t i t has been suggested t h a t

r e g i o n a l e s t i m a t o r s which focus on a system o f s i t e s a r e

h i g h l y d e s i r a b l e . I t i s e s s e n t i a l t o s tudy a system o f r e c r e -

a t i o n s i t e s i n o r d e r t o es t ima te t h e i n t e r a c t i o n between s i t e s

i n i n f l u e n c i n g t h e behav io r o f p a r t i c i p a n t s , and t o have s u f -

f i c i e n t da ta t o es t ima te t h e e f f e c t o f r e l e v a n t v a r i a b l e s such

as a v a i l a b i l i t y o f s u b s t i t u t e s , and v a r i a t i o n s i n t a s t e s .

' ~ u r t and Brewer (1974) make much t h e same p o i n t . They s t a t e (p. 1) t h a t "no t o n l y do t h e u n i t v a l u e s l a c k an e m p i r i c a l b a s i s , b e i n g l a r g e l y s u b j e c t i v e e s t i m a t e s , . . . b u t t h e d e t e r - m i n a t i o n o f ( t o t a l ) v a l u e must l o g i c a l l y p recede c a l c u l a t i o n o f a u n i t day v a l u e . " T h e i r c h a r t ( F i g u r e 9) p r o v i d e s a use- f u l i n d i c a t i o n o f how p e r c a p i t a b e n e f i t s may v a r y w i t h d i s - t a n c e f rom a s i t e o r s u b s t i t u t e s i t e s .

Examinat ion o f t o o smal l a r e g i o n o r t o o few s i t e s w i l l p re-

ven t t h e i r l c l us i on o f necessary v a r i a b l e s .

A t present , t h e r e a r e two broad c lasses o f r e g i o n a l t r a v e l

c o s t models. F i r s t , t h e r e i s t he model based on a l i n e a r sys-

tem of i n t e r r e l a t e d demand equat ions, i l l u s t r a t e d by t he B u r t

and Brewer (1 971, 1974) s tud ies and a1 so used by Moncur (1 975),

and C i c c h e t t i , F isher , and Smith (1 976). Secondly, t he re a re

t h e s i n g l e equa t ion models based on a g r a v i t y model approach

t o demand. These l a t t e r models a r e i l l u s t r a t e d by t h e model

.developed by U.S. Army Corps o f Engineers (Knetsch, Brown, and

Hansen [I 976]), and by t h e model developed by Cesar io and

Knetsch (1 976).

The development and use o f bo th c lasses o f r e g i o n a l models

share c e r t a i n common needs i n da ta c o l l e c t i o n and a n a l y s i s .

These general procedures a r e o u t 1 i ned be1 ow.

Model Construction

1) Demand Survey: A survey o f r e c r e a t i o n behav io r over a

wide geographic r e g i o n i s r equ i red . Th i s may be e i t h e r an on-

s i t e o r household survey depending on t h e needs o f t h e p a r t i c -

u l a r model. The survey should be d i r e c t e d a t f i n d i n g f o r each

t r i p : ( a ) l e n g t h and purpose o f v i s i t s t o any s i t e under con-

s i d e r a t i o n , ( b ) t r a v e l t ime, ( c ) expend i tu res s p e c i f i c t o t h e

t r i p ( e x c l ~ d i n g au to c o s t which i s t o be c a l c u l a t e d sepa-

r a t e l y ) , ( d ) mi leage t r ave led , o r o r i g i n o f use r i n o rde r t h a t

m i leage may be ca l cu la ted , ( e ) income, ( f ) o t h e r demographic

v a r i a b l e s t h a t a re expected t o i n f l u e n c e demand ( i n p a r t i c u l a r ,

f a m i l y s t r u c t u r e and pas t exper ience w i t h t h e s i t e ) .

2) Classification of Sites: A l l models r e q u i r e t h a t some

d i s t i n c t i o n be made among s i t e s on t h e bas i s o f t h e q u a l i t y o f

t h e f a c i l i t i e s and t h e expressed t a s t e s o f users . The s i n g l e

equa t ion methods r e q u i r e t h e computat ion o f an index o f

a t t r a c t i v e n e s s which may be based on a measure o f t h e a v a i l -

ab le f a c i l i t i e s and p o s s i b l y an es t ima te of user preferences

based on t h e i n i t i a l demand survey. For mu1 t i p l e equa t ion

methods, i t i s necessary t o c l a s s i f y a l l s i t e s ( i n c l u d i n g t he

proposed s i t e be ing eva lua ted) i n t o a l i m i t e d number o f c a t e -

g o r i e s based on s i m i l a r i t y o f f a c i l i t i e s and q u a l i t y o f t h e

o p p o r t u n i t i e s prov ided.

3 ) S u b a r e a o f O b s e r v a t i o n : Subareas o f o r i g i n , such as d i s -

tance zones, coun t i es , towns, o r , poss ib l y , i n d i v i d u a l house-

ho lds , must be de f i ned . These subareas should be chosen such

t h a t demographic i n f o r m a t i o n on average income and popu la t i on

i s a v a i l a b l e and t he da ta hand l ing i s manageable. The areas

should a l s o be un i for rn enough and smal l enough so t h a t i t i s

reasonable t o a t t r i b u t e t he t r a v e l c o s t a r~d average derno-

g raph ics f rom t h e subarea t o a l l users w i t h i n t he area. I t i s

a1 so necessary t h a t s u f f i c i e n t observa t ions be r e t a i n e d f o r

e s t i m a t i o n o f t h e model; t o o much aggrega t ion w i l l r e s u l t i n

l o s s o f i n f o r m a t i o n .

4 ) T r a v e l C o s t : I t i s necessary t o have, o r t o c a l c u l a t e ,

t he road mi leage t r a v e l e d by users. I n p r a c t i c e , a s i n g l e

p o i n t i n a f a i r l y aggregated subarea (such as t h e c e n t e r of a

town o r coun ty ) i s used t o r ep resen t a1 1 users i n t he subarea.

D is tance t r a v e l e d i s conver ted i n t o t r a v e l c o s t by us ing

a v a i l a b l e da ta on t h e c o s t per m i l e o f t r a v e l . The t r a v e l

c o s t should be on a per person round t r i p bas i s . That i s , if

two people t r a v e l i n one c a r , each i s cons idered t o have made

one round t r i p a t one ha1 f the t o t a l round t r i p t r a v e l c o s t .

5 ) T i m e : Round t r i p t r a v e l t ime f o r each use r o r i g i n may be

a v a i l a b l e f rom the demand survey, o r may be de r i ved f rom

mi leage t r a v e l e d and average road speed. The t ime spent a t

t h e s i t e ( i .e., l e n g t h of t h e v i s i t ) should be a v a i l a b l e f rom

t h e demand survey.

6) Substitutes: The e f f e c t o f s u b s t i t u t e s depends on t he

t r a v e l c o s t s from t h e subarea o f o r i g i n t o t h e s u b s t i t u t e s i t e ,

and a l s o on t h e r e l a t i v e a t t r a c t i v e n e s s o f each s i t e . Var ious

i n d i c e s and methods o f deal i n g w i t h s u b s t i t u t e s re f1 e c t i ng

t r a v e l c o s t s and e f f ec t i veness a r e descr ibed i n t h e subsequent

examples.

7) Demographics: Populat ion, income and o t h e r r e l e v a n t

demographic v a r i a b l e s may be de r i ved f rom census da ta o r t he

demand survey.

8) Demand Estimation: The econometr ic procedures w i l l depend

on t h e chosen model ( i .e., s i n g l e equa t ion o r mu1 t i p l e equa-

t i o n , l i n e a r o r non- l i n e a r ) .

Evaluation of a Proposed Site

Regional t r a v e l c o s t models can be used t o eva lua te t he

demand f o r , and t h e b e n e f i t s o f , a new s i t e which i s t o be

developed w i t h i n t h e r e g i o n i n which t h e model was developed.

Once t h e model has been developed, 1 i ttl e a d d i t i o n a l in forma-

t i o n i s r e q u i r e d and no f u r t h e r demand e s t i m a t i o n i s needed.

The bas i c procedures a r e o u t l i n e d below.

1) Classification of the New Site: For t h e mu1 t i p l e equa-

t i o n models, t h e new s i t e must be assigned t o one o f t h e

ca tego r i es s p e c i f i e d i n t h e model. For t h e s i n g l e equa t ion

model s, t h e expected index o f a t t r a c t i v e n e s s o f the new s i t e

must be computed, based on t h e f a c i l i t i e s t h a t w i l l be

a v a i l a b l e .

2) Delineate the Market Area of the New Site: Whi le t h e

i n i t i a l model m igh t have been est imated over a l a r g e reg ion ,

t h e p lanner can now focus on t he zone around t h e new s i t e , i n

which demand i s l i k e l y t o be p o s i t i v e . W i t h i n t h i s r e g i o n an

a l l - i n c l l r s i v e s e t of subareas o f o r i g i n , such as d i s t a n c e

zones, a r e de f i ned as be fo re .

3) Travel Costs: Distances f rom the areas o f o r i g i n t o t he

new s i t e can be es t imated us ing road maps. As noted pre-

v i o u s l y , t h i s should be conver ted i n t o average per c a p i t a

round t r i p t r a v e l cos t .

4 ) Time: Est imates o f r o u n d - t r i p t r a v e l t ime f rom each sub-

area of o r i g i n t o t h e new s i t e should be made.

5) Substitutes: NO f u r t h e r i n f o r m a t i o n i s r e q u i r e d . The

e x i s t i n g s i t e s on which t he demand e s t i m a t i o n was based w i l l

be t h e s u b s t i t u t e s fac ing p o t e n t i a l users o f t he new s i t e .

The procedure by which t he rnodel r e f l e c t s s u b s t i t u t e s w i l l

depend on t h e demand s p e c i f i c a t i o n and i s i l l u s t r a t e d i n sub-

sequent examples.

6) Benefit Estimation: The procedure f o r e v a l u a t i n g t h e

b e n e f i t of a new s i t e i s analogous t o t h a t descr ibed i n t h e

i n t r o d u c t o r y examples (Examples 1, 2, and 3 ) . A s i t e demand

curve i s de r i ved and b e n e f i t s a r e c a l c u l a t e d f rom t h e area

under t h i s curve. The s i t e demand curve i s de r i ved f rom the

t r a v e l c o s t model i n t he f o l l o w i n g way. The t r a v e l c o s t model

w i l l g i v e an es t ima te o f demand f o r a s i t e f rom each area o f

obse rva t i on a t a g i ven l e v e l o f t r a v e l cos t , g i ven t he appro-

p r i a t e va lues f o r t h e o t h e r v a r i a b l e s i n t he model. Th i s de-

mand i s then summed over a l l areas o f obse rva t i on t o g e t the

t o t a l s i t e demand a t t h e g i ven cos t . By s t a r t i n g w i t h t h e

a c t u a l t r a v e l c o s t f o r each o r i g i n and success ive ly r a i s i n g

t h i s c o s t by equal amounts everywhere ( w h i l e h o l d i n g t r a v e l

t ime and o t h e r v a r i a b l e s f i x e d ) t he s i t e demand curve may be

der i ved .

EXAMPLES OF REGIONAL TRAVEL COST ESTIMATORS: 1. BURT AND BREWER ( 1974 ) : A LINEAR SYSTEM

OF PER CAPITA DEMAND EQUATIONS

Th is s tudy was aimed a t e v a l u a t i n g t h e r e c r e a t i o n b e n e f i t s

of a proposed r e s e r v o i r p r o j e c t , t h e Pat tonsburg Reservo i r , t o

be developed i n M issou r i , 60 t o 70 m i l e s no r theas t o f Kansas

C i t y . F i v e Corps of Engineers impoundments a r e l oca ted w i t h i n

125 m i l e s of t h e proposed r e s e r v o i r . I n a d d i t i o n , f o u r o t h e r

r e s e r v o i r s were under c o n s t r u c t i o n a t t h e t ime o f t he s tudy,

and o the rs had been proposed. Thus, t h e a v a i l a b i 1 i t y o f sub-

s t i t u t e s appeared t o be an impo r tan t f a c t o r i n de te rmin ing t h e

va lue o f t h e proposed r e s e r v o i r . Two separate analyses o f t h e

va lue o f t h e proposed r e s e r v o i r were performed, one assuming

t h a t t h e neares t s i t e under c o n s t r u c t i o n ( S m i t h s v i l l e

Rese rvo i r ) was completed, and t h e o t h e r assuming t h i s s i t e d i d

n o t e x i s t . The s tudy was performed i n 1973 and was designed

t o r e f l e c t , i n a s imp le manner, t h e s u b s t i t u t i o n e f f e c t s of

new s i t e s .

The system o f f i v e i n t e r r e l a t e d demand equat ions o f t he

form i n d i c a t e d below was est imated. Each equat ion i s l i n e a r

i n t r a v e l cos t s and income, and e x p l a i n s per c a p i t a demand f o r

t r i p s t o a p a r t i c u l a r t ype o f s i t e . Per c a p i t a p a r t i c i p a t i o n

from o r i g i n i t o s i t e j i s taken t o depend on t h e c o s t of

reach ing t he neares t s i t e o f each type, as w e l l as on t h e i n -

come o f i n d i v i d u a l s a t o r i g i n i.

Equat ions: 5

Subscr ip ts :

qik: v i s i t s by i n d i - v i d u a l i t o t he nearest s i t e t ype k.

P i k : t r i p cos t t o i n d i - v i d u a l i, t o reach nearest s i t e o f t ype k .

Y i : f a m i l y income o f i n d i v i d u a l i.

aj, Bjk, c j : c o e f f i c i e n t s t o be e s t i - mated sub- j e c t t o t he c o n s t r a i n t

Va r i ab les and parameters: i = 1 , 2, ..., n sample observa t ions j , k = 1 , ..., 5 types o f s i t e s

Procedure

1 ) Demand S u r v e y : The sample was de r i ved from d i r e c t i n t e r -

views of over 2,000 Missour i households i n t he autumn o f 1966.

The purpose of t he survey was t o i d e n t i f y ac tua l outdoor rec re -

a t i o n behavior d u r i n g 1966. The respondents were i n i t i a l l y

contacted t o s o l i c i t t h e i r cooperat ion i n keeping records o f

t h e necessary in fo rmat ion . Usable i n f o r m a t i o n was c o l l e c t e d

from 2,031 households. The i n f o r m a t i o n used i n c o n s t r u c t i n g

the model was: ( a ) t h e number o f days spent a t s p e c i f i c s i t e s ,

i n c l u d i n g t r a v e l t ime; ( b ) expendi tures s p e c i f i c t o t he t r i p ,

exc lud ing au to cos t ; ( c ) mi leage d r i v e n on each t r i p ; and

( d ) f a m i l y income. Other socio-economic v a r i a b l e s were

gathered, b u t found o f l i t t l e use.

2) C l a s s i f i c a t i o n o f S i t e s : The s i t e s at tended by those

responding t o the demand survey were c l a s s i f i e d i n t o 5 types

o r ca tego r i es on t h e bas i s of f a c i l i t i e s and q u a l i t y . These were ( a ) Lake of t h e Ozarks, cons idered unique; ( b ) Table Rock

and a d j o i n i n g lakes on t h e Arkansas border, a1 so viewed as un-

usual i n q u a l i t y ; ( c ) o t h e r l a r g e lakes cons t ruc ted by t he

U. S. Army Crops of Engineers; ( d ) o t h e r lakes g r e a t e r than

200 acres; and ( e ) r i v e r s o f t he Ozark Mountain area. It i s

assumed t h a t t h e s i t e s w i t h i n a c l a s s a r e p e r f e c t s u b s t i t u t e s

f o r each o the r . The proposed p r o j e c t , Pat tonsburg Reservo i r ,

would be i n t he t h i r d ( c ) category. Data were i n t i a l l y

gathered on o t h e r ca tegor ies ; b u t these were subsequent ly d i s -

carded as n o t s i g n i f i c a n t l y r e l a t e d t o t h e f i v e p r imary

c lasses .

3) Subarea of Observation: I n d i v i d u a l households were t h e

u n i t of obse rva t i on f o r demand es t ima t i on . T rave l cos t s , how-

ever, were n o t c a l c u l a t e d f o r each i n d i v i d u a l b u t based on an

average over geographica l c l u s t e r s o f i n d i v i d u a l s . It should

be no ted t h a t w h i l e t h e household sample was f rom w i t h i n

M issou r i a lone, some s i t e s i n ad jacen t s t a t e s were cons idered

as t h e d e s t i n a t i o n s o f these i n d i v i d u a l s . These s i t e s were

c l a s s i f i e d i n t o one o f t h e f i v e c lasses o r ca tego r i es .

4) Travel Cost: A computer program was developed t o conve r t

d is tances i n t o t r a v e l cos t s . Dis tances t r a v e l e d were a v a i l -

a b l e f rom t h e demand survey. Per c a p i t a round t r i p c o s t s were

computed.

5) Time: B u r t and Brewer do n o t make a c o r r e c t i o n f o r

t r a v e l t ime.

6) Substitutes: W i t h i n each ca tego ry t h e s i t e s a r e cons id -

ered as be ing p e r f e c t s u b s t i t u t e s . S i t e s i n d i f f e r e n t ca te -

g o r i e s a r e viewed as d i f f e r e n t comrnodities. Separate demand

equat ions a r e d e r i v e d f o r each category. Each demand equat ion

i nc l udes , as va r i ab les , t h e t r i p c o s t t o t h e nea res t s i t e o f

each t ype and t hus r e f l e c t s t h e l o c a t i o n o f s u b s t i t u t e s i t e s .

The f i v e equa t ions a r e j o i n t l y es t imated i n o r d e r t o f u r t h e r

r e f l e c t t h e i n t e r r e l a t i o n between demand f o r each t ype of s i t e .

7) ~emographics: Demographic i n f o r m a t i o n was ob ta i ned from

t h e demand survey.

8) Demand Estimation: The a c t u a l demand equa t ions es t imated

a r e g iven below:

C l a s s i f i c a t i o n o f s i t e s :

1 = o t h e r l akes g r e a t e r than 200 acres 2 = Lake o f t he Ozarks 3 = o t h e r l a r g e Corps o f Engineers lakes 4 = Table Rock and a d j o i n i n g lakes 5 = r i v e r s o f the Ozark Mountain Area

The f i v e separa te equa t ions a r e es t imated u s i n g a gene ra l i zed

l e a s t squares procedure which takes i n t o account some of t h e

i n t e r r e l a t i o n s between t h e separate equa t ions . De ta i 1 s of t h e

procedure may be found i n B u r t and Brewer (1 971 ) and t h e e s t i -

ma t i on o f a s i m i l a r s e t o f equa t ions i s d e t a i l e d i n C i c c h e t t i ,

F isher , and Smith (1976) .

Evaluation of the Proposed Site

1) Classification of the New Site: The proposed s i t e i s i n

t h e t h i r d ( c ) ca tegory , l a r g e Corps o f Engineers l akes .

2) Delineation of the Market Area of the New Site: The

r e g i o n of i n f l uence surrounding t h e s i t e o f t he proposed

Pat tonsburg Reservo i r was de f i ned as t h e l ocus of a l l p o i n t s

which a r e as c l o s e t o t h e proposed r e s e r v o i r as t o an e x i s t i n g

r e s e r v o i r be long ing t o t h e same ca tegory . T h i s r e g i o n was

then d i v i d e d i n t o p o p u l a t i o n subareas. Each c i t y of over

5,000 popu la t i on and each county (exc lud ing those c i t i e s ) was

t r e a t e d as a subarea.

3) Travel cost: Measurements o f d i s t a n c e a r e c a l c u l a t e d

from t h e cen te r of each subarea t o t h e c l o s e s t s i t e i n each

category. D i r e c t d i s t ances a r e conver ted i n road d i s tances

based on an average f a c t o r . Road d i s tances a re then conver ted

i n t o t r a v e l cos t . Th i s i s conver ted t o average per c a p i t a

t r a v e l c o s t pe r round t r i p . Two se t s o f da ta a r e e v e n t u a l l y

r equ i red , one as i f t h e new s i t e d i d n o t e x i s t , and one as i f

i t d i d e x i s t . Only d i s t ances t o t h e t h i r d ca tegory ( c ) o f

s i t e s w i l l be a1 t e r e d by t h e c o n s t r u c t i o n o f t h e Pat tonsburg

Reservo i r . B u r t and Brewer c a l c u l a t e d these f i g u r e s , b o t h

under t h e assumption t h a t t h e r e s e r v o i r p r e s e n t l y under con-

s t r u c t i o n , S m i t h v i l l e Reservo i r , ex i s ted , and t h a t i t d i d n o t

e x i s t .

4) Time: Time was n o t i nco rpo ra ted i n t o t h e model.

5) Substitutes: The demand equat ions i nc l ude , as v a r i a b l es,

t h e c o s t o f reach ing t h e neares t s i t e i n each category. The

changes i n t h e t r a v e l c o s t s which r e s u l t f rom the c o n s t r u c t i o n

o f new s i t e s r e f l e c t t h e changed a v a i l a b i l ' i t y o f s u b s t i t u t e s .

No c a l c u l a t i o n o f i n d i c e s o f s u b s t i t u t e s i s necessary.

6) Demographics: Updated p o p u l a t i o n f i g u r e s were found from

t h e 1970 census. Incomes were updated based on t h e 1970 cen-

sus and i n f l a t e d by t h e consumer p r i c e index t o 1973 l e v e l s .

-asod~nd

qeyq JOJ pasn aq UP^ 3~ y6noyq~e (a7cs Mau e JO sqgauaq ay7

6u!qen[eha SPJPMO~ paq3a~;p qou SPM $1 'e~ueh~Ksuuad uJaqsea

-ypou uk sy~ed a7eqs 6ukqskxa LeJahas oq pa! ~dde SPM Lapotu

ayl -sqso3 atukq JOJ UO~~ZI~JJO~ e sapnl3uk pue saqn7kqsqns JO

K~~L~~PL!PAP ay7 s-)z~al~a~ Lapoul ayl -uok6a~ ayq ULQ~M saqLs

Mau Kue se LLaM se savs 6ukqskxa JO wa-)sKs e JOJ Lapow uolq

-enleha qkjauaq PUP asn a~ksuaya~dtuo3 e sdolahap Kpnqs sky1

-paJetukJsa s! suokqenba puetuap JO tua7sKs ayq a3uo pak~dde

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-kqsa JO qas aules ayq sasn Kpnqs (~~61) Jamaura pue $urn0 ayl

-pa-)e3kpuk

sk sqkjauaq Lenuue JO tueaJqs ay7 uo (sa~nq~qsqns) uok~

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oq paskeJ aJe sqkjauaq paqetukqsa ayq 'a[ [khyqyus 3noy7k~

yjooco~~$ aJe JkohJasad G~nqsuo~qed qe uokqea~3a~ WOJJ sqkjauaq

Lenuue paqetukqsa ayq 'qLLnq sk JloAJasad aLLkhqq!ulS qeq3 uokq

-dtunsse ayq YJ~M 7~7 sk q~nsa~ ayl '(9~6~) yqk~s pue 'JaysLj

'kqqay33k3 pue (1~6~) JaMaJa pue qJna u~ paukeldxa sk a~npa3o~d

ayl -slenpkAkpuk LLe Jaho SJkJauaq asayq tuns uayq 'sah~r-13

puetuap dpq Lenpkhkpui a47 6uksn uk6k~o y3ea qe Lenpykpuk

a6e~ahe ayq JO snld~ns , s~atunsuo3 ayq aqen LeAa Kay1 .sa~~nz~

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a6eqs-puo3as sky? a?eln3le~ ueyq ~a;qed .sqkjauaq auLtuJaqap

02 paqeln31e3 ah~n:, sky$ Japun eaJe ayq pue KPM Lensn a147

uk paqeln31e3 uaaq ahey plno3 ah~n3 puetuap a7Ls a6eqs-puo3as

e 'aqks Mau aq2 asn 07 paq3kpa~d s! qeyq eaJe qayJetu ayq

PakJkluaP! ahey Kay7 a3uo 's! 7eyl '~a~dey3 sky7 uk Ja! LJea

paqp~sap a~npa3o~d aqq 03 qualehknba sk s7kJauaq aqenleha

07 asn JaMaJa pue pna poyqatu ayl :uor?eurqsg qrjauaa (L

PTT

E q u a t i o n

The equat ion es t imated was o f t h e forrn below. I t i s non-

l i n e a r i n t h e c o e f f i c i e n t s . It exp la i ns t o t a l v i s i t s (by

p a r t i e s r a t h e r than i n d i v i d u a l s ) from an o r i g i n , r a t h e r than

pe r c a p i t a v i s i t s as was t h e case w i t h t h e model developed by

B u r t and Brewer. Each s i t e i s assumed t o s a t i s f y t he same

t r i p demand func t i on , d i f f e r i n g o n l y i n terms o f t he v a r i a b l e s

r e f l e c t i n g qua1 i t y and access i b i l i t y r e l a t i v e t o s u b s t i t u t e

s i t e s .

Equat ion:

b1 b 2 V = bopi A . exp (b i j J ib4 Var iab les and parameters:

j, k : 1 , 2, ..., M r e c r e a t i o n s i t e s

V i j : the number o f v i s i t s per u n i t o f t ime made t o s i t e j from p o p u l a t i o n cen te r i

P i : p o p u l a t i o n o f cen te r i

Aj : the a t t r a c t i v e n e s s o f park j , a measure o f t he combined e f f e c t s on r e c r e a t i o n t r i p -mak ing o f c e r t a i n c h a r a c t e r i s t i c s o f r e c r e a t i o n s i t e j (e.g., acreage, pa rk i ng space)

C i j : t he genera l i zed c o s t o f t r a v e l t ime f rom i t o j ( r e f l e c t i n g t r a v e l t ime and t r i p expenses)

bop ... , b,: parameters t o be es t imated ( p l a u s i b l e s igns b,<O; -l<b,<O; b,, b2>0)

exp : the exponent ia l f u n c t i o n , i . e . exp (x) = ex.

Whi le t h e model appears complex, i t s a p p l i c a t i o n i s q u i t e

s imp le once t he model i s est imated. However, i t i s u n c e r t a i n

whether t h e ga ins o f us i ng such a complex model outweigh t he

c o s t s a r i s i n g f rom t e c h n i c a l d i f f i c u l t i e s w i t h es t ima t i on . I t

would seem t h a t l e s s complex one-equat ion models s i m i l a r t o

those used by t h e Corps o f Engineers (Knetsch, Brown, and

Hansen [I 9761 ) a r e b e t t e r s t a r t i n g p o i n t s f o r agency model

devel oprr~en t .

Procedure

The p r o c e d ~ ~ r e necessary f o r e s t i m a t i n g and a p p l y i n g t he

demand equat ion i s i 11 u s t r a t e d below.

1) Demand survey: The da ta on v i s i t s were c o l l e c t e d from

o n s i t e surveys a t 84 s t a t e parks i n an area i n c l u d i n g most of

Pennsylvania, and p a r t s o f New York and New Jersey. The sur -

vey was designed t o ga the r i n f o r m a t i o n on: (a) t h e o r i g i n of

t h e v i s i t o r ; (b) mo t i ve o f t h e t r i p ( i .e. a c t i v i t i e s , main

d e s t i n a t i o n of t r i p ) ; ( c ) number of members o f t h e p a r t y ; and

(d) f a m i l y income. It was taken over seven days d u r i n g J u l y

and August 1967. Usable responses were c o l l ec ted f rom 31,000

i n d i v i d u a l s . These da ta were then e x t r a p o l a t e d t o es t imate a

f u l l season o f v i s i t s based on h i s t o r i c a l p a t t e r n s o f seasonal

use. The a n a l y s i s cons iders o n l y those v i s i t s which were day-

use v i s i t s w i t h a s p e c i f i c park as t he main d e s t i n a t i o n .

2) Class i f i ca t ion o f S i t e s : A park a t t r a c t i v e n e s s index,

A j , was formed. Th is v a r i a b l e was in tended t o r e f 1 e c t t he

a c t i v i t i e s a v a i l a b l e , t h e qua1 i t y o f t h e f a c i l i t i e s a v a i l a b l e

f o r each a c t i v i t y , and t h e s a t i s f a c t i o n t h a t users r e c e i v e

f rom each t y p e o f f a c i l i t y .

The a t t r a c t i v e n e s s index f o r each s i t e , Aj, was o f t he form:

Where :

uk = r e l a t i v e u t i l i t y o f hav ing a c t i v i t y k ava i l ab le , as i nd i ca ted by p o p u l a r i t y weights ob ta i ned f rom da ta on p a r t i c i p a t i o n i n a c t i v i t i e s i n response t o the demand survey.

qk = q u a l i t y o f t h e f a c i l i t i e s a v a i l a b l e f o r a c t i v - i t y k , as s u b j e c t i v e l y r a ted by a team o f r e - searchers, w i t h qk on a range o f 1 t o 18.

a ={ Q i f a c t i v i t y k i s no t o f f e r e d k 1 i f a c t i v i t y k i s o f f e r e d

The a t t r a c t i v e n e s s index i s t he sum over a1 1 a c t i v i t i e s

cons idered. '

3 ) Subareas o f Observation: The u n i t s o f obse rva t i on f o r

t r i p o r i g i n s were coun t i es . The d e s t i n a t i o n s were s t a t e parks.

To ta l v i s i t s from 23 cont iguous coun t i es t o each o f 38 r e c r e -

a t i o n s i t e s p rov ided 874 observa t ions ( V . .) f o r es t ima t i on . 1 J

4 ) Travel cost: Road d i s tance over t h e most 1 i k e l y r o u t e

between t h e c e n t r o i d o f each c o u r ~ t y i t o t he e r l t r a r~ce o f a

park j, i s c a l c u l a t e d . Th i s i s m u l t i p l i e d by a cons tan t

t r a v e l c o s t o f $0.06 per m i l e . Presumably t h i s i s in tended t o

r e f l e c t t o t a l round t r i p monetary cos t s .

5) Time: The gene ra l i zed cos t , Cij, r e f l e c t s an assumed

t r a d e o f f between t ime and money cos t s . Two methods o f ca l cu -

l a t i n g t h i s v a r i a b l e were used:

Method I C i j = ($0.06 D..) ( y . ~ . .) IJ I I J

Method I I C i j = $0.06 D i j + y iT i j

Where :

$0.035 5 y i I $0.046 = a f r a c t i o n o f

t he county wage r a t e l o

D i j = the road d i s t a n c e from o r i g i n i t o s i t e j

T i j = t r a v e l t ime i n minutes f rom o r i g i n i t o s i t e j (based on average t r a v e l speed over va r i ous road types)

'o ther s t u d i e s have found t h a t t o t a l acreage o f water i s a reasonably good index o f a t t r a c t i v e n e s s f o r r e s e r v o i r r ec re - a t i o n (Knetsch, Brown, and Hansen [1976]) , and ac res o f main- t a i ned t u r f i s a reasonably good i n d i c a t o r o f t he a t t r a c t i v e - ness o f urban parks (Corps o f Engineers, 1976).

l O ~ o r a d u l t s one q u a r t e r t o one h a l f t he wage r a t e , and f o r c h i l d r e n , 25 percen t o f t he l e v e l chosen f o r a d u l t s .

The number o f t r i p s taken w i l l decrease w i t h d i s t a n c e f rom

t h e s i t e due t o bo th t h e h i g h e r monetary c o s t o f t r a v e l and

t h e g r e a t e r t ime r e q u i r e d t o make a v i s i t . To d e r i v e an accu-

r a t e s i t e demand cu rve i t i s necessary t o separa te o u t these

two e f f e c t s and t o es t ima te t h e e f f e c t on demand o f i nc reases

i n monetary c o s t s a lone . I f a reasonable approx imat ion o f t h e

t r a d e o f f between t ime and money c o s t s can be s p e c i f i e d , then

i t i s p o s s i b l e t o develop t h e s i t e demand curve. Once t h e

model i s es t imated ,_ a1 1 t h a t i s necessary i s t o eva lua te t h e

second s tage s i t e demand curve i n t he usual way. That i s ,

demand a t each o r i g i n i s eva lua ted a t va r i ous increments i n

monetary cos t s ; a l l o t h e r v a r i a b l e s , i n c l u d i n g t ime, a r e kep t

a t t h e i r a c t u a l l e v e l . Whi le t h e r e i s no s o l i d j u s t i f i c a t i o n

f o r t h e t r a d e o f f s chosen here, i n t he absence o f ev idence t o

t h e c o n t r a r y , t h e 1 i n e a r t r a d e o f f seems most accep tab le on t h e

bas i s o f e x i s t i n g e m p i r i c a l work. The l i n e a r t r a d e o f f r e s u l t s

i n lower es t imates o f b e n e f i t s t han t h e c u r v i l i n e a r t r a d e o f f .

61 Substitutes: The r o l e o f s u b s t i t u t e s i s r e f l e c t e d

th rough t h e te rm which i nc l udes b o t h

t h e a t t r a c t i v e n e s s index and, t h e l o c a t i o n o f ( t r i p c o s t t o )

each s i t e . An inc rease i n a t t r a c t i v e n e s s o r a c c e s s i b i l i t y o f

compet ing s i t e s would be expected t o reduce v i s i t s t o a par-

t i c u l a r s i t e .

7) Demand Estimation: Parameters o f t h e model were es t imated

by a non-1 i n e a r l e a s t squares method. The r e s u l t s f o r t h e

1 i n e a r time-money t r a d e o f f are ,

Ik!] A : ' ~ ~ ~ exp (-0.071 c i k ) ! -0.591

w i t h C . . = $0.06 D i j + y.T $0.035 5 y i 5 $0.046 I J I ij '

6uiqadwo3 40 xapu; quasa~d aqq oq ( +

'k3rq)dxa 1 + Wy 4

bukppe dq ' yq 1 + w ayq 'aqks Mau ayq q3alja~

oq paqsnrpe sk saiqkun~~oddo 6ukqadwo3 6ukq3alja~ wJaq ayl

.paq3alja~ d~ksea si aJLs Mau e 40 a3uasa~d ayJ 'a~~n3 puewap

paqewkqsa ayq pue ' xapu ssaua~ kq3e~q~e ayq ' awkq laAeJq

'Js03 LaAeJq uo uokqew~o~ug ayq uahkg :sagngTgsqns (S

.paJewkqsa aq plnoys aJks

pasodo~d ayq OJ u~6~~o y3ea WOJJ awiq LaAeq ayl :auT,z (p

'qso3 dk~~ punoJ eqide3 ad a6e~a~e ayq oquk paqJaA

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-e l.ndod y3ea wo~j a3ue~skp 40 squawaJnsea~ :gso2 -yanez,z (g

-aJks pasodo~d ayq 40 asn aqenleha

OJ pasn aq plnoM eaJe qayJew ayq ukyqk~ aJe Jeyq sasod~nd uok~

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dpnqs LLnj ayq d~~eiqku~ :paw gayzeh~ aw 30 UoTgeauTraa (Z

.pa~ndwos s k ''y ' SsauaA kq3e~~qe 40 xapuk ayq ' sa3ua~ya~d

Jasn 40 Ka~~ns pa~epdn pue aqks pasodo~d ayq Je sak~k~g3ej

pauueld ay3 uo paseg :WTS MaN ayg 30 uo;rge~g;rsser~ (r

' jjoapeJq a~kqe3k ~d lnw ayq JOJ pue

aJe 1 + w a3ks oq sq~s~h Leqoq 'qsos A~eqauow oq squawaJJuk

SnOLJPh JOJ 'Sk JPyl 1 +Wy pug 61 + W 'k 61 + W 'La JO~

sanleh pazksayqodAy uo paseq 'ah~ns qkskh aqe6a~66e ayq 6ukhk~

-ap Kq ALJPL~III~S paqenleha s!. (yq(1 + W) ayq) aqbs Mau y

-[aha1 ~enq3~ ayq qe queqsuo3 play aJe salqepeh Jayqo pup

awkq ipaquaura~3uk sk 'qso3 dyq pazk le~aua6 ayq JO goso$ cquauoduros A~eqauour ayq Aluo .sqkjauaq aqLs JO aJnseaur

ayq aq oq uayeq sb ah~n3 sky3 Japun eaJe ay1 apunoj sk ah~ns

pueurap aqks aqe6a~66~ ue '!: aqbs 6ulsn LenpLhkpuk 43ea 03

(!:Io) qso3 K~eqauow ayq ub squawaJ3uk snobJen 6ubqelnqsod ~q

-[' uah~6 e JOJ

'u '2 '1 = 'su~6po ~[e Jaho 6u~wurns Xq punoj aq ues

C aqks ~elns~q~ed auo oq sqks~h aqe6a~66e ayq qeyq aqou 'qs~~j

.a~npaso~d qsos [aheJq aldurks ayq jo poyqaur ah~ns puewap

aqis a6eqs puosas ayq oq elp pubs sb slapour uobqenba-auo ayq

uk uokqenleha qkjauaq 40 poyqaur ayl :uorqemrqsz qrgauaa (9

-saqks 6ubqskxa A~quasa~d ayq 40 ysea 07 sdpq 6u&3npa~ aliyM

eaJe qayJeur ayq ub sdyq Leqoq paseamu! uk q~nsa~ LLLM aqks

Mau e 's~aqaure~ed paqeurkqsa ayq jo sanleh a lqisneld yq~+, '

evaluated by t h e f o l l owing equat ion :

B e n e f i t s a r e approximated by t h e area under t h i s cu rve .

The Cesar io and Knetsch (1976) s tudy d i d n o t eva lua te a

s p e c i f i c proposed s i t e . They do p resen t es t imates of v i s i t a -

t i o n a t e x i s t i n g s i t e s generated by t h e i r model, and compare

these t o ac tua l at tendance. They a l s o p resen t es t imates o f

b e n e f i t s de r i ved f rom e x i s t i n g s i t e s .

I n choosing whether t o use t h e s imp le t r a v e l c o s t model

(Examples 1, 2, and 3 ) o r t h e r e g i o n a l t r a v e l c o s t model s, i t

i s necessary t o cons ide r t h e e r r o r s t h a t a r i s e f rom misspec i -

f i c a t i o n of equa t ions . I n p a r t i c u l a r , i t i s necessary t o

judge t h e ser iousness o f t h e e r r o r s i n use and b e n e f i t p r e d i c -

t i o n t h a t w i l l a r i s e f rom the omiss ion o f s i g n i f i c a n t v a r i a b l e s

f rom cons ide ra t i on . Our conc lus ion i s t h a t t h e omiss ion o f

any c o n s i d e r a t i o n o f t ime i s a source o f e r r o r which should be

c o r r e c t e d f o r , even i f t h e r e g i o n a l models a re n o t used.

F a i l u r e t o do so w i l l tend t o r e s u l t i n underes t imat ion of

b e n e f i t s o f proposed o r e x i s t i n g s i t e s . The e x p l i c i t cons id-

e r a t i o n o f s u b s t i t u t e s i t e s i s a1 so p r e f e r a b l e . The e r r o r s

t h a t a r i s e f rom f a i l u r e t o cons ide r t h e compe t i t i on o f o t h e r

s i t e s w i l l be most severe when many s u b s t i t u t e s e x i s t . F a i l u r e

t o cons ider such c o m p e t i t i o n f rom s u b s t i t u t e s i n s i t u a t i o n s

where many s u b s t i t u t e s e x i s t w i l l l e a d t o o v e r e s t i m a t i o n of

t h e use and b e n e f i t s o f proposed s i t e s . I n o r d e r t o cons ider

s u b s t i t u t e s s i t e s , i t i s necessary t o use t he r e g i o n a l t r a v e l

c o s t models o r a r e l a t i v e l y c rude method such as t h a t d e s c r i b e d

i n t h e e a r l i e r Example 3. An i n d i c a t i o n o f t h e n a t u r e o f

s p e c i f i c a t i o n e r r o r s i s ill u s t r a t e d i n t h e f o l l o w i n g two

exarnpl es .

T i m e

E s t i m a t i n g an e q u a t i o n w i t h r e l e v a n t v a r i a b l e s o m i t t e d can

r e s u l t i n b i a s i n t h e e s t i m a t e s o f t h e c o e f f i c i e n t s o f t h e r e -

m a i n i n g v a r i a b l e s (Johns ton 1972, pp. 168-169). The e x t e n t o f

t h e b i a s depends on t h e s i g n i f i c a n c e o f t h e o m i t t e d v a r i a b l e

and on t h e c o r r e l a t i o n between t h e o m i t t e d and r e t a i n e d v a r i -

a b l e . The s t r o n g e r t h e c o r r e l a t i o n , t h e g r e a t e r t h e b i a s . I f

monetary t r a v e l c o s t s and t r a v e l t i m e a r e p o s i t i v e l y c o r r e -

l a t e d ( i .e., t h o s e w i t h h i g h t r a v e l c o s t s have h i g h t r a v e l

t i m e ) , t h e s l o p e o f t h e t r i p demand c u r v e may be expected t o

be underes t ima ted ( i .e., t h e t r u e c u r v e i s more n e g a t i v e l y

s l o p e d ) when t r a v e l t i m e i s o m i t t e d .

I t can be r e a s o n a b l y argued t h a t t r a v e l t i m e i s a

s i g r r i f i c a r ~ t v a r i a b l e , n e g a t i v e l y i n f l u e n c i n g r e c r e a t i o n demand.

Time, a s w e l l as money, may be a c o n s t r a i n t on r e c r e a t i o n

a c t i v i t y , s i n c e a s i g n i f i c a n t amount o f t i m e may have t o be

spen t t r a v e l i n g t o t h e s i t e . A l s o t h e c o r r e l a t i o n between

monetary t r a v e l c o s t s and t r a v e l t i m e i s observed t o be h i g h

and p o s i t i v e . People frorn rrlore d i s t a n t zones must i n genera l

spend more t i m e and more money g e t t i n g t o a s i t e , t h a n peop le

who l i v e c l o s e r . As a r e s u l t , i t shou ld be expected t h a t when

t i m e i s i gnored , t h e t r a v e l c o s t method would e s t i m a t e t o o

f l a t a t r i p demand c u r v e .

U n f o r t u n a t e 1 y, t h e c o r r e l a t i o n o f t r a v e l c o s t and t r a v e l

t i m e i s l i k e l y t o be so n e a r l y p e r f e c t t h a t i t i s n o t p o s s i b l e

t o es t ima te t h e separate e f f e c t s o f t h e two v a r i a b l e s . ' ' As a

r e s u l t , i t has become a common procedure t o assume a known

t r adeo f f between t ime and money. No general l y accepted formu-

l a t i o n o f t h i s t r a d e o f f has y e t been e s t a b l i s h e d i n e m p i r i c a l

work. The l i n e a r t r a d e o f f i s most w i d e l y used and seems t o be

most suppor tab le . An example o f t h e use o f t h i s method i s

presented below. The example extends t h e s imp le t r a v e l c o s t

method of Example 1 and uses t h e same data, w i t h t h e a d d i t i o n

o f t r a v e l t imes .

EXAMRE 4: THE SIMPLE TRAVEL COST MODEL- CORRECTED FOR TRAVEL TIME

Some h y p o t h e t i c a l da ta a r e presented below (Tab1 e 9 ) r ep ro -

duc ing t h e da ta o f Example 1, w i t h t h e a d d i t i o n o f a column

p resen t i ng t r a v e l t imes f rom each o r i g i n t o S i t e I.

TABLE 9 . DATA FOR THE SIMPLE TRAVEL COST METHOD INCLUDING TRAVEL TIME

Number V i s i t s o f Pe r

O r i g i n Popu la t ion V i s i t s Cap i ta T r i p Cost T rave l Time

A 1,000 2,000 2 $8 3.2 h r s

C 3,000 24,000 8 $2 .8 h r s

As before, we assume t h a t a l l users come f rom one of t h r e e

towns. The s i t e e n t r y f e e i s taken t o be zero. I n o rde r t o

d e r i v e t h e t r i p demand cu rve ( t h e f i r s t - s t a g e demand cu rve ) i t

i s necessary t o assume a t ime-money t radeo f f . Here, i t i s

EX hat i s , t he problem o f mu1 t i c o l 1 i n e a r i t y e x i s t s ( ~ o h n s t o n 1972). Some researchers have suggested t h a t i f i n d i v i d u a l data were used f o r e s t i m a t i o n ( r a t h e r than the more common procedure which uses aggregated zones such as c o u n t i e s ) , then t h e problem migh t be reduced. I f p o s s i b l e t h i s would be t he most, s a t i s f a c t o r y approach. See Brown and Nawas (1 973), Gum and M a r t i n (1975), and S u b l e t t e and M a r t i n (1975).

assumed t h e t radeo f f i s l i n e a r . We assume t h e gene ra l i zed

t r i p c o s t frorn o r i g i n i t o S i t e I, KiI, i s as g i ven below,

w i t h .4 r e p r e s e n t i n g some f r a c t i o n (about 1 /4 t o 1 /3 i s reason-

a b l e ) o f t h e wage r a t e o f users .

S t a g e 1-Trip Demand

A t r i p dernar~d equa t i on c o n s i s t e n t w i t h t he above da ta can

be expressed by t h e equa t ion :

o r upon s u b s t i t u t i n g t h e assumed form o f t he gene ra l i zed t r i p

c o s t t h i s i s expressed as :

Where :

j = I , i = A , B , C

v = v i s i t s per c a p i t a from o r i g i n i t o s i t e j i j C i i = the t r a v e l cost o f t r a v e l i n g from i t s o r i g i n i t o

' J s i t e j . T,, = the t r a v e l t ime i n hours o f t r a v e l i n g from o r i g i n

I ' i t o s i t e j The appropr ia teness o f t h i s demand f u n c t i o n i s most e a s i l y

seen by s u b s t i t u t i n g i n t h e da ta f rom Table 9, t o check f o r

cons is tency . I f t r i p demand curves a r e drawn r e l a t i n g v i s i t s

t o t r a v e l cos t , then each o r i g i n w i l l have a d i s t i n c t demand

curve . That i s , t h e t r a v e l v a r i a b l e i s eva lua ted a t i t s ac tua l

l e v e l f o r each o r i g i n and t h e f o l l o w i n g t h r e e t r i p demand

curves (Tab le 10) a r e found. The demand curves f o r each

o r i g i n a r e drawn i n F i gu re 9. The dashed 1 i n e i n F i gu re 9

i s t h e e r roneous l y es t imated demand cu rve f rom Example 1,

v i j = 10 - C i j , which i s produced when t h e e f f e c t o f t r a v e l

t i rne i s . i gnored .

TABLE 10. TRIP DEMAND EQUATIONS-TRIPS PER CAPITA VS. TRAVEL COST

O r i g i n E q u a t i o n

A v i j = 10 - .344 (3.2) - ,862 C i j = 8 .9 - .862 C i j

FIGURE 9. THE TRIP DJ3AND CURVE

1 2

Visits P e r Capita

The r e su l t s a r e ea s i l y in terpreted. The " t rue" dernand curve for an individual from or igin C , shown by the sol id l i n e

through C , indicates tha t v i s i t a t i on will not decrease a t

h i g h e r cos t s as f a s t as was p r e d i c t e d by t h e demand cu rve

which i gno res t ime. If e n t r y fees were r a i s e d t o $4 so t h a t

t r i p c o s t s t o i n d i v i d u a l s a t o r i g i n C were $6, t h e y would n o t

reduce t h e i r v i s i t s t o 4, as p r e v i o u s l y p red i c t ed , b u t o n l y t o

4%. Th i s i s because i n d i v i d u a l s a t C do n o t have t o spend as

much t ime t r a v e l i n g as d i d i n d i v i d u a l s a t B who faced a $6

t r i p c o s t and made 4 v i s i t s . The e x t e n t t o which t h e s l ope i s

m ises t imated when t ime i s ignored i s t h e m i s s i n g v a r i a b l e

b i a s . The g r e a t e r t h a t e r r o r t h e poore r t h e es t imates of use

and b e n e f i t s .

S t a g e 2 -Aggregate S i t e Demand

The second s tage cu rve i s developed by t h e method descr ibed

i n Example 1. Demand from each o r i g i n i s eva lua ted a t va r i ous

l e v e l s of a h y p o t h e t i c a l use f ee . The use f e e a l t e r s t h e t r i p

c o s t on l y ; t r a v e l t ime i s n o t a l t e r e d , and i s kep t a t the

a c t u a l l e v e l f ac i ng each o r i g i n . A f t e r c o n s t r u c t i o n o f t h i s

aggregate s i t e demand curve, t h e a rea beneath may be c a l c u l a t e d

and i s a measure o f s i t e b e n e f i t s . Eva lua t i on o f t h i s cu rve

w i l l show ' t h a t t h e same use i s p r e d i c t e d f o r a ze ro fee, w h i l e

a t any h i g h e r f e e t h e use p r e d i c t i o n w i l l be g r e a t e r than t h a t

i n Example 1. Est imated b e n e f i t s w i l l be g r e a t e r ; t h e t o t a l

b e n e f i t s a r e now es t ima ted t o be $132,240, compared t o $1 14,000

i n Example 1. The same conc lus i ons and procedure a r e v a l i d

f o r a p p l y i n g t h i s t r a v e l c o s t model t o a new s i t e .

I n summary, c o r r e c t i o n s f o r t r a v e l t ime a r e e a s i l y made.

There i s no a d d i t i o n a l d i f f i c u l t y i n a p p l y i n g a c o r r e c t l y

s p e c i f i e d rnodel t o a new s i t e . The o n l y a d d i t i o n a l d a t a

needed a r e es t imates o f t r a v e l t ime f rom each p o p u l a t i o n cen-

t e r . Desp i te m i s g i v i n g s about t h e need t o choose a time-money

t r a d e o f f , we f e e l t h a t a 1 i n e a r t r a d e o f f , w i t h t h e va lue o f

t r a v e l t i m e chosen t o be some f r a c t i o n o f t h e wage r a t e , i s an

accep tab le procedure a t p resen t .

The m iss ing -va r i ab le b i a s i s a l s o l i k e l y t o be impo r tan t i f

v a r i a b l e s r e f l e c t i n g t he presence o f s u b s t i t u t e s i t e s a r e

omi t ted . Again, t h e e x t e n t o f t h e b i a s depends on t h e s i g n i f -

icance of t h e om i t t ed v a r i a b l e i n i n f l u e n c i n g demand and on

t h e c o r r e l a t i o n between t h e om i t t ed and r e t a i n e d v a r i a b l e . I f

t h e r e i s a systemat ic p o s i t i v e c o r r e l a t i o n between a v a i l a b i l -

i t y o f s u b s t i t u t e s and d i s tance frorn the s i t e when s u b s t i t u t e s

a r e n o t considered, t h e s lope of t h e t r i p demand curve may be

expected t o be underest imated ( i .e . , t h e t r u e curve has a

s teeper nega t i ve s lope than t he es t imated cu rve ) . If t h e r e i s

sys temat ic nega t i ve c o r r e l a t i o n ( i . e . , those i n d i v i d u a l s

l o c a t e d c l o s e r t o t h e s i t e have a w ider cho ice o f s u b s t i t u t e s ) ,

then t h e r e s u l t o f o m i t t i n g t h e v a r i a b l e i s t o es t imate t o o

s teep a demand curve. As l o n g as s u b s t i t u t e s i t e s a r e a v a i l -

ab le , i t should be expected t h a t t hey a r e indeed s i g n i f i c a n t

i n f l u e n c e s o f demand, and t h a t some e r r o r w i l l r e s u l t from

n e g l e c t i n g t h e i r e f f e c t . The f o l l owing g raph i ca l example

ill u s t r a t e s t h e m iss ing v a r i a b l e b ias .

The f o l l o w i n g g raph i ca l example (F igu re 10 ) i n d i c a t e s t h e

problem t h a t a r i s e s when t r i p cos t s and a v a i l a b i l i t y o f sub-

s t i t u t e s a re p o s i t i v e l y c o r r e l a t e d and t h e demand f u n c t i o n i s

m i s s p e c i f i e d by i g n o r i n g s u b s t i t u t e s . The r e s u l t i s s i m i l a r

t o t h a t o f t h e p rev ious example on t r a v e l t ime.

We may observe use-po in ts A, B, and C corresponding t o t he

da ta f rom Example 1 . The dashed 1 i n e represen ts t h e demand

curve which would be est imated, n e g l e c t i n g s u b s t i t u t e s . Using

t h i s curve, we would p r e d i c t t h a t i f the t r i p c o s t s were

r a i s e d t o $6 f o r i n d i v i d u a l s a t o r i g i n C t hey would make 4

t r i p s . That i s , we p r e d i c t they would make t h e same number o f

t r i p s as t h e more d i s t a n t l y l o c a t e d i n d i v i d u a l s a t B, who

p r e s e n t l y face t r i p c o s t s o f $6. However, i f s u b s t i t u t e s i t e s

a r e more r e a d i l y a v a i l a b l e a t a g r e a t e r d i s t a n c e f rom the s i t e

under s tudy , then t h e d e c l i n e i n t r i p s w i t h d i s t a n c e from t h e

s i t e i s due t o b o t h t h e h i g h money c o s t of t r a v e l and t h e

w i d e r c h o i c e o f s i t e s . Tha t i s , an i n d i v i d u a l a t B m i g h t have

made 6 t r i p s t o t h e s i t e , r a t h e r than 4, if he had n o t had

such a wide c h o i c e o f s u b s t i t u t e s . I n p a r t i c u l a r , i f he had

t h e same c h o i c e of s u b s t i t u t e s as i n d i v i d u a l s a t o r i g i n C,

t hen he m i g h t have consumed a t B ' .

FIGURE 10. THE TRIP DEMAND CURVE

Visits Per Capita

Such b e h a v i o r m i g h t l e a d t o t h e demand curves i l l u s t r a t e d i n

F i g u r e 10. Each demand c u r v e r e p r e s e n t s how users a t each

o r i g i n would r e a c t t o a change i n t r i p c o s t when a1 t e r n a t i v e s

a r e h e l d cons tan t a t t he a c t u a l l e v e l . The shape o f these

demand curves w i 11 depend g r e a t l y upon the p a r t i c u l a r speci f i - c a t i o n of t h e equat ion and the " s u b s t i t u t e " v a r i a b l e . How-

ever, as l ong as t he p o s i t i v e c o r r e l a t i o n o f s u b s t i t u t e s and

t r i p cos t s ho lds, i t i s c e r t a i n t h a t a t p o i n t s A, B, and C,

t he new demand curves w i l l be s teeper than the m isspec i f i ed

demand curve o f Exampl e 1 .

The r e s u l t s f o r b e n e f i t and use e s t i m a t i o n a r e n o t c l e a r

c u t . Rather, e r r o r w i l l depend on the cu rva tu re o f the t r u e

demand curves, t he e x t e n t t o which t he a l t e r n a t i v e s a r e per -

f e c t s u b s t i t u t e s (see Example 3) , t he l o c a t i o n of t he popula-

t i o n r e l a t i v e t o t he s i t e , and the e x t e n t o f the c o r r e l a t i o n

between d i s tance and a v a i l a b i l i t y o f s u b s t i t u t e s . Examples

can be cons t ruc ted which show e r r o r s i n e i t h e r d i r e c t i o n . I n

t h e a p p l i c a t i o n t o new s i t e s , i t i s most 1 i k e l y t h a t use and

b e n e f i t s w i l l be ove rs ta ted if an improper ly s p e c i f i e d demand

curve i s a p p l i e d t o a s i t e which faces compe t i t i on f rom many

s u b s t i t u t e s .

Methods such as those descr ibed under reg iona l t r a v e l c o s t

es t ima to rs e l i m i n a t e t he source o f b i a s and a r e recommended

f o r t h a t reason.

The t r a v e l c o s t method i s an approach t o r e c r e a t i o n b e n e f i t

e s t i m a t i o n t h a t i s w i d e l y accepted and re1a t ive l .y e a s i l y appl i e d .

Among methods which use observat ions o f behav io r t o impute

b e n e f i t s , t he t r a v e l c o s t methodology i s t he best . C i c c h e t t i

(1 969) concl udes :

I n summary, the t r a v e l - c o s t approach i s a s i g n i f i - can t t h e o r e t i c a l e f f o r t aimed a t meaningful p o l i c y recommendat ions t o es t imate bo th 'demand equat ions

and d o l l a r b e n e f i t s generated by ou tdoor r e c r e a t i o n . As the methodology stands, i t represen ts bo th a t h e o r e t i c a l l y v a l i d and e m p i r i c a l l y f e a s i b l e method.

The v a r i a t i o n s of t h e t r a v e l c o s t procedure may seem t o have

become somewhat more complex i n appearance as t h e methods t o

deal w i t h t ime, a l t e r n a t i v e s , and s i t e q u a l i t y have been

developed. However, t h e r e s u l t i n g computat ion necessary t o

use t h e models should n o t be s i g n i f i c a n t l y more d i f f i c u l t , and

t he advantages i n more accura te b e n e f i t eva l u a t i o n should be

g r e a t . Even t h e most bas i c t r a v e l c o s t procedure should be

f a r s u p e r i o r t o t h e p resen t p r a c t i c e o f choosing a r b i t r a r y

values w i t h o u t a t t emp t i ng a demand ana l ys i s . The p resen t need

i s f o r a program of da ta ga the r i ng and a p p l i c a t i o n o f e x i s t i n g

demand methodology t o s i t e s i n severa l r e p r e s e n t a t i v e market

r eg ions . I t i s p robab ly t he case t h a t , f o r s i t e s f o r which

t h e t r a v e l c o s t method i s appropr ia te , demand f o r r e c r e a t i o n

t r i p s can be est imated, u s i n g e x i s t i n g methodology, w i t h an

accuracy t h a t equals o r exceeds t h a t u s u a l l y expected from

demand s tud ies f o r o t h e r goods. Th i s i s a r e s u l t o f t he ve ry

use fu l c h a r a c t e r i s t i c o f r e c r e a t i o n , i n t h a t t r a v e l c o s t i s

t h e major component o f t h e c o s t o f consumption. T rave l cos t s

can be expected t o have a wide v a r i a t i o n over a c ross s e c t i o n

o f i n d i v i d u a l s , making accura te e s t i m a t i o n o f t h e response t o

c o s t d i f f e r e n t i a l s q u i t e easy.

A p p l i c a t i o n o f t r a v e l c o s t demand curves t o a new s i t e i s

i n most cases a r e l a t i v e l y s imple ma t te r . I t should be empha-

s i zed t h a t i t i s n o t necessary t o es t ima te a new t r a v e l c o s t

model f o r each new s i t e . Rather, a l l t h a t i s necessary i s

minimal da ta c o l l e c t i o n f o r use i n e x i s t i n g models. The p ro -

cedure i s i n a l l cases e q u i v a l e n t t o d e r i v i n g an aggregate

s i t e demand curve from i n d i v i d u a l t r i p demand curves. Some

care must be taken t o see t h a t s i t e - s p e c i f i c demand i s con-

s idered . Models such as t h a t o f B u r t and Brewer (1971) e s t i -

mate demand f o r a t ype o f s i t e , w h i l e t h e model developed by

Cesar io and Knetsch (1976) es t imates t he demand f o r s p e c i f i c

s i t e s .

The t r a v e l c o s t method o n l y eva lua tes user b e n e f i t s , and

o n l y t h i s i s s u e has been addressed. I f t h e r e a r e s i g n i f i c a n t

non-user b e n e f i t s o r l o s s o f b e n e f i t s a r i s i n g d i r e c t l y f rom

t h e s i t e ( inc reased l a n d va lues f o r nearby res iden t s , env i ron-

mental qual i t y changes) these shoul d be eval uated separate1 y .

Sorne problems a r e i n h e r e n t i n t h e t r a v e l c o s t method. It w i l l

always y i e l d t h e b e n e f i t s o f t he whole t r a v e l exper ience

r a t h e r than f o r s i t e use a lone. T h i s cannot be c o r r e c t e d w i t h -

o u t e v a l u a t i n g and sepa ra t i ng o u t t h e b e n e f i t s , r ece i ved o r

l o s t f rorr~ i n t e r v e n i n g o p p o r t u n i t i e s o r t r a v e l . Except f o r

unusual cases, t h i s should n o t be a ma jo r source o f e r r o r .

The t r a v e l c o s t method has a number o f advantages over t he

survey method, and i s recommended f o r use i n a lmos t a l l cases.

The d i r e c t i o n f o r f u r t h e r research should be i n accumulat-

i n g b e n e f i t s t u d i e s i n r e p r e s e n t a t i v e market areas us ing t he

bes t methods which a r e p r e s e n t l y a v a i l a b l e . The r o l e o f con-

ges t ion , t h e form o f demand equat ions, i n d i c e s o f qual i t y and

s u b s t i t u t e s , i n d i v i d u a l d i f f e r e n c e s , t h e o r e t i c a l f o rmu la t i ons ,

and t h e r e l a t i o n between t he t ime and income c o n s t r a i n t s a l l

would b e n e f i t f rom f u r t h e r research. However, wide exper ience

w i t h t h e t r a v e l c o s t method i s a l r eady a v a i l a b l e and i t s use-

f u l n e s s i s c l e a r . There i s no j u s t i f i c a t i o n f o r con t inued use

o f t h e i n t e r i m u n i t day va l ues.

SUMMARY AND COMMENTS

1 ) The ma jo r r e l e v a n t v a r i a b l e s t o i n c l u d e i n t he t r a v e l

c o s t method a r e t r i p cos t s t o t h e s i t e under s tudy and t o sub-

s t i t u t e s i t e s , a t t r i b u t e s o f t he s i t e r e l a t i v e t o s u b s t i t u t e

s i t e s , and t ime c o s t o f a t r i p .

2 ) If significant variables that are strongly correlated

with the included variables are omitted from the travel cost

method, there will be some error in the benefit estimates.

3) I t i s preferable to account for the interrelat ion among

s i t e s within a market area. Different s i t e s compete for the same potential customers. Joint estimation of the demand for

a l l s i t e s in the market area of the study s i t e accounts for

the interrelat ions. Regional estimators are preferable.

4 ) The proper unit of quantity i s t r i p s ( v i s i t s ) .

5 ) Estimation of separate travel cost demand curves for

different ac t iv i t i e s can lead to double counting and should be

avoided. Experience indicates,however, that i t may be desir-

able to estimate day use t r i p s separately from longer v i s i t s .

6 ) Benefits can be approximated by the area under the s i t e -

specific demand curve.

7 ) To apply the method to a new s i t e i s relat ively easy.

The demand curve estimated for a similar s i t e , preferably

within the same market region as the new s i t e , i s applied to

the population which will use the new s i t e . The distribution

of the population re la t ive to the new s i t e and existing sub-

s t i t u t e s , the socioeconomic characteristics of the population, and the re la t ive quality of the new s i t e will influence the

estimated benefits.

CHAPTER 6 S U W R Y OF ECQTlENDATI flJS CCOCEWI I NG VAUlATlON CONCEPTSJ

VAWRTION FETHODSJ AN AGENCY PROCEDURES

The c o r r e c t use o f t h e b e n e f i t - c o s t c r i t e r i o n should be t o

compare the gross p o s i t i v e b e n e f i t s generated by a p r o j e c t ,

measured i n terms of t o t a l w i l l i n g n e s s t o pay, t o t he c o s t s o f

b i d d i n g t h e necessary resources away f rom a l t e r n a t i v e uses, as

measured by t h e va lue o f these resources i n t h e i r bes t l i k e l y

a l t e r n a t i v e use. When a p l an c rea tes a d d i t i o n a l r e c r e a t i o n a l

o p p o r t u n i t i e s , t h e a p p r o p r i a t e concept f o r e s t i m a t i n g t h e con-

t r i b u t i o n o f t h a t i nc rease i n o u t p u t t o n a t i o n a l economic

development i s t he w i l l i n g n e s s o f users t o pay. W i l l i ngness

t o pay should be i n t e r p r e t e d as w i l l i n g n e s s t o pay e n t r y o r

use fees f o r t h e s p e c i f i c s i t e , area, o r resource i nvo l ved

w i t h t he a l t e r n a t i v e be ing evaluated. W i l l i ngness t o pay i n -

c ludes e n t r y and use fees a c t u a l l y pa id p l u s an es t ima te of

t he amount i n excess o f these charges t h a t users cou ld be

induced t o pay. Th i s i s a measure o f gross user b e n e f i t s .

The cos t s o f a p r o j e c t should be measured as the va lue o f

the r e q u i r e d resources i n t h e i r b e s t e x i s t i n g use. I t i s

common t o cons ider t h e o p p o r t u n i t y c o s t o f l a b o r and c a p i t a l

t o be mere ly t h e i r monetary cos t . Th i s payment should ade-

q u a t e l y r e f l e c t t h e va lue o f these i n p u t s i n a l t e r n a t i v e uses.

T h e i r value, then, i s t h e rr~inirr~um corr~pensation r e q u i r e d t o

a t t r a c t t h e i n p u t s away f rom a l t e r n a t i v e uses.

S i m i l a r l y , l and and water i n p u t s should be measured by t he

minimurn compensation r e q u i r e d by those who have ownership

r i g h t s t o these resources i n t h e i r p resen t form. We d e f i n e

t h i s compensation as t h e " w i l l ingness t o s e l l " measure o f

va l he. When t h e resources a r e p r e s e n t l y owned by t h e pub1 i c ,

t h e a p p r o p r i a t e va lue i s t h e w i l l i n g n e s s of users t o g i v e up

t h e o p p o r t u n i t y t o use t h e resources i n t h e i r p resen t s t a t e .

When t h e l and and wate r resources i n t h e i r p resen t form a r e

p r i v a t e l y owned, t h e p r i c e a t which t h e owner f r e e l y s e l l s t h e

l a n d i s most 1 i k e l y an adequate r e f l e c t i o n o f t h e va lue of t h e

l a n d i n i t s e x i s t i n g u s e . l

I f c o s t and b e n e f i t s a r e measured i n t h i s manner, t h e f u l -

f i l lnient o f t h e b e n e f i t - c o s t c r i t e r i o n assures t h a t those who

g a i n a r e w i l l i n g t o pay enough t o adequa te ly compensate those

who i n c u r c o s t s . Tha t i s , i t would be p o s s i b l e t o a r range

compensation payments so t h a t no one was made worse o f f and a t

l e a s t some people c o u l d be made b e t t e r o f f . Thus t h e use o f

w i l l i n g n e s s t o s e l l t o measure c o s t s i s f u l l y c o n s i s t e n t w i t h

t h e use of w i l l i n g n e s s t o pay t o measure inc reased b e n e f i t s ,

and i s i n f a c t bas i c t o t h e s p i r i t o f b e n e f i t - c o s t a n a l y s i s .

Whether those who i n c u r c o s t s have any l e g a l entitlement t o

a c t u a l r e c e i p t o f compensation i s q u i t e ano the r mat te r ; here

t h e measure o f w e l f a r e ga ins and losses i s a t i ssue .

W i l l i n g n e s s t o pay, t h e measure o f gross consumer b e n e f i t s ,

may be approximated by t h e sum o f a c t u a l o n - s i t e expend i tu res

p l u s consumers' su rp l us . Th i s may be eva lua ted as t h e area

under t h e demand cu rve up t o t h e q u a n t i t y demanded. W i l l i n g -

ness t o s e l l as a measure o f n e t b e n e f i t s l o s t may be approx i -

mated by consumers' su rp lus , t h e area under demand cu rve above

p r i c e . However, i t should be s t a t e d t h a t f o r e s p e c i a l l y de-

s i r a b l e o r un ique resources, t h i s measure may s i g n i f i c a n t l y

unde rs ta te t h e a c t u a l va l ue o f l o s t b e n e f i t s .

A measure o f consumers' su rp l us ga ined f rom p a r t i c u l a r

r e c r e a t i o n o p p o r t u n i t i e s can be developed f rom a demand cu rve

o r schedule which i n d i c a t e s t h e q u a n t i t y o f use t h a t buyers

( p a r t i c i p a n t s ) i n a market would purchase a t each p r i c e . I n

l ~ o r an excep t ion , see p. 13, n o t e 4, above.

t h e absence of market ev idence o f t h e demand f o r r e c r e a t i o n

( i . e . , t he q u a n t i t y o f r e c r e a t i o n consumed over a wide range

o f user fees) , i t i s necessary t o es t ima te demand and va lue by

i n d i r e c t approaches such as t h e t r a v e l c o s t and survey methods.

The t r a v e l c o s t method es t ima tes a dernand cu rve f o r s p e c i f i c

r e c r e a t i o n o p p o r t u n i t i e s assoc ia ted w i t h a s i t e o r area. An

es t ima te of consumers' su rp l us i s then ob ta ined by c a l c u l a t i n g

t h e a rea under t h e demand curve. Wi th t h e survey method, a

sample o f users i s ques t ioned i n o rde r t o develop es t imates o f

an i n d i v i d u a l ' s a c t u a l v a l u a t i o n . These es t ima tes may be

though t o f as p o i n t s on a cu rve s i m i l a r t o a demand curve f o r

a r e c r e a t i o n o p p o r t u n i t y , b u t i t i s n o t necessary t o c o n s t r u c t

such a cu rve . Rather, es t ima tes o f i n d i v i d u a l va lues a r e

summed t o f i n d t o t a l n e t b e n e f i t s .

The survey and t r a v e l c o s t methods have been used t o

develop models f o r e s t i m a t i n g t h e w i l l i n g n e s s o f users t o pay

f o r a s i t e , resource, o r area. These methods can, i f p r o p e r l y

appl i ed , deve lop model s t h a t w i l l p r o v i d e es t i r r ~a tes o f v a l ue

t h a t a r e h i g h l y u s e f u l f o r p l ann ing purposes. The p r e c i s i o n

o f these es t ima tes may equal o r exceed t h a t f o r va lues o f

o t h e r ou tpu t s of p r o j e c t s i n v o l v i n g wate r and r e l a t e d l a n d

resources.

I t i s n o t necessary t o under take a new t r a v e l c o s t o r su r -

vey s tudy f o r each p r o j e c t o r a c t i o n t h a t i s eva lua ted .

Rather, these methods can be developed a t e x i s t i n g s i t e s ,

then a p p l i e d t o es t ima te w i l l i n g n e s s t o pay f o r new f a c i l i t i e s

and s i t e s . I t w i l l o f t e n be p o s s i b l e t o use a p a r t i c u l a r

model t o eva lua te a number o f p r o j e c t s . I n each case i t i s

o n l y necessary t o ga the r a p p r o p r i a t e da ta t o e n t e r i n t o t h e

model. Once a model i s s e l e c t e d f o r use, t h e appropr ia teness

o f t h e model f o r t h e s i t u a t i o n t o which i t i s a p p l i e d must be

c l e a r l y documented. Th i s documentat ion must convey a c l e a r

understanding of t h e model, t h e r e c r e a t i o n o p p o r t u n i t i e s , and

t h e p o p u l a t i o n o f users t o which i t i s be ing a p p l i e d .

T h e S u r v e y Method

1 ) The survey method i s a t p resen t more accep tab le f o r

e s t i m a t i n g w i l l ingness t o pay than f o r e s t i m a t i n g w i l l ingness

t o s e l l . It i s recommended t h a t more research be devoted t o

procedures f o r e s t i m a t i n g w i l l i n g n e s s t o s e l l .

2 ) Equat ions shou ld be developed t o express t h e r e l a t i o n -

s h i p between w i l l i n g n e s s t o pay and c h a r a c t e r i s t i c s o f users

based on i n f o rma t i on gathered f rom t h e survey o f users . A

l a r g e r survey should be aimed a t e s t i m a t i n g t h e d i s t r i b u t i o n

o f these c h a r a c t e r i s t i c s over t h e user popu la t i on .

3 ) The b e n e f i t s a t p lanned s i t e s and f a c i l i t i e s need t o be

eva lua ted us i ng i n t e r v i e w s f rom e x i s t i n g s i t e s . I n o r d e r t h a t

w i l l ingness- to-pay equa t ions may be appl i e d t o proposed s i t e s

which may be l o c a t e d d i f f e r e n t l y w i t h r espec t t o users and

s u b s t i t u t e s i t e s , we' recommend t h a t t r a v e l d i s t ance , and ac-

c e s s i b i 1 i t y t o s u b s t i t u t e s be cons idered as exp lana to r y v a r i -

ab l es i n t h e w i l l i n g n e s s - t o - p a y equa t ion . A p p l i c a t i o n s o f t h e

t r a v e l c o s t method i l l u s t r a t e t h e impor tance o f these v a r i -

ab l es i n i n f l uenc ing i n d i v i d u a l w i l l ingness t o pay.

4 ) The survey ques t i ons should r e l a t e c l e a r l y t o s p e c i f i c

r e c r e a t i o n a c t i v i t i e s t h a t a r e t o be a f f e c t e d by a management

a l t e r n a t i v e . That i s , i t should be e x p l i c i t l y s t a t e d t h a t ,

when e s t i m a t i n g w i l l i n g n e s s t o pay t h e respondent shou ld con-

s i d e r t h e a p p r o p r i a t e range o f s u b s t i t u t e s i t e s and a c t i v i t i e s .

Cau t ion shou ld be used t h a t r e s u l t s a r e n o t a p p l i e d inappro -

p r i a t e l y t o proposed changes.

5 ) I n s t r u c t i o n s and ques t i ons should be f o rmu la ted t o a v o i d

b i ased responses which rnight r e s u l t f rom t h e respondent

answering i n a manner which he perce ives m i g h t f u r t h e r h i s

s e l f - i n t e r e s t . The respondent should be p laced i n a r e a l i s t i c

d e c i s i o n framework t h a t s t i m u l a t e s a thought p a t t e r n which

approximates t he market process.

6 ) I t i s bes t t o survey a c t u a l b e n e f i c i a r i e s on ly , i n o rde r

t o reduce t h e h y p o t h e t i c a l n a t u r e o f t he ques t ion ing .

7 ) For s i t e s which i n v o l v e m u l t i p l e v i s i t s and v i s i t s o f

d i f f e r e n t leng th , c a u t i o n should be taken t h a t a t r u l y r ep re -

s e n t a t i v e sample of v i s i t s and v i s i t o r s i s chosen.

8 ) I n some cases t h e bes t u n i t eva lua ted may be t he s i n g l e

t r i p . I n o t h e r c i rcumstances, i t may be d e s i r a b l e t o va lue a

season o f a c t i v i t y .

T h e T r a v e l C o s t M e t h o d

1 ) The ma jo r r e l e v a n t v a r i a b l e s t o i n c l u d e i n t he t r a v e l

c o s t method a r e t r i p c o s t s t o t h e s i t e under s tudy and t o

s u b s t i t u t e s i t e s , a t t r i b u t e s o f t h e s i t e r e l a t i v e t o sub-

s t i t u t e s i t e s , and t ime c o s t o f a t r i p .

2 ) If any s i g n i f i c a n t v a r i a b l e s which a r e s t r o n g l y c o r r e -

l a t e d w i t h t h e i nc l uded v a r i a b l e s a r e om i t t ed from the t r a v e l

c o s t model, t h e r e w i l l be some e r r o r i n t h e b e n e f i t es t imates .

3 ) I t i s p r e f e r a b l e t o account f o r t he i n t e r r e l a t i o n among

s i t e s w i t h i n a market area. D i f f e r e n t s i t e s compete f o r t he

same p o t e n t i a l customers. J o i n t e s t i m a t i o n o f t h e demand f o r

a l l s i t e s i n t h e market area o f t he s tudy s i t e accounts f o r

t h e i n t e r r e l a t i o n s . Regional es t ima to rs a r e p r e f e r a b l e .

4 ) The p roper u n i t o f q u a n t i t y i s t r i p s ( v i s i t s ) .

5 ) Es t ima t i on o f separa te t r a v e l c o s t demand curves

f o r d i f f e r e n t a c t i v i t i e s can l e a d t o double coun t i ng and

should be avo ided. Exper ience i n d i c a t e s , however, t h a t i t may be d e s i r a b l e t o es t ima te day use t r i p s s e p a r a t e l y f rom l o n g e r

v i s i t s .

The t r a v e l c o s t method has a number o f advantages over t h e

survey method. Some o f t h e ma jo r advantages a r e as f o l l o w s :

1 ) An es t ima te of use o f a proposed s i t e i s developed as

w e l l as an es t ima te of t o t a l w i l l i n g n e s s t o pay. Wi th t h e

survey method, a separate es t ima te o f use i s r e q u i r e d i n add i -

t i o n t o t h e e s t i m a t e o f i n d i v i d u a l w i l l i n g n e s s t o pay i n o r d e r

t o es t ima te t o t a l w i l l i n g n e s s t o pay.

2 ) The t r a v e l c o s t method has been appl i e d t o r e c r e a t i o n

b e n e f i t e s t i m a t i o n i n f a r more ins tances than has t h e survey

method. Consequent ly, t h e r e i s a l a r g e r arnount o f i r ~ f o r r n a t i o n

a v a i l a b l e on how t o a p p l y t h e method most e f f e c t i v e l y t o

r e c r e a t i o n b e n e f i t e s t i m a t i o n than i s t he case w i t h t h e survey

method.

3 ) The t r a v e l c o s t method i s based on obse rva t i on o f a c t u a l

behav io r o f r e c r e a t i o n i s t s r a t h e r than t h e i r responses t o

ques t ions concern ing h y p o t h e t i c a l c i rcumstances. Consequently,

t h e t r a v e l c o s t method tends t o y i e l d more r e l i a b l e and con-

s i s t e n t es t ima tes o f va lue.

4 ) Data ga the r i ng f o r t h e t r a v e l c o s t method i s e a s i e r t o

accompl i s h w i t h f i e l d personnel than i s t h e case w i t h t he su r -

vey method. E s t a b l i s h i n g a p p r o p r i a t e r a p p o r t w i t h respondents

and ask ing ques t ions i n a way t h a t does n o t induce b iased r e -

sponses t o survey ques t ions may be d i f f i c u l t f o r personnel who

have n o t had spec ia l t r a i n i n g .

5 ) The t r a v e l c o s t method can be checked by comparing p re -

d i c t e d use w i t h a c t u a l use. There i s no such t e s t f o r t he accuracy of t h e survey method.

Consequently, i t i s recommended t h a t t h e t r a v e l c o s t method

be used wherever p o s s i b l e and t h a t t h e survey method be used

i n those cases where t h e t r a v e l c o s t cannot be used.

There a r e severa l ins tances i n which t h e t r a v e l c o s t method

can n o t be used and t he survey method should be app l i ed .

These a re :

1 ) When resources, areas, o r s i t e s t h a t a r e be ing eva lua ted

a r e l i k e l y t o be one o f many d e s t i n a t i o n s f o r a t r i p f o r a

ma jo r p o r t i o n of t h e users.

2 ) For cons ide r i ng t h e va lue o f smal l changes i n t h e qua l -

i t y of e x i s t i n g s i t e s which would n o t be expected t o a f f e c t

t h e t r a v e l c o s t s o f v i s i t o r s o r t h e number o f v i s i t s t h a t they

make, p a r t i c u l a r l y i f these changes have imp1 i c a t i o n s f o r

r e c r e a t i o n exper iences a t a number o f s i t e s .

3 ) When urban s i t e s o r o t h e r areas a r e eva lua ted where t he

d i s tances t r a v e l e d by users do n o t show s u f f i c i e n t v a r i a t i o n

t o f a c i l i t a t e use o f t he t r a v e l c o s t method.

4 ) Poss ib ly , f o r e v a l u a t i n g t h e e f f e c t s o f conges t ion on

bene f i t s .

Thus, i t i s l i k e l y t h a t t h e t r a v e l c o s t method w i l l be used

f a r more o f t e n than t h e survey method t o es t ima te r e c r e a t i o n ' s

c o n t r i b u t i o n t o n a t i o n a l economic development,but t h e r e w i l l

be cases where t h e survey method w i l l be used.

I f new demand-based v a l u a t i o n methods a re developed t h a t

p r o v i d e es t imates o f t h e w i l l i n g n e s s o f users t o pay use o r

e n t r y fees, these methods may be empl oyed under c i rcurr~stances

where they a r e demonstrated t o p rov ide es t imates o f va lue t h a t

a r e equal t o o r exceed t he p r e c i s i o n of es t imates t h a t would

be p rov ided by t he t r a v e l c o s t and survey methods.

Va lua t i on procedures c u r r e n t l y used by f e d e r a l agencies do

n o t make use of t h e t r a v e l c o s t o r survey methods bu t , ra ther ,

use t he " i n t e r i m u n i t day va lue approach." T h i s approach

s u f f e r s from a number of ma jo r problems concern ing bo th i t s

d e f i n i t i o n and i t s conceptual and emp i r i ca l bas is . Est imates

o f w i l l i n g n e s s t o pay from t h e " i n t e r i m u n i t day va lue

approach" w i l l n o t encourage e f f i c i e n t resource a l l o c a t i o n .

Improv ing t h e u n i t day va lue approach would r e q u i r e sub-

s t a n t i a l t h e o r e t i c a l and e m p i r i c a l e f f o r t . Rather than expend

such e f f o r t , however, i t seerns reasonable t o u t i l i z e o t h e r

methods which have a l r eady been developed.

What i s necessary f o r e s t i m a t i n g r e c r e a t i o n ' s c o n t r i b u t i o n

t o n a t i o n a l economic development i s t h e development o f

r e g i o n a l models ( equa t i ons ) t o p r e d i c t t he w i l l ingness o f

users t o pay. Th i s i s n o t a r a d i c a l l y new approach; r a t h e r ,

i t makes t h e bes t use o f procedures and models t h a t a r e pres-

e n t l y a v a i l a b l e . These equat ions would e x p l a i n i n d i v i d u a l

w i l l i n g n e s s t o pay f o r many types o f r e c r e a t i o n as f u n c t i o n s

o f s i t e c h a r a c t e r i s t i c s , t h e socio-economic c h a r a c t e r i s t i c s of

t h e i n d i v i d u a l user , t h e a v a i l a b i l i t y and q u a n t i t y o f s u b s t i -

t u t e a c t i v i t i e s and s i t e s , and t h e l o c a t i o n o f t he i n d i v i d u a l

i n r e l a t i o n t o t h e s i t e under s tudy. P r e d i c t i o n o f w i l l i n g -

ness t o pay a t t h e i n d i v i d u a l 1 eve1 based on emp i r i ca l s t u d i e s

o f s i m i l a r s i t e s should be a s i g n i f i c a n t l y b e t t e r approach

than an a t tempt t o es t ima te t he average w i l l i n g n e s s t o pay by

a r r ~ o d i f i e d u n i t va lue approach.

Regional models w i 11 g i v e es t imates o f t o t a l w i l l ingness t o

pay f o r a new s i t e as a f u n c t i o n o f these va r i ab les , as w e l l

as f o r t h e number o f users, and t h e d i s t r i b u t i o n o f users

w i t h i n t h e market area. These f u n c t i o n s cou ld be de r i ved f rom

t r a v e l c o s t demand f u n c t i o n s (which would a l s o p r o v i d e e s t i -

mates o f use) o r coul d be exp l i c i t wi 11 i ngness-to-pay func-

t i o n s s i m i l a r t o those t h a t a r e de r i ved by Davis (1963) u s i n g

t h e survey method (which must be supplemented by use e s t i -

mates) . They may be a p p l i e d t o eva lua te proposed p r o j e c t s

w i t h o n l y minimal e f f o r t .

I t i s recommended t h a t these procedures be implemented by a

coope ra t i ve e f f o r t among fede ra l agencies. Th is would i n c l u d e

t h e sha r i ng o f da ta and e x p e r t i s e . Us ing t he procedures ou t -

1 i ned i n t h i s r e p o r t , a c e n t r a l da ta bank o f t he r e s u l t s o f

demand s tud ies shoul d be devel oped. The r e s u l t s shoul d be

s t o r e d i n a form which would pe rm i t p lanners t o s e l e c t t he

b e s t model f o r p r e d i c t i n g t he w i l l ingness o f users t o pay f o r

a planned s i t e . T h i s da ta bank would be o f g r e a t use t o

p l anners.

The i n t e r i m u n i t day va lue approach should be abandoned.

Furthermore, under no c i rcumstances should such o t h e r er rone-

ous methods based on gross o r n e t expend i tu res by r e c r e a t i o n -

i s t s , gross n a t i o n a l p roduc t , t h e c o s t o f p r o v i d i n g rec rea t ion ,

o r t h e market va lue o f f i s h o r game harvested be used t o e s t i -

mate r e c r e a t i o n ' s c o n t r i b u t i o n t o n a t i o n a l econorr~ic develop-

rnent. These methods do n o t p r o v i d e an es t imate o f t h e w i l l -

ingness o f users t o pay use o r e n t r y fees and t h e y a r e based

on a misunderstanding of economic concepts; t hey a r e t he re fo re

i n a p p r o p r i a t e . These methods a r e presented i n Appendix C,

where t h e i r i nappropr ia teness i s po in ted ou t .

CHAPTER 7 REVISIONS FOR THE PRINCIPES AND STANDARDS

The f o l l o w i n g i s presented as a m o d i f i c a t i o n f o r t h e P r i n c i -

ples and S t a n d a r d s based or1 t h e r e s u l t s o f t h i s study. The mod-

i f i c a t i o n s concern ( 1 ) a replacement f o r s e c t i o n 11. F.e., d e a l i n g

w i t h p r i n c i p l e s and standards f o r e s t i m a t i n g t h e b e n e f i c i a l

e f f e c t s o f r e c r e a t i o n on n a t i o n a l economic development, and

( 2 ) an a d d i t i o n t o s e c t i o n I1 G.a., d e a l i n g w i t h p r i n c i p l e s and

s tandards f o r e s t i m a t i n g t h e l o s s i n n a t i o n a l economic develop-

ment r e s u l t i n g from t h e d isp lacement o f r e c r e a t i o n resources.

( e ) R e c r e a t i o n . For t h e most p a r t , ou tdoor r e c r e a t i o n i s

p rov ided p u b l i c l y and d i s t r i b u t e d w i t h o u t cha rg i ng user fees

o r p r i c e s . Whi le t h e p r i v a t e p r o v i s i o n o f r e c r e a t i o n oppor-

t u n i t i e s has been i n c r e a s i n g i n r e c e n t years , a n a l y s i s o f

r e c r e a t i o n needs i s conducted w i t h o u t b e n e f i t o f any substan-

t i a l amount o f feedback f rom e f f e c t i v e l y f u n c t i o n i n g markets

t o gu ide t h e e v a l u a t i o n o f p u b l i c l y produced r e c r e a t i o n goods

and se rv i ces . Under these cond i t i ons -and based on a w i t h and

w i t h o u t ana l ys i s - t he i nc rease i n r e c r e a t i o n p rov ided by a

p lan , s i n c e i t rep resen t s a d i r e c t consumption good, must be

measured o r va lued on t h e bas i s o f es t ima ted w i l l i n g n e s s o f

users t o pay e n t r y o r use fees . The a p p r o p r i a t e concept o f

w i l l i n g n e s s - t o - p a y i nc l udes e n t r y and use fees a c t u a l l y pa id ,

p l u s an es t ima te o f t h e amount i n excess o f these charges

t h a t users cou ld be induced t o pay.

A t p resen t , t h e r e a r e two accep tab le methods f o r e s t i m a t i n g

t h e w i l l i n g n e s s o f users t o pay: t h e t r a v e l c o s t method and

t h e survey method. Equat ions developed w i t h these methods a t

e x i s t i n g f a c i l i t i e s can be used t o es t ima te w i l l i n g r ~ e s s

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Choice o f Method. The t r a v e l c o s t method has severa l ad-

vantages over t h e survey method i n e s t i m a t i n g w i l l i n g n e s s t o

pay. The t r a v e l c o s t method p rov ides an es t ima te o f use f o r a

proposed s i t e o r a rea as we l l as an es t ima te o f w i l l i n g n e s s t o

pay. Wi th t h e survey method, a separate es t imate o f expected

use i s r e q u i r e d i n o r d e r t o es t ima te t o t a l w i l l ingness t o pay.

The t r a v e l c o s t method has been a p p l i e d t o r e c r e a t i o n b e n e f i t

e s t i m a t i o n more o f ten than t h e survey method and, consequently,

more i n fo rma t i on i s a v a i l a b l e about t he most e f f e c t i v e way t o

app l y t h e method. The t r a v e l c o s t method i s based on a c t u a l

behav io r o f r e c r e a t i o n i s t s r a t h e r than on t h e i r responses t o

ques t ions concern ing h y p o t h e t i c a l s i t u a t i o n s . Consequent1 y,

t h e method tends t o g i v e more c o n s i s t e n t est imates and i s more

e a s i l y appl i e d by f i e l d personnel.

However, under c e r t a i n c i rcurnstances t h e survey method has

advantages over t h e t r a v e l c o s t method. These c i rcumstances

i n c l u d e : t h e e v a l u a t i o n o f resources, s i t e s , o r areas t h a t a r e

l i k e l y t o be one o f many d e s t i n a t i o n s f o r a t r i p ; f o r va lua-

t i o n o f smal l changes i n q u a l i t y a t e x i s t i n g s i t e s when these

changes would n o t be expected t o a f f e c t t h e t r a v e l c o s t s o f

v i s i t o r s o r t h e i r number o f v i s i t s , e s p e c i a l l y i f they have

impacts on r e c r e a t i o n behav io r over a wide area; f o r t he va lu -

a t i o n o f urban s i t e s o r o t h e r areas where d i s tances t r a v e l e d

by users do n o t show s u f f i c i e n t v a r i a t i o n f o r use o f the

t r a v e l c o s t method; and, poss ib l y , f o r e v a l u a t i n g t h e e f f e c t s

o f conges t ion on b e n e f i t s .

The Travel C o s t Method. I t i s p r e f e r a b l e i n deve lop ing t h e

t r a v e l c o s t model t h a t t h e f o l l o w i n g v a r i a b l e s be cons idered:

t r i p c o s t s t o t h e s i t e under s tudy and t o s u b s t i t u t e s i t e s ,

a t t r i b u t e s o f t h e s i t e and o f s u b s t i t u t e s i t e s , and t ime c o s t

o f a t r i p . The p roper u n i t of q u a n t i t y t o es t ima te when us ing

t h e t r a v e l c o s t method i s t r i p s . It i s o f t e n necessary t o

account f o r t h e i n t e r r e l a t i o n s h i p among s i t e s w i t h i n a market

area, s j n c e these s i t e s compete f o r t h e same p o t e n t i a l

customers. I n o rde r t o do so, i t i s p r e f e r a b l e t o es t ima te

t he demand j o i n t l y f o r a l l s i t e s i n t he market area of t he

s tudy s i t e . Regional es t ima to rs a r e p r e f e r a b l e .

The Survey Method. I t i s e s s e n t i a l t h a t t he respondent t o

a ques t ion c l e a r l y understand which s p e c i f i c r e c r e a t i o n a c t i v -

i t i e s o r areas he i s be ing asked t o eva lua te . Ques t ions

should n o t s imp ly ask t he consumer t o s t a t e h i s w i l l i n g n e s s t o

pay. I t i s p re fe rab le t o dev ise l e s s open-ended ques t ions

which ensure t h a t responses w i l l be r e a l i s t i c and accura te .

I n s t r u c t i o n s and ques t ions should be fo rmu la ted t o avo id

b iased responses which m igh t r e s u l t f rom t h e respondent an-

swering i n a manner which he perce ives rnight f u r t h e r h i s s e l f -

i n t e r e s t .

4 ) Other Methods. If new v a l u a t i o n methods a r e developed

t h a t p rov ide demand-based es t imates o f t he w i l l i n g n e s s o f

users t o pay use and e n t r y fees, these methods may be employed

under c i rcumstances where t hey a r e demonstrated t o p rov ide

es t imates o f va lue t h a t a r e equal t o o r exceed t he p rec i s i o r l

o f es t imates t h a t would be prov ided by t he t r a v e l c o s t and

survey methods.

The i n t e r i m u n i t day va lue approach should be abandoned.

Furthermore, under no c i rcumstar~ces should methods based on

gross o r n e t expend i tu res by r e c r e a t i o n i s t s , gross n a t i o n a l

product , t h e c o s t o f p r o v i d i n g r e c r e a t i o n , o r t he market va lue

o f f i s h o r game harves ted be used t o es t imate r e c r e a t i o n ' s

c o n t r i b u t i o n t o n a t i o n a l economic development. These methods

do n o t p r o v i d e an es t ima te o f t he w i l l i n g n e s s o f users t o pay

use o r e n t r y fees and a r e t h e r e f o r e i n a p p r o p r i a t e .

when a proposed p l a n des t roys o r o therw ise makes e x i s t i n g

r e c r e a t i o n o p p o r t u n i t i e s unava i l ab le , t he a p p r o p r i a t e concept

f o r v a l u a t i o n of t h e l o s t r e c r e a t i o n o u t p u t may be w i l l i n g n e s s

of users t o pay o r t h e w i l l i n g n e s s o f users t o s e l l t h e i r

r i g h t s t o use t h e s i t e o r area. W i l l ingness t o s e l l , o r t he

compensation r e q u i r e d by p resen t users i f t h e s i t e o r area

were made u n a v a i l a b l e t o them, i s t he a p p r o p r i a t e v a l u a t i o n

concept f o r pub1 ic ly -owned r e c r e a t i o n f a c i l i t i e s .

It i s t he re fo re recommended t h a t , un l ess b e t t e r procedures

become a v a i l a b l e, consumers ' su rp l us be presented as t h e 1 ower

bound on l o s t n e t b e n e f i t s f rom des t royed resources w i t h t h e

r e c o g n i t i o n t h a t t h e a c t u a l va l he w i l l exceed t h i s es t imate .

Thus t he procedures o u t l i n e d i n Sec t i on 1I .F.e. as amended by

t h e f i r s t p a r t of t h i s chap te r , a r e t o be used t o es t ima te t h e

va lue of l o s t r e c r e a t i o n ou tpu t s . It should be s ta ted , when-

ever t h i s measure i s used, t h a t i t i s used because o f t h e l a c k

o f a p r e s e n t l y s a t i s f a c t o r y method of measuring t h e a p p r o p r i -

a t e va lue and t h a t i t may s i g n i f i c a n t l y unde rs ta te t h e cos t s .

CHAPTER 8 ECmmAT I ONS FOR I M P W A T I ON

Th is r e p o r t recommends abandonment o f the i n t e r i m u n i t day

value approach and the development and use o f models, based on

t r a v e l c o s t and survey methods, f o r es t ima t i ng the w i l l ingness

o f users t o pay f o r rec rea t i on . Th i s w i l l make r e c r e a t i o n

b e n e f i t es t ima t i on l e s s dependent on the unaided judgments o f

agency planners and base i t on the observed behavior and ex-

pressed preferences o f r e c r e a t i o n p a r t i c i p a n t s . The r e s u l t

should be a rnore o b j e c t i v e measurement o f r e c r e a t i o n b e n e f i t s

and a more e f f i c i e n t a l l o c a t i o n o f resources.

Th is approach w i l l p rov ide fede ra l agencies w i t h a number

o f s i g n i f i c a n t benef i t s : (1 ) They w i l l be ab le t o make a rnore

e f f i c i e n t a l l o c a t i o n o f resources. ( 2 ) The i r analyses w i l l

s tand the s c r u t i n y o f o t h e r agencies and the pub1 i c . ( 3 ) A g rea t deal w i l l be learned about t h e preferences o f the users

t h a t t hey serve. Th is in fo rmat ion , i n tu rn , w i l l f a c i l i t a t e a

nuniber o f aspects o f p lanning.

There w i l l , however, be cos ts associated w i t h data a c q u i s i -

t i o n , model cons t ruc t i on , and model use. An i n i t i a l e f f o r t

w i l l be requ i red t o implement t he approach, and subsequent

updat ing w i l l be necessary. But when we apprec ia te t h a t l a r g e

investments a r e made i n p r o j e c t s i n v o l v i n g water and r e l a t e d

l a n d resources, and t h a t a l a r g e and i nc reas ing share o f the

c o s t o f these p r o j e c t s i s a l l o c a t e d t o rec rea t i on , t he gain i n

e f f i c i e n c y i n v o l v i ng one l a r g e p r o j e c t cou ld f inance many

years o f such research appl i c a b l e t o a1 1 p r o j e c t s being

planned du r i ng t h a t per iod .

The f o l l o w i n g recommendations w i l l , however, increase the

e f f i c i e n c y and e f fec t i veness o f these e f f o r t s .

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-Lahap JayqayM 'Led 02 ssau6ukllk~ 6u~qewkqsa ~oj slapow (1

v a l u a t i o n of w i l d l i f e . I t i s l i k e l y t h a t t h i s w i l l con t i nue

t o be t h e case i n t h e years ahead. Thus i t may be reasonable

f o r t h e F i s h and W i l d l i f e Se rv i ce t o t ake t he l e a d w i t h r e -

spec t t o t h e survey rnethod. It would seem h i g h l y wo r thwh i l e

t o e s t a b l i s h a committee o f t e c h n i c a l expe r t s f rom each of t h e

f ede ra l agencies concerned w i t h p l ann ing f o r water and r e l a t e d

l a n d resources t o he1 p d issemina te new ideas and r e s u l t s , as

w e l l as t o c o o r d i n a t e agency e f f o r t s .

5 ) The models developed f o r e s t i m a t i n g w i l l i n g n e s s t o pay

(descr ibed i n i t e m #1 above) should be s to red i n a c e n t r a l

f i l e o r l o c a t i o n t h a t i s r e a d i l y access ib l e t o agency planners.

Perhaps t h e Bureau o f Outdoor Recrea t ion c o u l d t ake l e a d e r s h i p

i n deve lop ing and upda t i ng t he f i l e . The p lanner would o u t -

1 i n e bas i c parameters o f t h e s i t u a t i o n be ing evaluated, such

as s i t e c h a r a c t e r i s t i c s , t h e socio-economic c h a r a c t e r i s t i c s o f

expected users, t h e a v a i l a b i l i t y and q u a n t i t y o f s u b s t i t u t e

s i t e s and a c t i v i t i e s , and t h e l o c a t i o n o f expected users w i t h

r e s p e c t t o t h e s i t e . The system would then f u r n i s h t he most

a p p r o p r i a t e model f o r e s t i m a t i n g i n d i v i d u a l wi 11 i r~gness t o

Pay.

I n sum, cons ide rab le da ta c o l l e c t i o n and model c o n s t r u c t i o n

a r e c a l l e d f o r . T h i s e f f o r t should be aimed a t deve lop ing

models t o p r e d i c t i n d i v i d u a l w i l l i n g n e s s t o pay as a f u n c t i o n

o f s i t e c h a r a c t e r i s t i c s , t h e socio-economic c h a r a c t e r i s t i c s o f

t h e i n d i v i d u a l user , t h e a v a i l a b i l i t y and q u a n t i t y o f s u b s t i -

t u t e a c t i v i t i e s and s i t e s , and t h e l o c a t i o n o f t h e i n d i v i d u a l

i n r e l a t i o n t o t h e s i t e under s tudy. Use o f these models w i l l

improve t h e p u b l i c p l ann ing and dec is ion-making process and

p r o v i d e cons ide rab le i n f o r m a t i o n about t h e behav io r and p re fe r -

ences o f r e c r e a t i o n i s t s .

Data a c q u i s i t i o n , model cons t ruc t i on , and use o f the model s

w i l l be g r e a t l y f a c i l i t a t e d by coopera t ion among agencies. A

c e n t r a l f i l e o f equat ions f o r p r e d i c t i n g i n d i v i d u a l w i l l i n g -

ness t o pay should be cons t ruc ted and made r e a d i l y a v a i l a b l e

t o agency planners.

CHAPTER 9 RESEARCH NEHE

The h ighes t p r i o r i t y f o r research aimed a t improv ing p ro -

cedures f o r e s t i m a t i n g t h e c o n t r i b u t i o n o f r e c r e a t i o n t o

n a t i o n a l economic development shoul d be g i ven t o e m p i r i c a l

s t ud ies . These s tud ies should make use o f t h e guide1 i nes p re -

sented i n t h i s r e p o r t . The s tud ies should be aimed a t deve l -

op ing models usefu l f o r e v a l u a t i n g t h e types of a l t e r n a t i v e s

t h a t wa te r resource p lanners a r e f ac i ng . l Past s t u d i e s have

focused on a r e l a t i v e l y smal l subset o f r e c r e a t i o n ou tpu ts ;

b u t t h e t r a v e l c o s t and survey rr~ethods a r e a p p l i c a b l e t o t h e

broad spectrum of a l t e r n a t i v e s t h a t p lanners now face and a r e

l i k e l y t o face i n t h e yea rs ahead.

I n a d d i t i o n t o t h e above needs, t h e r e a r e a number of

areas where improvements i n r e c r e a t i o n b e n e f i t e s t i m a t i o n

metnodology would be use fu l .

It has been i n d i c a t e d t h a t t h e response t o ques t ions con-

c e r n i n g maximum w i l l i n g n e s s t o pay f o r use o f a p a r t i c u l a r '

s i t e depends h e a v i l y on t h e way t h a t a ques t i on i s asked.

There i s a need f o r a d d i t i o n a l research on t h e bes t way t o

s t r u c t u r e ques t ions and pose them t o t h e respondent. Consid-

e rab l e e f f o r t should a1 so be d i r e c t e d towards deve lop ing

or example, some of the planning a1 ternat ives presented at the Recreation Benefi t Evaluation Conference included: wild, scenic, and recreation rivers; urban streams; "linear parks"; urban flood plains; floating down a stream; improved water quality; national recreation areas; regulation of a reservoir; steelhead fishing; instream values of water; and level A, 0 , and C planning studies.

method01 ogy f o r a p p l y i n g su rvey w i 11 ingness- to-pay equa t ions

t o eva lua te new p r o j e c t s .

The l e v e l o f conges t ion a t a s i t e may have a s i g n i f i c a n t

impact on user bene f i t s , b u t i t i s y e t t o be e f f e c t i v e l y e v a l -

ua ted i n t h e t r a v e l c o s t o r survey models. I f conges t ion i s

n o t taken i n t o account, t h e b e n e f i t s o f r educ ing conges t ion a t

e x i s t i n g s i t e s w i l l be neg lec ted when t h e b e n e f i t s o f develop-

i n g a new s i t e a r e eva lua ted . I f conges t ion i s n o t taken i n t o

account when a demand f u n c t i o n d e r i v e d f rom an e x i s t i n g s i t e

i s a p p l i e d t o a new s i t e , i t must be assumed t h a t conges t ion

a f f e c t s b o t h s i t e s i n a s i m i l a r rnanner and a1 so t h a t popula-

t i o n s o f bo th marke t areas have s i m i l a r d i s l i k e s f o r conges-

t i o n . E s t i m a t i n g t h e impact o f conges t ion on w i l l i n g n e s s t o

pay f o r a proposed s i t e i s p a r t i c u l a r l y d i f f i c u l t because

t h e c o s t o f conges t ion a t an e x i s t i n g s i t e may n o t be a usefu l

gu ide. The survey method may p r o v i d e t h e most usefu l approach

t o e v a l u a t i n g t h e impact o f conges t ion on w i l l i n g n e s s t o pay.

I t i s reasonable t o expec t t h a t i n d i v i d u a l s ' responses t o

r e c r e a t i o n o p p o r t u n i t i e s va r y s i g n i f i c a n t l y . I f such d i f f e r -

ences a r e n o t accounted f o r i n t h e b e n e f i t e s t i m a t i o n proce-

dure, b e n e f i t s o f t h e s i t e w i l l n o t be eva lua ted a c c u r a t e l y .

An index o f demographic v a r i a b l e s o f f e r s some promise as an

i n d i c a t o r o f v a r i a t i o n s i n i n d i v i d u a l responses. Th i s index

m i g h t i n c l u d e some weighted cornbi n a t i o n o f t ~ o u s e t ~ o l d income,

f a m i l y s t r u c t u r e , age, p a s t exper ience w i t h t h e s i t e , and s i z e

o f t h e town i n which t h e household r es i des . The model deve l -

oped by Cesar io and Knetsch (1 976) seems adap tab le t o f u t u r e

e f f o r t s t o e v a l u a t e i n d i v i d u a l d i f f e r e n c e s . A r e g i o n a l e s t i -

ma t i on procedure i s a l s o h e l p f u l i n p r o v i d i n g a s u f f i c i e n t

range o f d a t a t o e s t i m a t e t h e t a s t e parameters.

It i s n o t c l e a r what c o n s t i t u t e s an app rop r i a te index o f

s i t e q u a l i t y . Attempts a t d e r i v i n g such an index have i n -

c luded: some measure o f p r o j e c t s ize, which may be c o r r e l a t e d

w i t h o t h e r q u a l i t y c h a r a c t e r i s t i c s ; s u b j e c t i v e rankings by

r e c r e a t i o n exper ts ; preference surveys; ac tua l observat ions o f

r e c r e a t i o n i s t s ' behavior; and combinat ions o f these. The

approach used by Cesario (1969), which i s based on ac tua l ob-

serva t ions o f r e c r e a t i o n i s t s ' behavior, shows cons iderab le

promise and should be g iven a t t e n t i o n by researchers. Qua1 i t y

i s bes t viewed as an i n t e r a c t i o n between t h e tas tes o f con-

sumers and t h e f a c i l i t i e s o r resources a v a i l a b l e .

TIME

It has been p rev ious l y i n d i c a t e d t h a t t ime spent t r a v e l i n g

t o a s i t e i s an impor tan t determinant o f r e c r e a t i o n b e n e f i t s .

To neg lec t t ime w i l l g e n e r a l l y r e s u l t i n an underest imat ion o f

benef i t s . Unfor tunate ly , t he t ime b ias problem has been more

e a s i l y recognized than solved, and a p e r f e c t s o l u t i o n i s n o t

y e t a t hand. Thus f a r t h e r e have been two wain 1 ines o f ap-

proach. The f i r s t has been t o i n c l u d e t ime as a v a r i a b l e i n

t he regress ion equat ion i n o rder t o separate the e f f e c t o f

money and t ime cos ts on t h e number o f r e c r e a t i o n t r i p s under-

taken. Th is approach has o f t e n been f r u s t r a t e d by h igh co r re -

l a t i o n between money and t ime cos ts o f t r a v e l which precludes

an accurate assessment o f t he e f f e c t o f each va r i ab le . The

second approach has been t o assume a p a r t i c u l a r t r a d e o f f be-

tween t h e money and t ime cos ts o f t r a v e l and i nco rpo ra te t h i s

i n f o r m a t i o n i n t o t h e ana l ys i s . A complete ly s a t i s f a c t o r y

f o rmu la t i on o f t h i s t r a d e o f f has y e t t o be es tab l i shed i n

emp i r i ca l work.

The a v a i l a b i l i t y o f s u b s t i t u t e s i s an impo r tan t determinant

o f w i l l i n g n e s s t o pay f o r a s i t e . Neg lec t i ng s u b s t i t u t e s can r e s u l t i n s i g n i f i c a n t overes t imat ions o f r e c r e a t i o n bene f i t s .

Regional e s t i m a t i o n procedures, such as those used by B u r t and

Brewer (1 971, 1974), Cesar io and Knetsch (1 976), and t h e Corps

o f Engineers (Brown and ans sen, 1974) p rov ide a va luab le base

f o r f u r t h e r research i n t h i s area.

DEMAND SPECIFICATION

There i s need f o r a t h e o r e t i c a l development o f t h e demand

f o r r e c r e a t i o n v i s i t s and days cons ide r i ng bo th t i r r ~ e and

money c o n s t r a i n t s . T h i s would p rov ide a b e t t e r b a s i s f o r

s p e c i f i c a t i o n o f demand f u n c t i o n s . I t i s c l e a r t h a t t h e r e i s

some t r a d e o f f t h a t may occur between t h e number o f t r i p s and

t h e l e n g t h o f each s p e c i f i c t r i p . I t i s a l s o c l e a r t h a t t ime

t r a v e l i n g w i l l be viewed d i f f e r e n t l y than t i m e a t t h e s i t e .

Time t r a v e l i n g i s an e s s e n t i a l c o s t t h a t must be i n c u r r e d

be fo re s i t e use can occur.

A t p resen t t h e r e i s no s a t i s f a c t o r y method f o r e s t i m a t i n g

w i l l i n g n e s s t o s e l l . Survey es t imates o f w i l l i n g n e s s t o s e l l

d i f f e r f rom survey es t imates o f w i l l i n g n e s s t o pay by amounts

i n excess o f what c u r r e n t t heo ry suggests. There i s a need

f o r a d d i t i o n a l t h e o r e t i c a l work on e x p l a i n i n g these d i f f e r -

ences, as w e l l as f o r exper imenta t ion w i t h va r i ous ways o f

e s t i m a t i n g w i l l ingness t o s e l l .

APPENDIX A THE RECREATI @i BENEFIT EVALUATION CONFERENCE

The R e c r e a t i o n B e n e f i t E v a l u a t i o n C o n f e r e n c e was h e l d a t

t he Marv in Center, George Washington U n i v e r s i t y on December 2

and 3, 1976. The conference was a t tended by t h e research

team, consu l t an t s , Recrea t ion B e n e f i t Adv isory Commi t t e e , and

40 r e p r e s e n t a t i v e s of f ede ra l agencies.

The purpose o f t he conference was t o b r i n g researchers and

agency personnel t o g e t h e r t o d iscuss s i g n i f i c a n t i ssues con-

ce rn ing r e c r e a t i o n b e n e f i t es t ima t i on . Researchers have been

c r i t i c a l of agency procedures f o r es t i m a t i ng r e c r e a t i o n bene-

f i t s and have developed more e l abo ra te v a l u a t i o n methodologies.

However, most p u b l i c agencies have been s low t o implement

these developments. Thus, t h e r e was a c l e a r need f o r b r i n g i n g

researchers and agency personnel t oge the r t o d i scuss proce-

durzs f o r r e c r e a t i o n b e n e f i t es t ima t i on . A background paper

was prepared by t h e research team and d i s t r i b u t e d t o a l l par-

t i c i p a n t s t h r e e weeks be fo re t h e conference. An e a r l i e r d r a f t

o f t h e background paper was reviewed by t he consu l t an t s and

t he Recrea t ion Eva1 u a t i o n Committee i n August 1976. The back-

ground paper prepared f o r t h e conference ( 1 ) ou t1 i ned t he c u r -

r e n t s t a t e o f t h e a r t w i t h r espec t t o r e c r e a t i o n b e n e f i t e s t i -

mat ion, ( 2 ) i d e n t i f i e d s i g n i f i c a r l t i ssues concern ing r e c r e a t i o n

b e n e f i t es t ima t i on , (3 ) developed p r e l i m i n a r y guide1 i nes f o r

b e n e f i t es t ima t i on , and ( 4 ) i n d i c a t e d areas where a d d i t i o n a l

research i s r equ i red . Th is r e p o r t i s e s s e n t i a l l y a r e v i s i o n

of t h a t paper, based on ou r i n t e r p r e t a t i o n o f d i scuss ion a t

t he conference.

The conference was opened by W i l l i a m H. Honore, Chairman o f

t h e Recrea t ion B e n e f i t Eva lua t i on Committee. He o u t l i n e d t h e

o r i g i n and purpose o f t h e research e f f o r t , t h e s i g n i f i c a n c e o f

the issues being addressed, and the purpose and expected out-

come of the conference. John R. Kelly, University of I1 l inois, conference moderator, outlined the format and tentat ive schedule of the conference. John F . Dwyer, University of I l l i no i s , presented a summary of the background paper and highlighted the issues to be addressed.

Each of the consultants then responded to the background paper and highlighted key issues. Next, a l l participants were

given an opportunity to present the i r views, and several did.

Conference participants were then broken down into seven working groups that focused on the following topics.

1) Wil l ingness t o Pay a s a G u i d i n g Concept- IS wi 11 i n g n e ~ ~ of consurners to pay the appropriate valuation concept? Is will inaness.to sel l a more appropriate concept under some c i r - cumstances? To what extent should nonuser benefits be re- flected in the national economic development account? Is i t necessary to impose the "integrabili ty conditions"? As they are usual ly imposed, are the "integrabi 1 i ty conditions" appro- pr iate for the cross-section data used in the travel cost met hod?

2) The P r i n c i p l e s and standards-What changes in the Pr in-

ciples and Standards are called for? What guidelines for valuation methodology are appropriate? Is an "interim ap- proach" desirable?

3) The Travel C o s t ~ethod-What i s i t s usefulness for rec- reation benefit estimation? Under what circumstances i s i t an

appropriate method? . How i s i t best applied in these s i tua- t ions? What guidelines should be specified for i t s use?

4 ) The Survey ~ethod-What i s i t s usefulness for recreation benefit estimation? Under what circumstances i s i t an

app rop r i a te method? How i s i t bes t a p p l i e d i n these s i t u a -

t i o n s ? What g u i d e l i n e s should be s p e c i f i e d f o r i t s use?

5 ) The U n i t Day Value ~ethod-What i s i t s ~ ~ e f ~ l n e ~ ~ f o r

r e c r e a t i o n be r~e f i t e s t i m a t i o n ? Under what c i rcumstances i s i t

an app rop r i a te method? How i s i t bes t a p p l i e d i n these

s i t u a t i o n s ? What g u i d e l i n e s should be s p e c i f i e d f o r i t s use?

How should t h e q u a n t i t y by which i t i s m u l t i p l e d be est imated?

6) IS There a B e t t e r way-IS a comple te ly d i f f e r e n t approach

t o r e c r e a t i o n b e n e f i t e s t i m a t i o n c a l l e d f o r ? What about the

a l t e r n a t i v e c o s t method?

7) The Continuing ~ f f o r t - W h a t e f f o r t s should be i n i t i a t e d

t o p rov ide con t inued improvement i n r e c r e a t i o n b e n e f i t est ima-

t i o n procedures? Should s p e c i f i c responsi b i l i t i e s f o r ana ly -

s i s be assigned t o one o r more agencies? What e f f o r t s should

be undertaken t o make f u l l e r use o f e x i s t i n g da ta and t ake

f u l l advantage o f new e m p i r i c a l work?

The consu l t an t s and members o f t he Recrea t ion B e n e f i t Eval -

u a t i o n Corr~mittee had p r e v i o u s l y been assigned these t o p i c s and

were prepared t o f a c i l i t a t e d i scuss ion o f t h e issues. P a r t i -

c i p a n t s were assigned t o these groups and c o n s u l t a n t s and mem-

bers o f t h e Recrea t ion B e n e f i t Eva lua t i on Committee served as

d i scuss ion f a c i l i t a t o r s . Each group des ignated a d i scuss ion

l e a d e r and a recorder . Members o f t he research team c i r c u l a t e d

among t h e groups t o p rov ide needed guidance and coo rd ina t i on .

The d i scuss ion groups made two i n t e r i m r e p o r t s t o t he

e n t i r e conference d u r i n g t h e a f t e rnoon o f December 2.

The research team, consu l tan ts , and members o f t h e Recre-

a t i o n B e n e f i t Eva lua t i on Committee he ld a d i n n e r meet ing on

t h e evening o f December 2 t o eva lua te t h e progress o f t he

f i r s t day and p l a n f o r t he second day. I t was agreed t h a t

i n i t i a l progress on the issues had been excellent and that discussion during the second day should focus on recommenda-

t i o n s . I t was agreed tha t participants would be consolidated into three working groups for the next day. These groups con- sidered the fol 1 owi ng problems :

1) What i s the appropr ia te va lua t i on methodology?

2) What r e v i s io"s i n the P r i n c i p l e s and S t a n d a r d s

a r e c a l l e d f o r ?

3 ) What cont inu ing e f f o r t s a re needed t o improve

rec rea t i on b e n e f i t es t imat ion procedures?

After a brief orientation the next morning, the three groups met for a working session. Each group gave i t s final report to the conference shortly before noon.

The conference was adjourned a t noon, b u t the consultants, Recreation Benefit Evaluation Committee, and the research team continued to meet for the remainder of the afternoon. The discussion focused on summarizing the conference, identifying needed revisions in the draf t report , and developing appropri- a te plans for implementing the revised procedures.

ME RESEARCH TENl

Dr. John F. Dwyer Department o f Fo res t r y U n i v e r s i t y o f I l l i n o i s 21 1 Mumford H a l l Urbana, I L 61801

Dr . John R. K e l l y Department o f Le i su re S tud ies U n i v e r s i t y o f I l l i n o i s ICBD 53, 51 Ge r t y S t . Champaign, I L 61820

Michael D. Bowes Department o f Economics U n i v e r s i t y o f I l l i n o i s 330 Commerce West Urbana, I L 61801

Marianne Bowes Department o f Economics U n i v e r s i t y o f I l l i n o i s 330 Commerce West Urbana, I L 61801

Randy A. Nel son Department o f Economics U n i v e r s i t y o f I 1 1 i n o i s 330 Commerce West Urbana, I L 61801

David J. Ravenscraf t Department o f Economics U n i v e r s i t y o f I l l i n o i s 330 Commerce West Urbana, I L 61801

CONSULTANTS

Dr. W i l l i a m G. Brown D r . Kenneth E. McConnel 1 Department of A g r i c u l t u r a l and Department o f Resource

Resource Economics Economics Oregon S t a t e U n i v e r s i t y U n i v e r s i t y o f Rhode I s l a n d Corval 1 i s, OR 97331 Kingston, R I 02881

Dr. Robert K. Dav is Dr. Jon R. M i l l e r O f f i c e o f P o l i c y Analys is ' School of Management Department o f t h e I n t e r i o r C l arkson C o l l ege Room 5147, I n t e r i o r B u i l d i n g Potsdam, NY 13676 Washington, DC 20240

Dr. Jack L. Knetsch D r . Danie l M. Ogden, J r . Department o f Economics 1812 Seminole D r i v e Simon Fraser U n i v e r s i t y F o r t Col 1 i ns , CO 80521 Burnaby Vancouver, B.C., Canada V5 A1 56

Dr. John V . K r u t i l l a Dr. George L. Peterson Resources f o r t h e Fu tu re Department o f C i v i l 1755 Massachusetts Ave. N.W. Engineer ing Washington, DC 20036 The Techno1 o g i c a l I n s t i t u t e

Northwestern U n i v e r s i t y Evanston, I L 60201

AGENCY REPRESENTAT I E S AT RECREATI ON BENEFIT EVALUATION CONFERENCE'

Paul D. Adams Bureau of Outdoor Recreat ion 148 Cain S t r e e t A t l an ta , GA 30303

Ado1 ph Andersen Environment Resources D i v i s i o n Environmental E f f e c t s

Laboratory U. S. Army Corps o f Engineers Waterways Experiment S t a t i o n P. 0. Box 631 Vicksburg, MS 39180

A l b e r t G. Baldwin Bureau o f Outdoor Recreat ion Denver Federal Center B u i l d i n g 41 P. 0. Box 25387 Denver, CO 80222

Dennis Beuchl e r U. 5. F i sh and W i l d l i f e Serv ice 19 th and C S t ree ts , N.W. Room 2646 Washington, DC 20240

Char1 es Bl ackstock* Bureau o f Power Federal Power Commission 825 N. Cap i to l S t r e e t Washington, DC 20426

Edward A. Cohn Plan Formulat ion Branch Planning D i v i s i o n U. S. Army Corps o f Engineers 1000 Independence Ave., S.W. Fo r res ta l Bui 1 d ing Washington, DC 20314

Dale Crane* Chief , Recreation-Resource

Management Branch Construct ion-Operat ions

D i v i s i o n U. S. Armycorps o f Engineers 1000 Independence Avenue S. W . For res ta l B u i l d i n g Washington, DC 20314

George Davis Bureau o f I nd ian A f f a i r s U. S. Department o f the I n t e r i o r 18 th and C S t ree ts , N.W. Washington , DC 20240

Herrry DeGraff* Regional Economics Ana lys is

D i v i s i or1 Bureau o f Economic Ana lys is U. S. Department o f Cornmerce Washington, DC 20230

Thomas E r v i n Bureau o f Outdoor Recreat ion U. S . Department o f t h e I n t e r i o r 18 th and " C " S t ree ts , N.W. Washington, DC 20240

Robert Gal 1 agher Nat iona l Marine F i she r i es

Serv ice 2001 Wisconsin Avenue Washington, DC 20235

R. M. Gray U.S. S o i l Conservat ion Serv ice South Ag r i cu l t u r e Bl dg., 14 th and Independence Ave. , Washington, DC 20250

I n a d d i t i o n t o the research team and the consul tants.

$:Indicates a member o f the Recreat ion Bene f i t Eva lua t ion Committee.

W i l l i a m Hansen U. S . Army Corps of Engineers Waterways Experiment S t a t i o n P. 0. Box 631 Vicksburg, MS 39180

Adr ian Haught* Room 4204, South A g r i c u l t u r e

B l dg . USDA- Fores t Se rv i ce Washington, DC 20250

W i l l i a m Heneberry* Natu ra l Resources Economic

D i v i s i o n Economic Research Se rv i ce U. S. Depar tmentof A g r i c u l t u r e Room 404 500 12 th S t r e e t , S.W. Washington, DC 20250

W i l l i a m H. Honore* Bureau o f Outdoor Recrea t ion U. S . Department o f t h e I n t e r i o r 1 8 t h and C S t r e e t s , N.W. Washington, DC 20240

Owen Jamison Room 4245, South A g r i c u l t u r e

Bldg. USDA-Forest Se rv i ce Washington, DC 20250

Glen Johnson* U. S. S o i l Conservat ion Se rv i ce South A g r i c u l t u r e B u i l d i n g 14 th and Independence Ave., Washi ngton , DC 20250

Fred Ka iser Fores t Se rv i ce Room 3821 South A g r i c u l t u r e

B l dg . USDA-Forest Se rv i ce Washington, DC 20250

W i l l i a m King Western Energy LandUseTeam O f f i c e o f B i o l o g i c a l Serv ices U . S. F i sh and W i 1 d l i f e Serv ice Room 206 Federal B u i l d i n g F t . C o l l i n s , CO 80521

W i l l i a m D. Lawson Bu reauo f Outdoor Recreat ion U. S. Department o f t h e I n t e r i o r 18 th and C S t ree t s , N.W. Was h i ngton, DC 20240

Richard G. Leve r t y Pl an Formul a t i o n Branch P lann ing D i v i s i o n U. S. Army C o r p s o f Engineers 1000 Independence Ave., S.W. F o r r e s t a l B U ~ 1 d i n g Washington, DC 20314

Da r re l 1 Lewis* Bureau o f Land Management U. S. D e p a r t m e n t o f t h e I n t e r i o r 1 8 t h and C S t ree ts , N.W. Washington, DC 20240

Clarence Maesner Federal B u i l d i n g Room 507 511 Northwest Broadway Por t land , OR 97204

Don Manley Federal B u i l d i n g U. S. Courthouse Room 345 L inco ln , NB 68508

Robert McKusick Natu ra l Resources Economic

D i v i s i o n Economic Research Serv ice U. S. Department o f A g r i c u l t u r e Room 504 500 12 th S t r e e t , S.W. Washington , DC 20250

k l n d i c a t e s a member o f t he Recrea t ion B e n e f i t Eva lua t i on Committee.

John L. Needy Adam A. Soko losk i D i v i s i o n o f Fo res t r y , U. S. F i s h and W i l d l i f e Serv ice

F i s h e r i e s and W i l d l i f e 1 9 t h and C s t r e e t s , N.W., Tennessee Val 1 ey A u t h o r i t y Roorn 2244 N o r r i s , TN 37828 Washington, DC 20240

G. Rober t 01 son* Gordon Tay l o r * D i v i s i o n o f Fo res t r y , Of f ice o f Econornics

F i s h e r i e s and W i l d l i f e Federal Power Commission Tennessee Val 1 ey A u t h o r i t y 825 N. C a p i t o l S t r e e t N. E. N o r r i s , TN 37828 Washington, DC 20426

Rodney 01 son* U. S. F i s h a r ~ d W i l d l i f e Se rv i ce 1 9 t h and C S t r ee t s , N.W., Room 2646 Washington, DC 20240

Richard Po r t e r * Bureau o f Recl arnation DOI, Room 7443 1 8 t h and C S t r ee t s , N.W. Washington, DC 20240

R ichard T. Reppert* I n s t i t u t e f o r Water Resources U. S. Army Corps o f Engineers Kingman Bui 1 d i n g F t . Be1 v o i r , VA 22060

George B. T u l l ey* Tennessee V a l l e y A u t h o r i t y Knoxv i l l e , TN 37902

A. Heaton U n d e r h i l l Bureau o f Outdoor Recrea t ion U. S. Department o f t h e I n t e r i o r 1 8 t h and C S t r ee t s , N.W. Washington, DC 20240

Demetres A. V la tas* O f f i c e o f Water Research and

Tec hnol ogy U. S. Department o f I n t e r i o r Room 5422 19 th and C s t r e e t s Washington, DC 20240

Jack A. Richards Robert C. b laters* Regional Econonii s t U. S. Water Resources c o u r ~ c i l Northwest F i s h e r i e s Center 2120 "L" S t r e e t , N.W. 2725 Mont l ake B l vd., E S u i t e 800 S e a t t l e , WA 98102 Washington, DC 20037

K e i t h Shone Ralph W i 1 son* Bureau o f Outdoor Recrea t ion U. S. S o i l Conservat ion Se rv i ce U. S. Department o f I n t e r i o r South A g r i c u l t u r e Bldg. 1 8 t h and C S t r ee t s , N.W. 1 4 t h and Independence Ave., Washington, DC 20240 Washington, DC 20250

* I n d i c a t e s a member o f the Recreat ion B e n e f i t Eva lua t i on Committee.

APPENDIX B AGENCY PROCEDURES

An a t tempt was made t o summarize procedures used by f ede ra l

agencies f o r e s t i m a t i n g r e c r e a t i o n b e n e f i t s f o r proposed water

resource development p r o j e c t s . The purpose o f t h e a n a l y s i s

was t o i d e n t i f y p romis ing approaches t o e s t i m a t i n g t he c o n t r i - b u t i o n o f r e c r e a t i o n t o n a t i o n a l economic development. The

a n a l y s i s was based on documents p rov ided by t he f o l l o w i n g

agencies: U. S. Army Corps o f Engineers, U.S.D.A. S o i l Conser-

v a t i o n Serv ice, U .S.D. I. Bureau o f Outdoor Recreat ion, and

U.S.D.I. F i sh and Wild1 i f e Serv ice . A summary o f each agency's

procedures i s presented be1 ow:

The i n t e r p r e t a t i o n o f Corps o f Engineers procedures was

based on t h e f o l l o w i n g documents:

1) "A Suggested Method o f Determin ing t he Value f o r a Recrea t ion Day a t Corps o f Engineers Reservo i r P r o j e c t s " (no da te o r source) .

2) Papers presented a t SPD Recrea t ion O r i e n t a t i o n Sess ion , 4-8 Nov. 1968.

3) Regu la t i on No. 1120-2-400: " I n v e s t i g a t i o n s , P lann ing and Development o f Water Resources ,I1 1 Nov. 1971 ( i ncorpor - a t i n g changes f rom Oct. 10, 1972 and June 29, 1973).

4 ) Regu la t i on No. 1165-2-1: "Water Resources Development Programs o f t he Corps o f Engineers," 10 Jan. 1975.

5) P l a n Fo rmu la t i on and E v a l u a t i o n Stud ies-Recreat ion, Volumes I - V , June 1974.

Two r r~a i r~ approaches t o t he e s t i r r ~ a t i o n o f b e n e f i t s frorn rec -

r e a t i o n a t Corps r e s e r v o i r s were found. The "most s i m i l a r

p r o j e c t " approach, descr ibed i n Volume I 1 o f PFES and e l s e -

where, i n v o l v e s t he f o l l o w i n g s teps. F i r s t , use o f t h e p ro -

posed s i t e i s est imated. Data c o l l e c t e d by t he Corps on a

sampl e of 52 r e s e r v o i r s f rom 1966 t o 1969 i s used t o s e l e c t

t h e p r o j e c t ( o r p r o j e c t s ) most s i r r l i l a r t o t h e proposed one.

Next, t he day-use market a rea- i .e . , t h e area f rom which 80%

o r more of day use o r ig ina tes -and t he per c a p i t a use curve of

t h e s i m i l a r p r o j e c t a r e ad jus ted f o r d i f f e r e n c e s i n s i ze , pop-

u l a t i o n d i s t r i b u t i o n , t h e number of a1 t e r n a t i v e r e c r e a t i o n

areas, and o t h e r c h a r a c t e r i s t i c s o f t h e proposed s i t e . From

t h e ad jus ted per c a p i t a use curve and c u r r e n t and p ro jec ted

p o p u l a t i o n f i g u r e s f o r t h e ad jus ted market area, i n i t i a l and

f u t u r e use o f t he s i t e a r e c a l c u l a t e d .

To ta l b e n e f i t s a r e then found by mu1 t i p l y i n g es t imated use

by a u n i t day va l ue f rom t h e range g iven i n t he P r i n c i p l e s a n d

S t a n d a r d s . I t i s noted i n Regu la t ion No. 1120-2-400 t h a t t he

va lue of any c u r r e n t r e c r e a t i o n a l use o f t h e p r o j e c t area

shou ld be deducted f rom p r o j e c t b e n e f i t s . Two p o i n t systems

were found i n t h e m a t e r i a l rev iewed which cou ld he1 p i n t h e

cho i ce o f a value, one e n t i t l e d "A Suggested Method of Deter-

m in ing t h e Value f o r a Recrea t ion Day a t Corps o f Engineers

Reservo i r P r o j e c t s " (an NPD r a t i n g c h a r t ) , and one presented

by Jack Bernard a t t h e SPD Recrea t ion O r i e n t a t i o n Session. I n

each, t h e proposed r e s e r v o i r i s assigned p o i n t s on t he b a s i s

o f such c r i t e r i a as t h e qua1 i t y o f access and r e c r e a t i o n a l

f a c i l i t i e s , t h e number o f a c t i v i t i e s a v a i l a b l e , a e s t h e t i c con-

d i t i o n s o f t h e p r o j e c t , and c o m p e t i t i v e r e c r e a t i o n areas. The

t o t a l o f p o i n t s f rom a l l ca tego r i es i s then used t o determine

a p a r t i c u l a r va lue. N e i t h e r t a b l e p rov ides guidance f o r t he

cho i ce o f a va lue f o r spec ia l i z e d r e c r e a t i o n a c t i v i t i e s .

The second approach t o t h e e s t i m a t i o n o f r e c r e a t i o n bene-

f i t s i s e l abo ra ted i n Volumes I 1 1 and V o f PFES. I n these

volumes, r e g i o n a l e s t i m a t o r s were developed f o r s p e c i f i c Corps

d i s t r i c t s by p o o l i n g d a t a from a l l r e s e r v o i r s w i t h i n each d i s -

t r i c t . I n genera l these took t h e form o f regress ions of r ec re -

a t i o n days on popu la t i on , d i s t a n c e from t h e r e s e r v o i r , su r face

area o f t h e p r o j e c t , and an index o f a1 t e r n a t i v e r e c r e a t i o n

areas. From t h e r e g i o n a l es t imato rs , demand curves f o r par -

t i c u l a r p r o j e c t s were de r i ved u s i n g t h e t r a v e l c o s t method,

i n c o r p o r a t i n g an ad justment f o r t h e d i s u t i l i t y o f t ime i n t h e

form o f an assumed t r a d e o f f between money and t ime cos ts .

Recrea t ion bene f i t s o f a proposed s i t e cou ld then be c a l c u l a t e d

as t h e area under t h e de r i ved p r o j e c t demand curve.

A l though t h i s method was proposed as a replacement f o r t he

most s i m i l a r p r o j e c t approach, i t i s n o t c l e a r t o what e x t e n t

i t was accepted by t h e Corps o r i s a c t u a l l y be ing used. The

10 Jan. 1975 r e g u l a t i o n s t i l l advocates t h e s i m i l a r p r o j e c t

approach.

The i n t e r p r e t a t i o n o f S o i l Conservat ion Se rv i ce procedures

was based on t h e f o l l o w i n g documents:

1) USDA Procedures for Planning Water and Related Re- sources, pp. 111-7 to 111-8 and V-8 to V-10, March 1974.

2) SCS Watershed protection Handbook, Sect ion 108.05- "Recreation or Fish and Wildlife Benefits," 8/23/74.

3) Preliminary revision of SCS Economics Guide,Chapterg- "Recreational and Fish and Wildlife Development," May 1975 (not yet officially adopted).

4) SCS Resource Conservation and Development Handbook, Section 102.6-"Evaluation of RC & D Measures," 9/23/75.

The methodology f o r e s t i m a t i n g b e n e f i t s f rom water r e c r e -

a t i o n i s descr ibed i n genera l by USDA Procedures and i n more

d e t a i l i n scs Economics Guide. B a s i c a l l y , b e n e f i t s a r e t o be

c a l c u l a t e d as t h e p roduc t o f es t i r r~a ted v i s i t a t i o n and a u n i t

day va lue f rom t h e Principles and Standards. It i s i n d i c a t e d

t h a t any l o s s o f r e c r e a t i o n o p p o r t u n i t y as w e l l as ga ins from

a proposed p r o j e c t should be assessed.

The c a l c u l a t i o n o f expected use, i .e., t he n e t a c t i v i t y

demand f o r a s i t e , proceeds as f o l l o w s . F i r s t , an es t imate o f

t h e p r o j e c t ' s r e c r e a t i o n market a rea (RPIA), i .e., t h e area

from which 80% of day o r o v e r n i g h t use i s expected, i s made.

Next, c u r r e n t per c a p i t a p a r t i c i p a t i o n r a t e s f o r r e c r e a t i o n a l

a c t i v i t i e s w i t h i n t h e RMA a r e mu1 t i p 1 i e d by p r o j e c t e d popu la t i on

t o determine f u t u r e demand f o r these a c t i v i t i e s . The n e t

a c t i v i t y demand f o r t h e proposed s i t e i s t h e d i f f e r e n c e between

f u t u r e demand and t h e c a p a c i t y of a l r e a d y e x i s t i n g s i t e s .

Presuming t h a t s u f f i c i e n t f a c i l i t i e s can be p rov ided a t t h e

s i t e t o accommodate n e t a c t i v i t y demand , the c a l c u l a t e d number

o f r e c r e a t i o n days i s then m u l t i p l i e d by an a p p r o p r i a t e u n i t

day va lue, which i s i n t e r p r e t e d as a measure o f t h e amount

users would be w i l l i n g t o pay t o a v a i l themselves o f t h e r e c -

r e a t i o n o p p o r t u n i t y . For general r e c r e a t i o n a c t i v i t i e s as

d e f i n e d by t h e Principles and Standards, g u i d e l i n e s a r e p ro -

v i ded f o r choos ing w i t h i n t h e $.75-$2.25 range i n t h e form o f

a p o i n t system. The proposed s i t e i s ass igned p o i n t s on t h e

b a s i s o f f o u r c r i t e r i a - r e c r e a t i o n exper ience, development

sca le , s i t e m o d i f i c a t i o n , and env i ronmenta l qua l i t y -and t h e

t o t a l p o i n t va l ue i s used t o de te rmine a p a r t i c u l a r u n i t day

v a l he.

The g u i d e l i n e s f o r s p e c i a l i z e d r e c r e a t i o n a r e as f o l l o w s :

e x i s t i n g da ta a r e t o be used t o es t ima te man-days o f f i s h i n g

i n a p r o j e c t area; t h e cho i ce o f a u n i t day va lue depends on

t h e spec ies and t y p e o f f i s h i n g i nvo l ved , a l t hough no p a r t i c u -

l a r guide1 i n e s a r e g iven.

The i n t e r p r e t a t i o n o f Bureau o f Outdoor Recrea t ion proce-

dures was based on t h e f o l l o w i n g documents:

1 ) Water Resources Program Handbook ( d r a f t ) .

2 ) Memorandum f rom W i 1 1 i am H. Honore, October 19, 1976.

The Bureau o f Outdoor Recrea t ion employs t h r e e methods t o

eva lua te t h e r e c r e a t i o n b e n e f i t s o f a p a r t i c u l a r p r o j e c t :

( 1 ) a p o i n t system f o r s e l e c t i n g a va lue f rom t h e range con-

t a i n e d i n t h e P r i n c i p l e s and Standards; ( 2 ) t h e comparable

s i t e method; and (3 ) t h e t r a v e l c o s t method. A p a r t i c u l a r

method o r v a r i a t i o n o f a method i s used on a case by case

b a s i s so t h a t t h e most a p p r o p r i a t e procedure f o r t h e a v a i l a b l e

da ta and c h a r a c t e r i s t i c s o f a p a r t i c u l a r p r o j e c t i s se lec ted .

P o i n t systems a r e t h e most commonly used approach.

I t i s t h e p o l i c y of t h e Bureau t h a t va lues should be

se lec ted on t h e b a s i s o f s t ud ies o f what people a r e w i l l i n g t o

pay f o r outdoor rec rea t ion-e .g . , surveys o f ent rance and user

fees a t compet ing s i t e s and t h e d i s t a n c e people t r a v e l t o

thern-as w e l l as t h e f e a t u r e s of a proposed p r o j e c t . Th i s

i n fo rma t i on should be used i n c o n j u n c t i o n w i t h t h e above

methods.

U. S . FISH AND WILDLIFE SERVICE

The i n t e r p r e t a t i o n o f U. S. F i s h and W i l d l i f e Serv ice p ro -

cedures was based on t h e f o l l o w i n g documents:

1) "Guide l ines f o r Implementing the P r i n c i p l e s and Stan- dards f o r P lann ing Water and Related Land Resources i n S tud ies o f Federal Waterfowl Refuges ," August, 1976, d r a f t prepared by The F i s h and W i l d l i f e Serv ice .

2) H a b i t a t E v a l u a t i o n Procedures, J u l y 1 , 1976, D i v i s i o n o f Eco log i ca l Serv ices, U. S . F i s h and W i l d l i f e Serv ice, U . S . Department o f t he I n t e r i o r .

The e s t i m a t i o n o f r e c r e a t i o n user b e n e f i t s , i n c l u d i n g hun t -

i n g and f i s h i n g a t proposed water resource development p r o j -

ec ts , i n v o l v e s two s teps: c a l c u l a t i n g man-days on t h e p r o j e c t

area, and s e l e c t i n g a u n i t day value. Es t ima t i on o f use i s

made on t h e b a s i s o f da ta on t h e e x t e n t o f t h e a c t i v i t i e s

w i t h i n t h e area f rom which t he p r o j e c t i s expected t o draw

users, t h e s i z e o f t h e area, t h e p r o j e c t , and t h e h a b i t a t asso-

c i a t e d w i t h t h e p r o j e c t . The man-days of use c a l c u l a t e d i n

t h i s manner a r e m u l t i p l i e d by a monetary va lue app rop r i a te f o r

t he t ype of a c t i v i t y invo lved . Th i s va lue may be taken from t h e range of va lues i n t h e Principles and Standards o r another

source as p rov ided i n t h e Principles and Standards. Values generated by s t a t e agencies o f t e n a re used.

APPEMIIX C VALUATION METHODOLOGY

A number o f a1 t e r n a t i v e methods have been advanced f o r t h e

va l u a t i o r ~ o f r e c r e a t i o n resources. Th i s appendix p rov ides a

d e s c r i p t i o n o f some o f them. The f i r s t s e c t i o n d iscusses con-

cep ts t h a t r e l a t e t o demand o r w i l l i n g n e s s t o pay, w h i l e the

second d iscusses concepts t h a t do n o t d i r e c t l y r e l a t e t o w i l l -

ingness t o pay.

Several methods f o r v a l u a t i o n o f r e c r e a t i o n a r e based on

t h e w i l l'i ngness o f consumers t o pay, as revea led by a demand

curve f o r a r e c r e a t i o n s i t e o r a c t i v i t y . I n a d d i t i o n t o t he

consumers' su rp lus measures presented i n t h i s r e p o r t t h e r e a r e

those methods which employ market value, maximum revenue of a

n o n - p r i c e - d i s c r i m i n a t i n g mor~opo l i s t , maximum revenue o f a

p e r f e c t - p r i c e - d i s c r i m i n a t i n g monopol i s t , 1 and va l ues, and a1 - t e r n a t i ve cos t s .

Market Va lue

I n genera l , market va lue i s an accep tab le measure o f con-

t r i b u t i o n t o n a t i o n a l economic development p rov ided t h e demand

curve can be cons idered n e a r l y h o r i z o n t a l and t h e market p r i c e

c o r r e c t l y measures va lue i n exchange. ' However, t h i s does n o t

mean t h a t p r i c e s i n p r i v a t e markets a r e an adequate measure o f

va lue f o r p u b l i c r e c r e a t i o n . I f t h e consumer faces a wide

cho i ce o f s u p p l i e r s a l l p , rov id ing se rv i ces a t t h e same p r i c e ,

actors t h a t may l i m i t t h e use fu lness o f market p r i c e as a measure o f va l ue i n c l u d e : monopoly and monopsony elements, subs id i es , e x t e r n a l i t i e s , unacceptab le d i s t r i b u t i o n o f incpme, p r i c e c o n t r o l s , and o t h e r government r e g u l a t i o n .

o r i f the change i n o u t p u t generated by a p r o j e c t i s smal l

enough ( r e l a t i v e t o t h e marke t ) n o t t o a l t e r market p r i c e ,

then t h e demand schedule can be cons idered h o r i z o n t a l i n the

r e l e v a n t r e g i o n . When t h e implementat ion of a p l a n r e s u l t s i n

a s i g n i f i c a n t change i n p r i c e o r when t he e x i s t i n g p r i c e i s

unacceptable as a measure o f s o c i a l value, t hen market va lue

i s an unacceptable measure of c o n t r i b u t i o n t o n a t i o n a l eco-

nomic development.

The r e c r e a t i o n i n d u s t r y i s cha rac te r i zed by a l a r g e amount

o f government e n t e r p r i s e . Demand i s 1 i k e l y t o be downward

s l o p i n g because r e c r e a t i o n i s a p roduc t wide1 y d i f f e r e n t i a t e d

by l o c a t i o n and q u a l i t y . Th is , coupled w i t h t he l a r g e sca le

o f many r e c r e a t i o n s i t e s and t h e absence o f c o m p e t i t i v e p r i c -

i ng , o f t en makes market p r i c e an i n a p p r o p r i a t e measure of

w i l l i n g n e s s t o pay.

Three ma jo r problems 1 i m i t t he use fu lness o f market va lue

as a measure o f t h e va lue o f r e c r e a t i o n o p p o r t u n i t i e s .

1 ) The p r i c e of s i m i l a r se rv i ces i n t he p r i v a t e r e c r e a t i o n

market may be a poor s i m u l a t i o n o f a market p r i c e f o r p u b l i c

o p p o r t u n i t i e s . Some impo r tan t d i f f e r e n c e s between publ i c and

p r i v a t e f a c i l i t i e s i n c l u d e t h e amount o f congest ion, t h e l e v e l

of q u a l i t y , and t h e s c a l e and c o s t o f se rv i ces prov ided.

Pub l i c s i t e s a r e o f t e n l a r g e r , assoc ia ted w i t h un ique scenic

o r h i s t o r i c areas, and p r o v i d e fewer personal se rv i ces . For

some a c t i v i t i e s , no p r i v a t e market e x i s t s . Even where p r i v a t e

market p r i c e s f o r t r u l y comparable r e c r e a t i o n se rv i ces can be

found t hey a r e o f t e n depressed by compe t i t i on from the low

p r i c e s o f p u b l i c f a c i l i t i e s . Consequently, i t i s very d i f f i -

c u l t t o s imu la te a market p r i c e f o r many o f t h e r e c r e a t i o n

a c t i v i t i e s p rov ided by publ i c water resource p r o j e c t s . The

second and t h i r d problems below r e l a t e t o t he usefu lness of

market va lue as a measure o f c o n t r i b u t i o n t o n a t i o n a l economic

development when p r i c e can be es t imated s a t i s f a c t o r i l y .

2 ) Market p r i c e r e f 1 e c t s b n l y what consumers (purchasers)

a c t u a l l y pay. T h i s ignores any consumers' su rp lus , o r t he

a d d i t i o n a l amount which consumers cou ld be induced t o pay.

The sum of ac tua l o n - s i t e expend i tu re and an es t imate o f con-

sumers' su rp lus p rov ides a b e t t e r es t imate o f t o t a l b e n e f i t s .

Consequently, under these c o n d i t i o n s market va lue unde res t i - mates t he t o t a l amount consumers a r e w i l l i n g t o pay. To ill us-

t r a t e , cons ider F igu re C-1 below i n which AB represen ts a

downward-sl op ing demand curve f o r a s e r v i c e p rov ided by a firm.

I f market p r i c e were OP and q u a n t i t y taken OQ, market va lue

would i n d i c a t e t h a t t o t a l b e n e f i t s a re OPCQ; b u t t he t o t a l

w i l l i n g n e s s t o pay i s OACQ. Market va lue i gno res t h a t p a r t of

w i l l ingness t o pay r e f l e c t e d by PAC.

Quantity

I f t h e demand curve f o r a d d i t i o n a l u n i t s o f t he s e r v i c e

were n e a r l y h o r i z o n t a l , PAC i n F igu re C-1 would be n e a r l y zero

and market p r i c e would a c c u r a t e l y measure t o t a l w i l l i n g n e s s t o

pay. T h i s r a i s e s t he ques t i on o f t h e p resen t and f u t u r e com-

p e t i t i v e s t r u c t u r e o f t h e market f o r r e c r e a t i o n . Are con-

sumers 1 i k e l y t o f ace a h o r i z o n t a l demand curve? ' I t appears

.puewap JO Lqk~~qsela L~eqkun JO qukod ayq squasa~da~

a 'u~oys se a~~n3 puewap JeaukL e q7~~ -a~~n3 puewap ayq

Japun paqk~3sui aq ue3 143114~ (bad()) a16ueq3a~ qsa6~el a147 Lq

~-3a~n6kj uo paqe~kpuk sk 31 -uokqezkwkxetu qkjo~d se awes ay3

sk sky7 'qso3 alqegeA oJaz JO asp3 ayq ~oj ' [[e oq a3k~d auo

6ut6~ey3 Lq s~awnsuo3 UOJJ paq~e~qxa aq plno3 qeyq qsow ayq

s~ qs~~odouow 6u~qeu~u~~~~s~p-a~~~d-uou e JO anuaAaJ LunwkxeN

.Led oq ssau6ulllk~ Leqoq JO amseaw e se anleA qaydeur JO ssau

-1njasn ayq uke~qsuo3 'qay~ew uokqea~~a~ ayq uk a~~r-13 puewap

6utdols-p~e~u~op e pue aspd~aqua quawu~a~o6 JO qunowe a6~el e

JO a~uasa~d ayq 6ukpnl3uk 'SJO~~PJ JO Jaqwnu e cL~ewwns UI

.papk~o~d sa3p~as JO sqso3 pue adLq ayq puecsJasn ~ekquaqod

JO uokqnqpqskp pue s3kqsk~aq3e~ey3 ayq 'uo~qe3ol sqk uo

6ukpuadap qayJew quaJaJJkp qeyMawos e sey aqks y3e3 .swalqo~d

que3k~ku6ks squasa~d uokqenqks Jayqoue oq qk 6ukL~dd~ pue Jay

-~ew auo UOJJ a3pd qayJetu 6ukyel 'a3~~d ~pln3kq~pd e q~ PLOS

Lq~quenb ~eln~kq~ed e yqi~ paq~k3osse sk anleA qayJcN (E

wa~~n3 puewap ayq

JD adols ayq qq~~ sasea~3u~ uokqewkqsa~apun ayq JO apnq~u6~w

ayT pue Led oq ssau6uk~~k~ saqewkqsaJapun a3~~d qayJPw6ase2

Lue UI .suokqkpuo3 qayJew yqk~ op 07 alqqk 1 aAey saqls 3~ ~qnd

qe sa~yd 'paukjap 1 LaM ~ou sk a3pd JayJew e sak~kunq~oddo

uokqea~3a~ JO uokspo~d 31 [qnd "a- 'suokqkpuo3 qua~~n3 Japun

.L~qsnpuk ayq JO ~~ed a6~el e saqeukwop ~oq3as aq~~pd ayT

JC uaAa qskxa LL~M ah~t-13 puptuap aq~s 6u~dols-p~e~u~op P pue

anukguo~ oq L~ayk s uo~qlqadwo~ 3~7s; ~odouow JO UJOJ ~ekqeds

e cq~r~po~d paqeLquaJaJJ ~p L~y6ky e pue uokq~npo~d alms

-a6~el cuo~qdwnsuo~ 2k~~3ads-aqks se y3ns L~qsnpuk uokqeaJ

-3a~ ayq JO sxgsk~aq~e~ey3 ukeq~a3 uaAkg .qou aJe Layq qpyq

FIGURE C - 2

Quantity

Clawson (1959), deal ing with the case of no user charge,

suggested use of maximum revenue a t ta inab le by a non-price-

discriminating monopolist as the value of recreation. Others

who follow his suggestion include Castle and Brown (1964), Brown, Singh, and Cast1 e (1 964), Stoevener and Sokol oski

(n .d . ) , and Stevens (1966). I t was f e l t tha t such a method

would yie ld a value most comparable t o the value the s i t e

would have i f i t were privately owned. Knetsch (1964) and,

subsequently, Clawsor~ (Cl awson and Knetsch, 1966) advocated

consumers' surplus, ra ther than monopoly revenue, as the appro-

p r ia te measure of value under conditions of no entry fee .

A number of researchers have calculated both consumers'

surplus and monopoly revenue without choosing e i ther as the

appropriate measure of value. These include Brink (1 973),

Martin, G u m , and Smith (1 974), and Sublette and Martin (1 975).

Maximum revenue of a non-price-di scrimi na t i n g monopol i s t does not indicate the fu l l benefits (expressed in terms of

willingness t o pay) received by consumers facing a zero charge.

These b e n e f i t s depend, r a t h e r , on t h e amount o f t h e good

supp l i ed and t h e c o s t o f supp l y i ng i t. For example, i f quan-

t i t y Q ( i n F i g u r e C-2) were supp l i ed a t no c o s t , t h e f u l l

b e n e f i t would be OABQ. I f t h e r e were no c o s t and no supp ly

c o n s t r a i n t , consumers would consume OC and r e c e i v e a d d i t i o n a l

b e n e f i t s g i ven by QBC. Thus i f w i l l i n g n e s s t o pay i s t o be

measured, revenue o f a non -p r i ce -d i sc r im ina t i ng monopol i s t i s

n o t a p p r o p r i a t e . Besides t h e conceptua l p r o b l em, t h e r e a r e

p r a c t i c a l problems w i t h t h e concept, i n c l u d i n g i t s f a i l u r e t o

d i s t i n g u i s h adequa te ly between p r o j e c t s . For a f u r t h e r d i s -

cuss i on see Smi th (1 975) . Some examples o f these probl.ems a r e

as f o l l o w s :

1 ) Wi th ze ro v a r i a b l e supp ly c o s t and p r i c e , (F i gu re C-3)

what i s t h e b e n e f i t f rom i n c r e a s i n g t h e f i x e d supp ly f rom

Q, t o Q,? I f revenue o f a n o n - p r i c e - d i s c r i m i n a t i n g monopo l i s t

were used t o eva lua te t h e inc rease , t h e n e t b e n e f i t would be

zero. Both Q, and Q, would be cons idered t o g i v e the same

b e n e f i t (OABC) even though more o u t p u t a t t he same p r i c e i s

p rov i ded a t Q,.

FIGURE C-3

Quantity

2) Consider t h e demand curves, D, and D,, i n F i g u r e C-4 f o r

two a l t e r n a t e p r o j e c t s .

Revenue of a n o n - p r i c e - d i s c r i m i n a t i n g monopo l i s t i s t h e

same f o r both, y e t t o t a l w i l l i n g n e s s t o pay i s g r e a t e r w i t h D,.

Quantity

3 ) I f t h e r e a r e p o s i t i v e marg ina l c o s t s t o p roduc t i on , t h i s

method may be unable t o d i s t i n g u i s h between two p r o j e c t s w i t h

t h e same c o s t s even i f one would r e s u l t i n g r e a t e r o u t p u t a t

l ower p r i c e . Th i s i s because t h e method cons ide rs t h e demand

curve o n l y , whereas supp ly may a l s o a f f e c t b e n e f i t s , as shown

i n t h e p rev ious example.

Thus, t h e revenue o f a n o n - p r i c e - d i s c r i m i n a t i n g monopo l i s t

i s a weak c r i t e r i o n f o r r ank ing investments . I t a l s o s u f f e r s

f rom l a c k o f c o m p a r a b i l i t y w i t h o t h e r s tandard techniques o f

b e n e f i t e v a l u a t i o n f o r wa te r uses which a t t emp t t o measure t h e

f u l l w i l l i n g n e s s t o pay. The use o f t h i s method would r e s u l t

i n an underva l u a t i o n o f r e c r e a t i o n b e n e f i t s r e l a t i v e t o o t h e r

p r o j e c t b e n e f i t s .

~aximum Revenue of Perfect-price- Discriminating Monopolist

Th i s procedure p rov ides a measure o f b e n e f i t s which i s i d e n t i c a l t o e v a l u a t i n g t o t a l w i l l i n g n e s s t o pay. A pe r f ec t -

p r i c e - d i s c r i m i n a t i n g monopo l i s t i s ab le t o s e l l each succes-

s i v e u n i t of h i s commodity f o r t he maximum p r i c e an i n d i v i d u a l

i s w i l l i n g t o pay f o r i t ; Such a monopo l i s t would produce t h e

q u a n t i t y a t which t h e p r i c e p a i d f o r t h e l a s t u n i t equa l l ed

t h e marg ina l c o s t of produc ing i t and cou ld cap tu re t he f u l l

w i 1 1 i ngness of consumers t o pay, i n c l u d i ng a1 1 consumers ' 2 s u r p l us. For example, i n F igu re C - 5 h i s revenue f rom s e l l i n g

OQ would be ODBQ.

D FIGURE C-5

MC

P

0 -

Quantity

I n the spec ia l case o f zero p r i c i n g , t he revenue o f a per -

f e c t p r i c e d i s c r i m i n a t o r corresponds t o t h e t o t a l area under

t h e s i t e demand curve , p rov ided t h a t income e f f e c t s a r e n e g l i -

g i b l e . T h i s l a s t qua1 i f i c a t i o n r e q u i r e s t h a t t he e x t r a c t i o n

o f t h e f u l l w i l l i n g r ~ e s s t o pay should n o t i n v o l v e such a

s i g n i f i c a n t wi thdrawal o f income t h a t consumers would be

2 ~ e n d e r s o n and Quandt, (1971) p. 217.

f o r ced t o r e v i s e t h e i r demand a f t e r t h e purchase o f each un i t .3

A l so i n t h e case o f ze ro use fee, such revenue i s i d e n t i c a l t o consumers ' su rp lus .

More general l y , if t h e fee i s s e t a t t he l e v e l where mar-

g i n a l c o s t equals p r i c e , revenue o f a p e r f e c t p r i c e -

d i s c r i m i n a t i n g monopol-1st w i l l be e q u i v a l e n t t o gross b e n e f i t s

and w i l l i n c l u d e consumers' su rp lus a long w i t h a c t u a l expendi-

t u r e s by consumers. I n F igu re C-5, ODBQ represen ts t he reve-

nue o f a p e r f e c t - p r i c e - d i s c r i m i n a t i n g monopo l i s t o r gross

b e n e f i t s f rom q u a n t i t y OQ, equal t o consumers' su rp lus (PDB)

p l us expend i tu res (OPBQ) .

The Land-Value Method

The survey and t r a v e l c o s t methods a r e use fu l f o r eva lu-

a t i n g t h e b e n e f i t s t o s i t e users. N e i t h e r method a t tempts t o

measure ex te rna l b e n e f i t s which a r i s e because o f t he a t t r a c -

t i v e n e s s o f l i v i n g near a r e c r e a t i o n area. These b e n e f i t s

m igh t accrue t o non-users as w e l l as users. The use o f l and

va lues i s a method which a t tempts t o overcome t h i s shortcoming.

Land va lues a r e 1 i k e l y t o be a f f e c t e d by peop le 's p r e f e r -

ence f o r p r o x i m i t y t o a r e c r e a t i o n a l area. Rent on l and

nea res t t h e s i t e w i l l be h igh , r e f l e c t i n g t h e f a c t t h a t those

i n d i v i d u a l s who l o c a t e near a s i t e may en joy t he use and t h e

v iew o f t h e area w i t h ve ry l i t t l e expense o r inconvenience.

The i r~crernent i n l o c a l l a n d va lues i s taker1 as t h e b e n e f i t of

t h e s i t e . The r a t i o n a l e i s based on t he c l a s s i c a l t h e o r y o f

r e n t s where r e n t s a r e es tab l i shed on l a n d a f f e c t e d by t h e

3 ~ h i s e f f e c t occurs ma in ly w i t h i n d i v i d u a l demand curves. For market curves where each i n d i v i d u a l takes o n l y a smal l p o r t i o n o f q u a n t i t y , the e x t r a c t i o n from h im o f h i s maximum w i l l i n g - ness t o pay has no e f f e c t upon t he maximum w i l l i n g n e s s t o pay o f o t h e r users .

p r o j e c t so as t o e l i m i n a t e any consumers' s u r p l u s o r above-

normal p r o f i t . Thus, t h e inc rease i n r e n t s i s a measure of

t h e inc reased w i l l ingness t o pay due t o t h e p r o j e c t .

Conceptua l ly , t h e l a n d va lue method w i l l c ap tu re t he bene-

f i t s of bo th users and non-users and, as a r e s u l t , would i n -

c l u d e t he b e n e f i t s measured by o t h e r methods. Bu t i n p r a c t i c e ,

t he method can o n l y be used f o r l a n d i n t h e immediate v i c i n i t y

of a s i t e . The expense o f da ta c o l l e c t i o n and t h e mu1 t i t u d e

o f f ac to r s which a f f e c t l a n d va lues would make i t d i f f i c u l t t o

es t ima te t h e e f f e c t o f a s i t e on l a n d va lues a t d i s t a n t

l o c a t i o n s .

As s ta ted , t h e method cou ld concep tua l l y cap tu re t h e bene-

f i t s t o d i s t a n t users measured by t he t r a v e l c o s t procedure.

Suppose a new s i t e i s developed which reduces an i n d i v i d u a l ' s

t r i p expense. Th i s i n d i v i d u a l w i l l ga i n some consumers ' su r -

p l u s f rom c o s t sav ings on h i s p resen t number o f t r i p s and f rom

any new t r i p s generated i n response t o the l owe r p r i c e . Th i s

i s t h e b e n e f i t found by t he t r a v e l c o s t method. The value, t o

t h e i n d i v i d u a l , o f h i s l o c a t i o n i s now g r e a t e r . The l and

owner may be i n a p o s i t i o n t o e x t r a c t t h i s consumers' su rp l us

by cha rg i ng h i g h e r r e n t s . I f t h i s i s t h e case, t hen t he i n -

c rease i n y e a r l y r e n t s w i l l correspond t o t h e y e a r l y b e n e f i t s

o f t h e r e c r e a t i o n s i t e .

As i n d i c a t e d , i t i s n o t r e a l i s t i c a l l y p o s s i b l e t o f i n d t he

e f f e c t s on l a n d va lue a t ve ry g r e a t d i s t ances f rom t h e s i t e .

U s u a l l y t h e l a n d va lue changes (which a r e e q u i v a l e n t t o t h e

c a p i t a l i z e d stream o f r e n t changes) o f a s m a l l e r area near t h e

f a c i l i t y a r e cons idered. Th i s should t hen be supplemented

w i t h t h e t r a v e l c o s t o r survey method t o eva lua te t h e bene f i t s

t o users o u t s i d e t h e c e n t r a l area. C l e a r l y t h e method i s

most u s e f u l when t h e r e a r e s i g n i f i c a n t non-user b e n e f i t s i n

t h e area near t h e r e c r e a t i o n s i t e . I f t h e r e a r e no

s i g n i f i c a n t non-user b e n e f i t s , as may be t h e case f o r r u r a l

s i t e s , t h e t r a v e l c o s t o r su rvey method a1 one would p r o v i d e

t h e same i n f o r m a t i o n a t l e s s expense. The l a n d v a l u e method

i s most u s e f u l i n urban areas, where non-user b e n e f i t may be

s i g n i f i c a n t and t h e range o f d i s t a n c e s t r a v e l e d i s t o o sma l l

t o rr~ake t h e t r a v e l c o s t method u s e f u l .

Some c a u t i o n shou ld be e x e r c i s e d when u s i n g t h e l a n d v a l u e

method. There i s some danger o f doub le c o u n t i n g b e n e f i t s .

F i r s t , i t shou ld be c l e a r t h a t b o t h t h e u s e r and non-user

b e n e f i t s have been found. I t i s n o t necessary t o compute

b e n e f i t s by a n o t h e r method f o r those u s e r s l o c a t e d w i t h i n t h e

area accounted f o r by t h e l a n d v a l u e method. Knetsch (1964)

d e s c r i b e d a n o t h e r problem. To some e x t e n t , l a n d va lues near a

s i t e may n o t be independent o f t h e w i l l i n g n e s s t o pay o f rnore

d i s t a n t l y l o c a t e d u s e r s . The r e n t on l a n d owned by bus inesses

may r e f l e c t revenues made f rom s a l e s t o t h e s e d i s t a n t use rs .

T h i s e f f e c t o n l a n d v a l u e s s h o u l d n o t be counted i n b e n e f i t s .

I t e i t h e r r e f l e c t s doub le c o u n t i n g o f t h e b e n e f i t s a l r e a d y con-

s i d e r e d i n t h e w i l l i n g n e s s t o pay o f t h e d i s t a n t u s e r s o r a

t r a n s f e r o f spend ing f rom a bus iness a t a n o t h e r s i t e .

A f u r t h e r p rob lem which i s c o n s i d e r e d i n rrlore d e t a i l by

L i n d (1973) i s t h a t t h e r e may be a d i s c r e p a n c y between l a n d

v a l u e s and n e t b e n e f i t s . The m a r k e t f o r l a n d may be such t h a t

n o t a l l changes i n consumers' s u r p l u s o r bus iness p r o f i t can

be c a p t u r e d i n l a n d v a l ues. L i n d conc ludes t h a t , i f a nurr~ber

o f s i m i l a r a c t i v i t i e s a r e compet ing f o r each p a r c e l o f l and ,

t h e l a n d v a l u e change w i l l c a p t u r e a1 1 p r o f i t s and s u r p l u s . I t

i s w o r t h comment t h a t t h e change i n r e n t due t o a new s i t e

- 4 ~ o r f u r t h e r d i scuss ion o f t he t heo ry o f r e n t s and the bene-. f i t s o f pub1 i c programs see: Rothenberg (1971), Whitbread and Bi r d (1973), Vaughan (1974), and Freemand ( 1 975).

cannot exceed t h e e x t r a su rp lus o r p r o f i t generated by t h a t

s i t e . 5

There a r e rrlany a p p l i e d l and v a l r ~ e s tud ies . The method i s

based on us ing reg ress ion techniques t o i s o l a t e t h e e f f e c t o f

va r i ous f ac to r s on l and va lues. Some use fu l a p p l i e d s tud ies

a r e Knetsch (1963), K i t chen and Hendon (1967), Hendon (1 973),

Weicher and Zerbs t (19731, and D a r l i n g (1973). These s tud ies

have concent ra ted on s i t e s i n urban areas.

~ l t e r n a t i v e C o s t

The a l t e r n a t i v e c o s t method i s , i n some cases, u s e f u l f o r

p r o v i d i n g a measure of p r o j e c t b e n e f i t s w i t h o u t r e q u i r i n g

e s t i m a t i o n o f a demand curve . An ex tens i ve d i scuss ion o f t h e

method can be found i n S t e i n e r (1965).6 I n cases where demand

i s d i f f i c u l t t o es t imate , gross b e n e f i t s o f a p r o j e c t a r e

o f t e n taken as t h e c o s t s o f t h e n e x t bes t a1 t e r n a t i v e . Equiv-

a l e n t l y , n e t b e n e f i t s a r e t h e savings i n c o s t gained by b u i l d -

i n g t h e l e a s t c o s t p r o j e c t r a t h e r than t h e n e x t bes t a l t e r n a -

t i v e . T h i s procedure i s acceptable o n l y under c e r t a i n

c o n d i t i o n s .

For t h e procedure t o be acceptable, t h e f o l l ow ing cond i -

t i o n s must be s a t i s f i e d . The a l t e r n a t i v e must be substan-

t i v e l y d i f f e r e n t from t h e l e a s t c o s t p r o j e c t , y e t must s a t i s f y

t h e same demand. The demand curve must be p e r f e c t l y i n e l a s t i c

( v e r t i c a l ) a t t h e l e v e l o f o u t p u t produced by t h e h i g h c o s t

p r o j e c t , o r e l s e t h e sca le o f o u t p u t o f bo th p l a n t s must be

techno1 o g i c a l l y f i x e d a t t h e same l e v e l . A1 so, demand must be

s t r ong enough t h a t some p r o j e c t o r o t h e r w i l l c e r t a i n l y be

5 ~ e n n e r g r e n e t a l . (1975) use a measure which they desc r i be as " ren t .I1 I t i s no t r e n t .

6 ~ u r t h e r d i scuss ion can be found i n Pres t and Turvey (1965), James and Lee (1971), and Young and Gray (1972).

aq KLIJL~~J~:, plnoM s3kjauaq 40 a~6uek~3 do3 ay3 asneoaq si

31 -30u aJaM 33aFo~d 3so3 3seal ay3 jk 3 ~~nq uaaq ahey plnoM

40 s314auaq sso~6 6ukye3 03 3ualeh~nba sk sky1 -,dyad eaJe

papeys ay3 Kq pa~uasa~da~ aJe 33aCo~d 3so3 3seal a43 03 alqe3n

-qp33e s3gauaq 3au ay3 'ploy suo~3~puo3 asay3 41 .(~e3kq~a~)

3~3selauk K~33a~~ad sk ah~n3 pueuap ay3 pue d uaaM3

-aq $so3 40 a6ue~ ay3 JahO ',d 40 3so3 a6e~ahe ue sey ahkq

-eu~aq[e 3saq 3xau ay3 alkyM 'd 40 3so3 a6e~ahe ue sey 33aFo~d

so:, MOL ayl -&)a ah~n:, pueulap K~si3es 1 LCM y3~y~ 40 yloq

's33aCo~d OM^ 40 auo p LCnq 03 pa33kuu103 sk pue 'K~ddns JaqeM

-aq plnoM 33aCo~d 3saq

3xau ayq '3 LLnq 3ou aJaM 33aro~d ~so3-3seal ay3 J! 'pue '2~~nq

obta ined i n t h e f u t u r e t h a t o n l y t h e area PBAP' i s descr ibed

as t he n e t bene f i t s d i r e c t l y a t t r i b u t a b l e t o t he low-cos t

p r o j e c t . If t h e nex t b e s t a l t e r n a t i v e would n o t be con-

s t r uc ted , t h e f u l l t r i a n g l e o f b e n e f i t s , PDB, would be d i r e c l y

a t t r i b u t a b l e t o t h e l e a s t c o s t s i t e . To eva lua te PDB would

r e q u i r e e s t i m a t i o n of t h e demand curve.

The a1 t e r n a t i ve c o s t rr~ethod a1 so r e q u i r e s t h a t t he p r o j e c t s be

s u b s t a n t i v e l y d i f f e r e n t . James and Lee (1 971, p. 170) p o i n t o u t

t h e problems t h a t may o therw ise a r i s e . A t one extreme, " t he

bene f i t s may be made as smal l as one m igh t 1 i ke by comparing

t h e p r o j e c t w i t h an a l t e r n a t i v e t h a t d i f f e r s . . . o n l y by a very

s l i g h t mod i f i ca t i on . " A t t h e o t h e r extreme, "it i s always pos-

s i b l e t o f i n d a more expensive way o f b u i l d i n g any p r o j e c t . "

They suggest a v o i d i n g t h e u s e o f p r o j e c t s w i t h anycommon elements.

The n e c e s s i t y o f a v e r t i c a l demand curve a t t he l e v e l of

q u a n t i t y suppl i e d by t h e h i g h e r c o s t a1 t e r n a t i v e i s i n d i c a t e d

by a comparison of FiguresC-6aand b. I f the l owe r c o s t o f t h e

bes t ' p r o j e c t were t o induce e x t r a demand corresponding t o the

d i f f e r e n c e between Q and Q ' i n F i gu re C-6b, t hen t h e r e would

be a t r i a n g l e o f consumers' su rp lus , ABC, t h a t would n o t be

accounted f o r by t h e a1 t e r n a t i v e c o s t method. To eva lua te t h a t

t r i a n g l e would r e q u i r e e s t i m a t i o n o f t h e s lope o f t he demand

curve i n t h e r e l e v a n t r eg ion .

As a f i n a l cau t i on , i t should be r e a l i z e d t h a t p r o j e c t s

cons idered by t he a l t e r n a t i v e c o s t method w i l l be au tomat i -

c a l l y j u s t i f i e d (whether o r n o t they should be) . That i s , by

t a k i n g t h e b e n e f i t s o f one p r o j e c t t o be t he cos t s o f a more

expensive p r o j e c t , i t w i l l always be t h e case t h a t b e n e f i t s

a r e g r e a t e r t han cos t s . Such a procedure i s acceptable o n l y

i f bo th p r o j e c t s cons idered would r e s u l t i n t o t a l b e n e f i t s

which would more than compensate f o r expenses. As an example

o f t he t ype of m is take t h a t can be made, i t would be f a u l t y t o

say t h a t t h e bene f i t s o f p r o v i d i n g each consumer w i t h a

C a d i l l a c would be t h e sav ings i n c o s t compared t o p r o v i d i n g

each w i t h a Mercedes-Benz. I n f a c t t h e expend i tu re on e i t h e r

one would be u n j u s t i f i a b l e f o r most consumers; t hey would p re -

f e r a cheaper means o f t r a n s p o r t a t i o n and would spend t h e

sav ings on more impo r tan t goods. I f i t i s n o t c e r t a i n t h a t a

p r o j e c t i s j u s t i f i e d o r t h a t i t s a l t e r n a t i v e w i l l be b u i l t ,

t h e r e i s no a v o i d i n g a f u l l e v a l u a t i o n o f t h e demand curve and

a comparison of n e t b e n e f i t s among a1 1 a1 t e r n a t e p r o j e c t s .

The a1 t e r n a t i v e c o s t method i s r a r e l y d i r e c t l y appl i c a b l e

t o r e c r e a t i o n . It i s n o t u s u a l l y t h e case t h a t t h e demand f o r

r e c r e a t i o n i s so s t r o n g t h a t t h e need f o r a p r o j e c t i s c l e a r .

Suggested uses have n o t recogn ized t h e r e s t r i c t i v e requi rements

o f t h e method. One sugges t ion l eads t o some i n t e r e s t i n g com-

ments on t h e combina t ion o f a l t e r n a t i v e c o s t methods w i t h t h e

t r a v e l c o s t procedure f o r e v a l u a t i n g b e n e f i t s .

The suggest ion o f Pa r r y and Norgaard (1975) t h a t an appro-

p r i a t e es t ima te o f t h e r e c r e a t i o n b e n e f i t s o f t h e New Melones

dam p r o j e c t would have,been t h e a l t e r n a t i v e c o s t o f p r o v i d i n g

i~nproved f a c i l i t i e s f o r access t o e x i s t i n g s i t e s i s r ~ o t

s t r i c t l y c o r r e c t . I n t h e absence o f any i n d i c a t i o n t h a t such

a p r o j e c t would have beer1 b u i l t o r t h a t , i n f a c t , e i t h e r

p r o j e c t was j u s t i f i e d , t h e a l t e r n a t i v e c o s t method i s n o t

a p p r o p r i a t e . T h e i r p o i n t i s w e l l taken, however, i n t h a t t h e y

p o i n t o u t t h a t t h e p lanners had n o t cons idered a l l p o s s i b l e

a1 t e r n a t i ves i n i ti a1 l y .

For r e c r e a t i o n t h e t r u e a1 t e r n a t i v e i s n o t u s u a l l y ano ther

p r o j e c t t h a t would be b u i l t , b u t r a t h e r a1 t e r n a t i v e a c t i o n by

t h e consumer. That i s , i t i s r a r e l y t h e case t h a t t h e r e i s an

a l t e r n a t i v e p r o j e c t which w i l l a u t o m a t i c a l l y be b u i l t , b u t i t

i s always t h e case t h a t , i f a new r e c r e a t i o n s i t e i s n o t b u i l t ,

those consumers who would have used i t w i l l f i n d some more

expens ive o r l e s s s a t i s f y i n g a l t e r n a t i v e . The c o s t o f t h a t

more expens ive a l t e r n a t i v e i s t h e a l t e r n a t i v e cos t ; and t h e

net benefits t o an individual of a new project can be approxi-

mated as the savings in cost of using the new project rather

than the next best a1 ternative. Such a procedure corresponds to that suggested by U l l man and Vol k (1 962). I t would neglect

, any induced demand due to lower costs and any consumers' sur-

plus gained from th is extra use.7

I n summary, the alternative cost method i s subject to poten-

t i a l abuse i f i t i s not c lear that the demand for recreation

i s strong enough tha t some project will certainly be bui l t . The theory behind the al ternat ive cost method i s useful, how-

ever, for pointing out the importance of existing al ternate

s i t e s to a consumer. The benefits to a consumer can be ap- proximated as the savings in going to a new project, compared

t o the cost he would have incurred satisfying the same demand

i f the new project had not been developed.

There are four major methods of calculating recreation

benefits tha t do not make use of the derr~and concept. These

incl ude the expenditure method, gross national product method,

cost method, and the market value of game method. These con-

cepts do not measure will ingness to pay as defined by the

Pr inc ip les and standards-i . e. , the area under the demand

curve. Their use would almost certainly resu l t in decisions

tha t are not optimal with respect t o national economic devel opment.

7 ~ h e c o n s t r u c t i o n o f t he t r a v e l cos t method i s such t h a t u s i n g t h i s form o f t h e a l t e r n a t i v e c o s t method would no t mean a p r o j e c t i s a u t o m a t i c a l l y j u s t i f i e d . Rather, i t o n l y says t h a t the t r i p s by an i n d i v i d u a l a r e cons idered j u s t i f i e d . The i n d i v i d u a l b e n e f i t s a re compared t o p r o j e c t cos t s a t a l a t e r s tage.

Expenditure Method

There a r e two vers ions o f t h e expend i tu re approach t o e s t i -

mat ing r e c r e a t i o n bene f i t s . The f i r s t assumes t h a t t he va lhe

o f a r e c r e a t i o n a c t i v i t y t o a consumer i s a t l e a s t equal t o h i s

expend i tu res i n c u r r e d f o r t r a n s p o r t a t i o n , food and l odg ing ,

and equipment i n o rde r t o engage i n t he a c t i v i t y . B e n e f i t s

a r e then t h e sum of a l l such expendi tures. A number o f c r i t i -

cisms can be made w i t h r espec t t o t h i s approact-I. F i r s t , w h i l e

t h e va lues de r i ved may be u s e f u l i n measuring t he impact o f a

r e c r e a t i o n s i t e on r e g i o n a l expendi t u r e s (p rov ided t h a t t he

l o c a t i o n o f these expend i tu res can be determined) , t hey do n o t

d i r e c t l y i n d i c a t e t he va l ue o f an addi t i o r ~ a l r e c r e a t i o n oppor-

t u n i t y t o t h e consumer. That i s , they say n o t h i n g about how

much t h e consumer i s w i l l i n g t o pay t o e n t e r t he r e c r e a t i o n

area. As T r i c e and Wood (1958) p o i n t ou t , many expend i tu res

c l a s s i f i e d as r e c r e a t i o n a l by t h i s method, i . e . , those f o r

food and l odg ing , a r e normal expendi tures made i n d i f f e r e n t

c i rcumstances. Moreover, most r e c r e a t i o n a l expendi tures a r e

f o r t h e p r o v i s i o n o f se rv i ces a n c i l l a r y t o ac tua l use o f t he

s i t e . I n p a r t i c u l a r , t he va lue o f r e c r e a t i o n a l equipment

should n o t be imputed e i t h e r t o a s i n g l e s i t e - s i n c e use o f

t h e equipment may be spread over a number o f s i t e s and a num-

ber o f years-or t o t h e o v e r a l l demand f o r r ec rea t i on -s i nce

u t i l i t y may a r i s e f rom rrlere ownership o f t he equiprner~t o r f rom

non - rec rea t i ona l use.

A second c r i t i c i s m o f t h e gross expend i tu re approach i s

t h a t i t does n o t produce a measure o f r e c r e a t i o n va lue com-

pa rab le t o o t h e r measures such as w i l l i n g n e s s t o pay. I t thus

has l i t t l e va lue as a gu ide t o p u b l i c expend i tu re dec i s i ons ,

which r o u t i n e l y i n v o l v e t r a d e o f f s among a number o f resources

o r a number o f uses o f a resource. F i n a l l y , i n c a l c u l a t i n g

t h e b e n e f i t s o f an a d d i t i o n a l r e c r e a t i o n s i t e what i s needed

i s a measure o f t h e n e t b e n e f i t r e s u l t i n g f rom t h e added oppor-

t u n i t y r a t h e r than i t s gross value. Th i s i s because

e x p e n d i t u r e s a t t h e s i t e w i l l o r d i n a r i l y be t r a n s f e r r e d f rom

o t h e r goods and s e r v i c e s ; thus t h e n e t change i n b e n e f i t s may

be s i g r ~ i f i c a n t l y l e s s t h a n t h e g ross change. I n answer t o t h i s c r i t i c i s m , t h e second v e r s i o n o f t h e e x p e n d i t u r e method,

a net e x p e n d i t u r e approach, has been developed. T h i s method

c a l c u l a t e s t h e va lue o f r e c r e a t i o n as t h e v a l ue-added due t o

r e c r e a t i o n e x p e n d i t u r e s - i . e . , t h e excess o f such e x p e n d i t u r e s

o v e r t h e c o s t o f i n p u t s used i n p roduc ing t h e food, g a s o l i n e ,

equipment, and s u p p l i e s purchased. Wh i le t h i s approach r e -

s u l t s i n a measure of n e t va lue, i t i s s t i l l s u b j e c t t o t h e

f i r s t two c r i t i c i s m s o f t h e gross e x p e n d i t u r e method and i s

more a p p r o p r i a t e l y cons ide red i n a r e g i o n a l deve l oprnent

account .

The g ross e x p e n d i t u r e approach has been used by a number o f

goverrlrr~ent agenc ies. I n one app l i c a t i o n t h e Cal i f o r n i a Depar t -

ment o f Fis-h and Game a t tempted t o e s t i m a t e t h e v a l u e o f

s t r i p e d bass, salmon, and s t e e l -head f i s h i n g i n 1953 as t h e

sum of e x p e n d i t u r e s on t r a n s p o r t a t i o n , food and l o d g i n g , s e r -

v i c e s and s u p p l i e s , and 1 i c e r ~ s e s and equiprnent a m o r t i z e d over

t h e expected p e r i o d o f use fu lness (Pelgen, 1955). A s i m i l a r

s t u d y surveyed f r e s h and s a l t - w a t e r f i s h i n g i n 1955 (Mahoney,

1960) . Each c a l c u l a t e d t h e average d a i l y e x p e n d i t u r e f o r d i f -

f e r e n t t ypes o f f i s h i n g , which c o u l d be used t o es t i rna te t h e

t o t a l v a l u e o f a p a r t i c u l a r s i t e , g i v e n t h e number o f f i s h e r -

men and t h e t ypes o f f i s h i n g .

The n e t e x p e n d i t u r e o r value-added approach was employed by

Wol lman (1 962) i n comparing a1 t e r n a t i v e uses o f water - indus-

t r i a l , a g r i c u l t u r a l and r e c r e a t i o n a l - i n t h e San Juan and Rio

Grande b a s i n s o f New Mexico. Wollman f e l t t h a t w h i l e p r i m a r y

value-added cannot be d e r i v e d f o r r e c r e a t i o n as f o r i n d u s t r y

and a g r i c u l t u r e because r e c r e a t i o n i s n o t s o l d a t a marke t

p r i c e , t h e value-added c r e a t e d i n t h e process o f f u r n i s h i n g

goods and s e r v i c e s t o r e c r e a t i o n i s t s i s comparable t o t h e

value-added r e s u l t i n g f r o m s a l e s o f i n p u t s t o i n d u s t r i a l and

a g r i c u l t u r a l producers. I t i s n o t c l e a r t h a t t h i s comparison

can be made, s i n c e o n l y i n a l i m i t e d sense a r e r e c r e a t i o n i s t s '

expend i tu res t h e " i n p u t s " o f r e c r e a t i o n ; t hey are, i n ' p a r t ,

a n c i l l a r y t o i t .

I t i s i n t e r e s t i n g t o no te t h a t Wollman recognized " t h e p ro -

d u c t i o n of c o l l e c t i v e consumer su rp luses" as a p o s s i b l e source

of underva l u a t i o n o f r e c r e a t i o n bene f i t s , b u t conc l uded t h a t

whether " t he d i s p a r i t y between market v a l u a t i o n and u n d e r l y i n g

psych ic s t a t e s i s g r e a t e r i n t h e area o f r e c r e a t i o n a l expendi-

t u r e s than f o r o t h e r o u t l a y s ... cannot y e t be demonstrated w i t h

a v a i l a b l e methodolog ies. "

G r o s s N a t i o n a l P r o d u c t Method

The Na t i ona l Income o r Gross Na t i ona l Product (GNP) ap-

proach a t tempts t o measure t h e c o n t r i b u t i o n o f r e c r e a t i o n t o

GNP i n one o f two ways: (1 ) t he d i r e c t c o n t r i b u t i o n o f t h e

r e c r e a t i o n i n d u s t r y t o GNP i s c a l c u l a t e d by f i n d i n g t h e va lue-

added due t o r e c r e a t i o n expend i tu re . Th i s i s e s s e n t i a l l y t h e

n e t expend i t u re method descr ibed above, and i s s u b j e c t t o t he

same c r i t i c i s m s . ( 2 ) The impact o f r e c r e a t i o n on l ong - run

p r o d u c t i v e e f f i c i e n c y , o r assumed " i n t r i n s i c s o c i a l va luet ' o f

r e c r e a t i o n , i s measured by assuming t h a t t he va lue o f a day o f

r e c r e a t i o n equals GNP pe r day per c a p i t a (Lerner , 1962). Th is

approach, summarized by Lerner on t h e bas i s o f d i s cuss ions

w i t h W i l l i a m R i p l e y o f t h e C a l i f o r n i a Department o f F i s h and

Garr~e, assumes t h a t , i n t h e l o n g run, r e c r e a t i o n t i m e i s as

e s s e n t i a l t o p r o d u c t i v i t y as work ing t ime. Accord ing t o 1

Lerner , t h e method i s n o t in tended t o p r o v i d e a measure com-

pa rab le t o measures o f b e n e f i t s f rom o t h e r a c t i v i t i e s . Indeed,

i t cou ld n o t be used t o judge among a1 t e r n a t i v e uses o f a

resource, s i n c e t h e va lue o f a day i n any a1 t e r n a t i v e a c t i v i t y

would equal t h e va lue o f a r e c r e a t i o n day. I n a d d i t i o n , i t i s

d o u b t f u l t h a t t h e method p rov ides a t r u e measure o f t he

" i n t r i n s i c s o c i a l va lue ' ' o f r e c r e a t i o n o r any o t h e r a c t i v i t y .

The shortcomings of GNP as a rrleasure o f economic w e l f a r e have

been we1 1 documented. I n c a l c u l a t i n g GNP, p r i v a t e goods a r e

eva lua ted a t market va l ue and p u b l i c goods a t cos t ; no a t tempt

i s made t o i n c l u d e t h e n e t b e n e f i t s t o consumers o f e i t h e r

t y p e o f good.

There i s no ev idence t h a t e i t h e r o f these approaches has

a c t u a l l y been appl i e d t o ' de te rmine t h e b e n e f i t s o f r e c r e a t i o n

i n genera l o r a t a p a r t i c u l a r s i t e .

C o s t Method

The c o s t approach assurnes t h a t t h e va l be o f a r e c r e a t i o n

s i t e equa ls o r exceeds t h e c o s t o f p r o v i d i n g t h e s i t e . Be-

s i des r e s t i n g on t h i s r a t h e r tenuous assumption, t h i s method

seems i n a p p r o p r i a t e f o r dec is ion-making purposes. For one

t h i n g , a n y proposed expend i tu re on r e c r e a t i o n f a c i l i t i e s i s

j u s t i f i e d by t h e method; f o r another , i t prov ides no means

f o r d e c i d i n g among a l t e r n a t i v e r e c r e a t i o n p r o j e c t s , s i n c e n e t

b e n e f i t s f rom any p r o j e c t a r e zero.

Th i s method was advocated by t h e Na t i ona l Park Se rv i ce

d u r i n g t h e 19501s, p r i m a r i l y as a bas i s f o r c o s t a l l o c a t i o n :

"The Se rv i ce ho lds t h a t , p rov ided a proposed r e s e r v o i r would

n o t d e s t r o y more i rnportan t conse rva t i ona l and r e c r e a t i o n a l

va l ues, expected b e n e f i t s . . .would be g r e a t e r than s p e c i f i c

c o s t s o f deve lop ing, ope ra t i ng , and m a i n t a i n i n g these f a c i l -

i t i e s . A reasonable es t ima te o f t h e b e n e f i t s a r i s i n g f rom t h e

r e s e r v o i r i t s e l f may be n o r m a l l y cons idered as an arnount equal

t o t h e s p e c i f i c c o s t s " (Na t i ona l Park Serv ice, 1950).

M a r k e t V a l u e o f Game

Th i s approach assumes t he va lue o f f i s h i n g o r h u n t i n g

equals t h e marke t va l ue o f what i s caught. The ma jo r c r i t i c i s m

i s t h a t i n most cases t h e ca t ch a lone i s n o t a p r imary ob jec -

t i v e o f t h e r e c r e a t i o n a l a c t i v i t y , and, a t l e a s t , t h e c o s t o f

c a t c h i n g t he game should have been sub t rac ted from t h e market

v a l ue.

APPENDIX D EQU IVALENT AND COMPENSATING VARIATION

AS DSURES OF BENEFITS

I n a r e f o r m u l a t i o n o f consumers' s u r p l u s , H i c k s (1943)

proposed fou r measures o f t h e change i n a consumer 's w e l f a r e

r e s u l t i n g from an a c t u a l o r proposed p r i c e change. These fou r

measures, t h e compensat ing and e q u i v a l e n t v a r i a t i o n s and t h e

compensat ing and e q u i v a l e n t s u r p l u s , a r e a1 1 i d e n t i c a l under

t h e assumpt ion o f ze ro income e f f e c t s . That i s , t h e s i z e o f

these s u r p l u s e s must be smal l enough, r e l a t i v e t o income, so

t h a t a l o s s o r g a i n o f t h a t amount would n o t a f f e c t t h e l e v e l

of consumpt ion o f t h e r e l e v a n t good. Under t h i s assumption,

t h e area under t h e demand c u r v e above p r i c e , u s u a l l y c a l l e d

t h e consumers' s u r p l u s , w i l l be e q u i v a l e n t t o t h e f o u r mea-

su res proposed by H icks . I f t h e assumpt ion o f ze ro income

e f f e c t s i s n o t made, t h e two H i c k s i a r ~ measures-the cornpensat-

i n g v a r i a t i o n and t h e e q u i v a l e n t v a r i a t i o n - a r e u s u a l l y t h e

most r e 1 evant . Fo r a b e n e f i c i a l change, t h e compensating

v a r i a t i o n i s l e s s than t h e usual consumer 's s u r p l u s measured

f r o m t h e demand curve; t h e e q u i v a l e n t v a r i a t i o n i s l a r g e r .

Fo r a n o n - b e n e f i c i a l change, t h i s r e l a t i o n i s reversed .

The compensating v a r i a t i o n i s d e f i n e d as t h e amount o f

compensation, p a i d o r r e c e i v e d , t h a t w i l l l e a v e t h e consumer

a t h i s i n i t i a l we1 f a r e l e v e l f o l l o w i n g a p r i c e change.

The e q u i v a l e n t v a r i a t i o n i s d e f i n e d as t h e amount o f corn-

pensa t ion , p a i d o r rece ived , t o p r e v e n t a p r i c e change t h a t

would l e a v e t h e consumer a t t h e w e l f a r e l e v e l t h a t would have

f o l l o w e d t h e change.

These d e f i n i t i o n s can be made c l e a r b y r e f e r e n c e t o a

r e c r e a t i o n s i t e . I f t h e r e a r e p r e s e n t l y no f a c i l i t i t e s , and

t h e bene f i t s o f a proposed f a c i l i t y a r e t o be evaluated, t he

f o l l owi rig measures may be considered. The compensating v a r i a -

t i o n i s t h e maximum arrlount an i n d i v i d u a l would pay t o have t h e

s i t e developed. The e q u i v a l e n t v a r i a t i o n i s t h e amount t h a t

he would want as compensation i f t h e s i t e were n o t developed,

i n o r d e r t h a t he would be as we1 1 o f f as if i t were developed.

I f t h e r e i s p r e s e n t l y a f a c i l i t y whose e l i m i n a t i o n i s under

cons ide ra t i on , t h e two measures a r e as f o l l o w s . The compen-

s a t i n g v a r i a t i o n i s t he amount t h e i n d i v i d u a l would r e q u i r e as

corr~pensation if t h e f a c i l i t y were destroyed, such t h a t he

would be as w e l l o f f as i f i t were n o t dest royed. The equ iv -

a l e n t v a r i a t i o n i s t h e maximum amount he would pay t o s t o p t he

f a c i l i t y f rom be ing dest royed. These a r e measures o f t h e

b e n e f i t s 1 o s t by e l i m i n a t i n g t h e f a c i l i ty.

It may e a s i l y be shown t h a t t he cornper~sating v a r i a t i o n an

i n d i v i d u a l would pay t o ensure a s i t e was b u i l t i s equal t o

t h e e q u i v a l e n t v a r i a t i o n he would pay t o p reven t t h a t s i t e

f rom be ing dest royed. I n o rder t o t ake advantage o f t h i s fact ,

and t o avo id con fus ing te rmino logy , n e t w i l l i n g n e s s t o pay has

been used i n t h e main body o f t h i s r e p o r t t o r e f e r t o these

two v a r i a t i o n s . S i m i l a r l y , an i n d i v i d u a l ' s e q u i v a l e n t v a r i a -

t i o n f o r b u i l d i n g a s i t e i s equal t o h i s corr~pensating v a r i a -

t i o n f o r d e s t r o y i n g it. These t oge the r have been r e f e r r e d t o

as w i l l i n g n e s s t o s e l l .

G raph i ca l l y , t h e compensating and e q u i v a l e n t v a r i a t i o n can

be shown u s i n g i n d i f f e r e n c e curves. The h o r i z o n t a l a x i s i n

F igu re D-1 r e f e r s t o an i n d i v i d u a l ' s ho ld i ngs o f good X, w h i l e

t h e v e r t i c a l a x i s r e f e r s t o h i s h o l d i n g o f income and a l l

o t h e r goods, Y . The i n d i f f e r e n c e curves rep resen t combina-

t i o n s o f X and Y which would p rov ide equal u t i l i t y t o t he

i n d i v i d u a l . Curve I 1 i s a h i g h e r l e v e l o f u t i l i t y than

curve I . So t h e combinat ions o f goods and income represented

by A and C p rov ide equal u t i l i t y . The i n d i v i d u a l i s a l s o i n -

d i f f e r e n t between p o i n t s B and E, b u t bo th these p o i n t s p ro -

v i d e g r e a t e r u t i l i t y than C.

Consider t he development o f a new s i t e (good X ) . The i n d i -

v i d u a l a t p o i n t A on i n d i f f e r e n c e cu rve I be fo re t he s i t e i s

b u i l t consumes none o f good X and amount OA o f t h e composite

good I . I f t h e s i t e were t o be b u i l t , and were made a v a i l -

a b l e t o t h i s i n d i v i d u a l a t a p r i c e such t h a t t h e i n d i v i d u a l

cou ld a f f o r d t o consume any cornbinat ion o f goods on t he budget

l i n e AA'y then t h e i n d i v i d u a l would choose t o consume a t

p o i n t B on i n d i f f e r e n c e curve 11, which represen ts t h e h i g h e s t

u t i l i t y l e v e l a t t a i n a b l e .

For such a proposed b e n e f i c i a l change, t h e compensating

v a r i a t i a n o r n e t w i l l i n g n e s s t o pay i s t he amount o f income,

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APPEND I X . E D I SSENTI NG STATEPIENT

DR. DANIEL M. OGDEN, JR.

PROFESSOR OF POLITICAL SCIENCE

COLORADD STATE UNIVERSITY

I f i n d I must d i s s e n t , i n p a r t , f rom the recommendations o f

t h e r e p o r t , "Guide1 i nes f o r Va lua t i on o f Water-Based Recre-

a t i o n . " * I cannot agree w i t h t h e r e p o r t ' s conc lus i on t h a t t he

u n i t day va lue system i s w i t h o u t m e r i t and should be abandoned.

I b e l i e v e t h a t i t has an impo r tan t r o l e t o p lay , even i f i t i s

a p p l i e d o n l y i n s p e c i a l c i rcumstances where p r o f e s s i o n a l s

judge t h a t t h e i n t r i n s i c q u a l i t y o f t h e resource deserves con-

s i d e r a t i o n i n t h e eva lua t i on . I f e e l t h a t t h e t ask fo rce

which prepared t h e r e p o r t had an o b l i g a t i o n t o e x p l o r e ways t o

improve t h e u n i t day va lue system as w e l l as t h e o t h e r eva lua-

t i o n methods which a r e reviewed.

I n my judgment, t h e u n i t day va l ue system was developed t o

g i v e t h e n a t u r a l resources agencies a way t o express t h e i r

p ro fess i ona l judgrnent about t h e r e1 a t i v e va lue o f r e c r e a t i o n

resources. Many agencies recogn ized t h a t t h e va lues o f w i l d

and scen ic r i v e r s , f o r example, o r o f n a t u r a l l akes , were

g r e a t e r than t h e va lues o f r e s e r v o i r s behind dams, r ega rd l ess

o f t h e numbers o f people who v i s i t them o r t h e d i s t a n c e t h e

v i s i t o r s t r a v e l . Measures which r e l y s o l e l y upon numbers o f

v i s i t o r s o r upon t h e d i s t a n c e p o t e n t i a l v i s i t o r s l i v e f rom a

r e c r e a t i o n resource f a i l t o cope w i t h t h i s concern about t he

i n t r i n s i c wor th o f t h e resource .

The Water Resources Counci l agreed t h a t t h i s dimension

needed formal express ion i n some fash ion and approved t h e u n i t

day va lue system as an i n t e r i m measure. I t recogn ized t h a t

*In h i s remarks which were printed exactly as received, Dr. Ogden i s referring t o the recommendations contained i n t h i s report. He has, however, referred t o the report by the t i t l e o f an earlier draf t .

t h i s i s a l e g i s l a t e d range o f va lues , wh ich t h e agenc ies

be1 i e v e i s t o l e r a b l e g i v e n t h e va lues wh ich can be a s c r i b e d t o

o t h e r uses o f w a t e r r e s o u r c e s f o r wh ich a m a r k e t p r i c e can be

de te rm ined b y e m p i r i c a l r e s e a r c h . The Congress a p p a r e n t l y

agreed w i t h t h e C o u n c i l , f o r i t has accep ted t h e u n i t day

v a l u e system as a l e g i t i m a t e means t o exp ress t h e v a l u e o f

w a t e r based r e c r e a t i o n .

The u n i t day v a l u e system, then, i s n o t a s u b s t i t u t e f o r

t h e t r a v e l c o s t method and does n o t a t t e m p t t o measure t h e

same t h i n g . I n most man-made p r o j e c t s t u d i e s , t h e t r a v e l c o s t

method c l e a r l y i s t h e a p p r o p r i a t e a n a l y s i s t o o l , because t h e

measure o f w o r t h i s c o m p a r a t i v e volume o f use t i m e s w i l l i n g n e s s

t o pay.

The a p p r o p r i a t e p o s t u r e f o r t h e t.ask f o r c e , i n my judgment,

shou ld have been t o recommend t h e t r a v e l c o s t method a s t h e

p r e f e r r e d p rocess f o r mos t o r d i n a r y p r o j e c t s , t o sugges t t h e

su rvey method a s a s u i t a b l e a l t e r n a t i v e i n many i n s t a n c e s

where t r a v e l c o s t s a r e n o t a good s u r r o g a t e , and t o have urged

r e s t r i c t i o n o f t h e u n i t day v a l u e sys tem t o t h o s e s p e c i a l

cases where i n t r i n s i c v a l u e s were c l e a r l y i m p o r t a n t , as, f o r

example, i n t h e case o f t h e Salmon R i v e r .

The Task Fo rce i s t h e r e f o r e u n f a i r i n t r e a t i n g t h e u n i t day

v a l u e method as though i t i s s i m p l y a n o t h e r way t o measure

w i l l i n g n e s s t o pay. The c r i t i c i s m s a r e based on a f a l s e

assumpt ion a b o u t t h e n a t u r e and purpose o f t h e system.

The u n i t day v a l u e system m e r i t e d s e p a r a t e a n a l y s i s , s t r i c t

d e f i n i t i o n o f i t s a p p r o p r i a t e a p p l i c a t i o n , and recommendations

f o r improved p rocedures . I t r i e d v e r y ha rd t o g e t t h e Task

Fo rce t o do j u s t t h a t b u t f a i l e d . I t h e r e f o r e must d i s s e n t

f r o m t h e r e p o r t .

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