evaluating recreational benefits of water resources on small geographical areas an application to...
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Evaluating Evaluating Recreational Benefits Recreational Benefits of Water Resources of Water Resources
on Small on Small Geographical AreasGeographical AreasAn Application to Rivers in An Application to Rivers in
Puerto RicoPuerto RicoPrepared by: Prepared by:
Juan Marcos González & John B. Juan Marcos González & John B. LoomisLoomis
Dept. of Agricultural and Resource Dept. of Agricultural and Resource EconomicsEconomics
Colorado State UniversityColorado State University
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OutlineOutline
Recreation Demand ModelsRecreation Demand Models Travel Cost ModelTravel Cost Model Contingent Valuation ModelContingent Valuation Model
Travel Cost Models: A closer lookTravel Cost Models: A closer look Empirical ApplicationEmpirical Application ResultsResults Implications: Water Resources Implications: Water Resources
ValuationValuation Concluding RemarksConcluding Remarks
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Recreation ModelsRecreation Models
Travel Cost Model (TCM)Travel Cost Model (TCM) Revealed Preferences Revealed Preferences Relates intensity of use (number of Relates intensity of use (number of
trips) to variables of interesttrips) to variables of interest Allows us to determine a demand Allows us to determine a demand
schedule directly schedule directly Quantity demanded (trips) versus price paid Quantity demanded (trips) versus price paid
(travel cost)(travel cost) Implicitly captures trade-offs between Implicitly captures trade-offs between
characteristics and moneycharacteristics and money
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Travel Cost ModelTravel Cost Model
, , ,( )ij j j i ir f p v m z
The individual demand for seasonal The individual demand for seasonal visits to the sites considered is visits to the sites considered is defined as:defined as:
rrijij is the number trips taken in a season by is the number trips taken in a season by
individual individual ii to site to site jj
ppjj is the cost associated to site is the cost associated to site jj
vvjj is a vector of characteristics site is a vector of characteristics site j j hashas
mmii stands for the income stands for the income
zzi i represent a set of particular individual represent a set of particular individual
characteristics of the characteristics of the visitorvisitor
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Recreation ModelsRecreation Models
Contingent Valuation Model (CVM)Contingent Valuation Model (CVM) Stated PreferencesStated Preferences Obtains information on contingent Obtains information on contingent
behavior of visitorsbehavior of visitors Relates response to changes in prices Relates response to changes in prices
and site characteristicsand site characteristics Allows us to determine consumer’s Allows us to determine consumer’s
surplus directlysurplus directly
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Contingent Valuation Contingent Valuation ModelModel
, , ,( )ij j j i ians f bid v m z
The marginal demand for a visit to the The marginal demand for a visit to the sites considered is defined as:sites considered is defined as:
ansansijij is the answer (yes/no) to the contingent is the answer (yes/no) to the contingent
valuation questionvaluation question
bidbidjj the hypothetical bid amount increase to visit the hypothetical bid amount increase to visit
site site jj
vvjj is a vector of characteristics site is a vector of characteristics site j j hashas
mmii stands for the income stands for the income
zzi i represent a set of particular individual represent a set of particular individual
characteristics of the characteristics of the visitorvisitor
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TCM : A Closer LookTCM : A Closer Look
Travel Cost Models Travel Cost Models rely on a continuous rely on a continuous spatial marketspatial market
Each ring is of a Each ring is of a given distance given distance incrementincrement
Visitors residing in Visitors residing in each ring have a each ring have a determined travel determined travel cost to visit the sitecost to visit the site
$4$40000$2$2
5050$1$10000
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TCM : The Island EffectTCM : The Island Effect Some sites have Some sites have
limited market area limited market area around them around them (islands) (islands)
The maximum travel The maximum travel cost that a visitor cost that a visitor can incur is limited can incur is limited or truncated or truncated
Travel cost will then Travel cost will then be less than their be less than their maximum maximum willingness to pay willingness to pay
$4$40000
$1$10000
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Empirical ApplicationEmpirical Application LocationLocation
El Yunque, Caribbean El Yunque, Caribbean National Forest. National Forest.
SitesSites Visitors from 11 sites were Visitors from 11 sites were
surveyed. surveyed. Espiritu SantoEspiritu Santo Mameyes Mameyes
In person interviewsIn person interviews Interviews were done Interviews were done
during summer 2005.during summer 2005. Included weekdays, Included weekdays,
weekends and holydays.weekends and holydays. Questions included visitor Questions included visitor
demographics, number of demographics, number of visits and perceived site visits and perceived site conditions.conditions.
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ResultsResultsVariablesVariables CVMCVM TCMTCM
InterceptIntercept 2.42962.4296 1.22371.2237
4.32234.3223 3.50293.5029
BidBid -0.0104-0.0104 -0.0108-0.0108
-9.2360-9.2360 -5.3192-5.3192
RoadRoad -0.2347-0.2347 0.09200.0920
-2.4443-2.4443 1.56421.5642
Mean Annual DischargeMean Annual Discharge -1.1143-1.1143 0.10550.1055
-2.6580-2.6580 0.90510.9051
Median Grain SizeMedian Grain Size -0.0004-0.0004 0.00020.0002
-2.5237-2.5237 1.97481.9748
Pool VolumePool Volume 0.22000.2200 -0.0182-0.0182
2.34962.3496 -0.6467-0.6467
Pool Volume SquaredPool Volume Squared -0.0083-0.0083 -0.0002-0.0002
-2.0475-2.0475 -0.1325-0.1325
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Demand SchedulesDemand SchedulesImplied Demand Curves for Number of Trips for
CVM and TCM
050
100150200250300350400450
0.1
1.2
2.3
3.4
4.5
5.6
6.7
7.8
8.9 10
11
.1
12
.2
13
.3
Number of Trips
Pri
ce TCM
CVM
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Implications: Water Implications: Water Resources ValuationResources Valuation
Mean Willingness to PayMean Willingness to Pay
CVM valuation is 18% larger !!CVM valuation is 18% larger !!
CVMCVM TCMTCM
Mean WTPMean WTP $ 109.42 $ 109.42 $ 92.75 $ 92.75
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Concluding RemarksConcluding Remarks TCM conditions might not be met by the TCM conditions might not be met by the
area studiedarea studied TCM results are truncated only when the TCM results are truncated only when the
value of the site is greater than the value of the site is greater than the maximum possible travel cost consideredmaximum possible travel cost considered
CVM results might be an alternative to CVM results might be an alternative to evaluate site WTPevaluate site WTP
Water resources valuations depend Water resources valuations depend heavily on the accuracy of the models heavily on the accuracy of the models that usedthat used
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Thank you!Thank you!
Questions?Questions?
Comments?Comments?