United States
Environmental Protection
Agency
Environmental Research
Laboratory
Corvallis OR
Research and Development
EPA-600/S3-83-016 June 1983
Project Summary
A Regional Recreation Demand
and Benefits Model
Ronald J. Sutherland
The U.S. Environmental Protection
Agency (EPA) has begun to incorporate
economic factors into its evaluation of
water (and air) quality improvement
programs. Although the Agency has not
completed its approach to defining
economic efficiency and to performing
marginal analyses, there is a clear
movement toward including costs and
benefits in the decision making process.
However, a major difficulty in attempt-
ing to use quantitative cost-benefit
estimates is that no well developed and
tested procedures exist for making
these estimates. Specifically, the mar-
ginal costs of making incremental
improvements in water quality in
streams and lakes are difficult to
estimate. Similarly, there are no
well developed, tested procedures for
obtaining estimates of the dollar
benefits of improved water quality.
Although several uses of water may
be enhanced by quality improvements,
recreation benefits appear to be the
most extensive. Therefore, the research
reported here focused on the
development of a model to estimate
recreation benefits of improved water
quality on a regional basis. Specifically,
the model estimates dollar benefits
with a consistent methodology over a
large number of sites, quickly and with
reasonable cost. One function of water
pollution control agencies is to select,
from a large number of potential sites,
water quality improvement projects
that are to be funded. Single site
analyses are time-consuming and
expensive, and therefore of limited
value. The model presented here
combines the gravity model with a
travel-cost analysis of recreation
behavior to estimate benefits at any site
in the Pacific Northwest.
This Project Summary was developed
by EPA's Environmental Research
Laboratory. Corvallis. OR, to announce
key findings of the research project that
is fully documented in a separate report
of the same title (see Project Report
ordering information at back).
Introduction
A regional recreation demand and
benefits model is described and used to
estimate recreation demand and value
(consumers' surplus) of four activities at
each of 195 sites in the Pacific
Northwest. The recreation activities are
camping, fishing, swimming, and
boating. The essence of the model is that
it generalizes the single-site, travel-cost
method of estimating a recreation
demand curve on virtually an unlimited
number of sites. The major components
of the analysis include the theory of
recreation benefits, a travel-cost
recreation demand curve, and a gravity
model of regional recreation travel flows.
Recreation benefits of improved water
quality in degraded rivers and streams in
the Pacific Northwest are estimated on a
county basis for Washington, Oregon,
and Idaho. The model also illustrates
estimates of existing recreation benefits
of selected lakes with good water quality.
Recreation benefits are defined in
terms of willingness to pay, or, alterna-
tively, as consumers' surplus, and
measured as the area under the
recreation site demand curve. An
improvement in water quality at one site
implies an outward shift in the demand
curve for that site and a redistribution of
demand from substitute sites. The issue
of the proper measurement of benefits at
an improved site where there are
displaced facilities is analyzed with the
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conventional utility maximization model
for consumer behavior. The analysis
shows that benefits measured under a
single demand curve are net benefits and
automatically account for any displaced
facilities.
Two major limitations of the travel-cost
method of estimating recreation demand
are its failure to consider substitute sites
and the expense of applying it on a site-
by-site basis. A gravity model is used here
to overcome each limitation. This model
distributes recreation trips to every site in
the region on the basis of relative travel
costs and relative attractiveness of each
site. The output of the gravity model is a
trip interchange matrix that is the main
input for travel-cost demand curves for
each site in the region.
The conventional gravity model is a
distribution model, which means that it
only estimates the distribution of trips
between productions and attractions,
which are assumed to be exogeneous.
Because the model does not estimate
total demand at each destination, its
applicability is limited for most recreation
purposes. The gravity model is extended
here by estimating it iteratively with an
attractions model. As a result, the
desirable properties of the gravity model
that determine the distribution of trips
also influence total demand at each site.
After a demand curve and consumers'
surplus are estimated for each of 195
sites in the region, a simulation analysis
is used to determine the sensitivity of the
results to three computational and
specification choices that must be made
in the analysis.
Conclusions
A model has been presented which can
be used to estimate recreation benefits
for four water-based activities within a
three and one-half state region. Benefits
can be estimated for any single site or for
several sites simultaneously. Benefits
also can be estimated for preserving
existing water quality as well as
improving degraded water. The main
conclusion is that, with respect to the
three Northwestern states, the largest
potential recreation benefits exist near
the population centers. In contrast,
improving water quality in sparsely
populated agricultural areas probably will
not stimulate a substantial increase in
recreation demand.
The derived recreation benefit
estimates may appear discouraging in
terms of the economic viability of meeting
the national goal of "fishable and
swimmable" water. Indeed, improving
water quality in some agricultural areas
may not be cost-effective. However,
potential recreation benefits at several
sites exceeds $1 million per year. Also
certain non-recreation benefits such a;
property values, aesthetic values, optior
demand, and perhaps drinking water an<
health benefits, are likely to display tht
same geographic pattern as recreatior
benefits. That is, these potential benefit!
may also correlate with populatior
densities. A more comprehensive
analysis of benefits, focusing particularly
on those listed above, could conclude tha
total water quality benefits are substan
tially larger than those presented foi
recreation. For example, in a valuatior
study of the Flathead Lake and Rivei
system in Western Montana using this
model, recreation values are estimated tc
be $6.3 million per year. However, in tht
same study, non-user values (option
existence, and bequest) are estimated tc
be $97.3 million per year for the same
region.
Ronald J. Sutherland is currently with the Los Alamos National Laboratory, Los
Alamos, NM 97545.
Jack H. Gakstatter is the EPA Project Officer (see below).
The complete report, entitled "A Regional Recreation Demand and Benefits
Model." (Order No. PB 83-182 279; Cost: $16.00, subject to change) will be
available only from:
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
Telephone: 703-487-4650
The EPA Project Officer can be contacted at:
Environmental Research Laboratory
U.S. Environmental Protection Agency
200S.W. 35th Street
Corvallis, OR 97333
United States
Environmental Protection
Agency
Center for Environmental Research
Information
Cincinnati OH 45268
Postage and
Fees Paid
Environmental
Protection
Agency
EPA 335
Official Business
Penalty for Private Use $300
PS 0000329
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