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
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