Valuation of National Park System Visitation: The Efficient Use of Count Data Models, Meta-Analysis, and Secondary Visitor Survey Data

The National Park Service (NPS) currently manages a large and diverse system of park units nationwide which received an estimated 279 million recreational visits in 2011. This article uses park visitor data collected by the NPS Visitor Services Project to estimate a consistent set of count data travel cost models of park visitor willingness to pay (WTP). Models were estimated using 58 different park unit survey datasets. WTP estimates for these 58 park surveys were used within a meta-regression analysis model to predict average and total WTP for NPS recreational visitation system-wide. Estimated WTP per NPS visit in 2011 averaged $102 system-wide, and ranged across park units from $67 to $288. Total 2011 visitor WTP for the NPS system is estimated at $28.5 billion with a 95% confidence interval of $19.7–$43.1 billion. The estimation of a meta-regression model using consistently collected data and identical specification of visitor WTP models greatly reduces problems common to meta-regression models, including sample selection bias, primary data heterogeneity, and heteroskedasticity, as well as some aspects of panel effects. The article provides the first estimate of total annual NPS visitor WTP within the literature directly based on NPS visitor survey data.     

The contingent behavior of charter fishing participants on the Chesapeake Bay: Welfare estimates associated with water quality improvements

Water quality in the Chesapeake Bay has deteriorated over recent years. Historically, fishing has contributed to the region's local economy in terms of commercial and recreational harvests. A contingent behavior model is used to estimate welfare measures for charter fishing participants with regard to a hypothetical improvement in water quality. Using a truncated Poisson count model corrected for endogenous stratification, it was found that charter fishers not only contribute to the local market economy, but they also place positive non-market value on preserving the Bay's water quality. Using two estimates for travels costs it is estimated that the individual consumer surplus is $200 and $117 per trip, and the average individual consumer surplus values for an improvement in water quality is $75 and $44 for two models estimated.     

Estimating the Economic Value of National Parks with Count Data Models Using On-Site,Secondary Data: The Case of the Great Sand Dunes National Park and Preserve

We estimate an individual travel cost model for Great Sand Dunes National Park and Preserve (GSD) in Colorado using on-site, secondary data. The purpose of the on-site survey was to help the National Park Service better understand the visitors of GSD; it was not intended for a travel cost model. Variables such as travel cost and income were estimated based on respondents’ Zip Codes. Following approaches found in the literature, a negative binomial model corrected for truncation and endogenous stratification fit the data the best. We estimate a recreational benefit of U.S. $89/visitor/year or U.S. $54/visitor/24-h recreational day (in 2002 U.S. $). Based on the approach presented here, there are other data sets for national parks, preserves, and battlefields where travel cost models could be estimated and used to support National Park Service management decisions.     

AN OPTIMIZATION MODEL FOR EFFICIENT MANAGEMENT OF URBAN WATER RESOURCES1

ABSTRACT: A mathematical programming model is proposed to determine economically efficient urban water resource allocation and pricing policy by maximizing the sum of the consumer and producer surplus. The optimization of this nonlinear problem is accomplished by the use of linear programming algorithm. The feasibility of using recycled water for municipal purposes is examined in a planning context. The impact of higher water quality discharge standards on pricing and allocation of water is analyzed and the attractiveness of water reuse option is demonstrated.     

Alternative Control Policies for Water Quality Management: An Experimental Economics Approach

Problems of deteriorating water quality and the prospects of large invest ments for treatment facilities have motivated government decision makers to seek more cost-effective means to manage water quality. The most preferred policy advocated by economists is based on economic incentives. But the response of water quality managers to a particular incentive system cannot be predicted a priori . Before any incentive system is implemented, its effectiveness must be evaluated. Mathematical programming models have been used for this purpose. Experimental economics provides an alternative mechanism for testing the effectiveness of such a system. It can also help identify the necessary parameters of incentive-based systems. The objective of this paper is to describe the results of an experiment for evaluating the effectiveness of managing water quality under two different policies: a command and control policy; and a transferable discharge permit (TDP) policy. A review of previous research on the effectiveness of TDP systems is provided along with arguments supporting the use of experimental economics to investigate these problems. The particular experiments developed for this research along with the experimental procedures are described. Key results and observations from the experiments are presented.     

The price of pollution: costs estimates of environmentally related disease in Oregon

The purpose of this study is to estimate the environmentally attributable costs associated with diseases and disabilities in Oregon. We utilised actual Oregon data on disease rates and costs whenever available. If state-specific data were not available, we extrapolated from national estimates. We then used environmentally attributable fractions to estimate the environmentally attributable costs. The estimated environmentally attributable costs are the following: adult and childhood asthma: $29.6M; adult cardiovascular disease: $342.4M; adult and childhood cancer: $130.5M; childhood lead poisoning: $866.2M; birth defects: $3.0M; and childhood neurobehavioural disorders: $185M. Policymakers and researchers in other states are encouraged to apply the methods we have presented here to calculate the environmentally attributable costs associated with diseases and disabilities in their state. Knowing that many of the environmental contributors to disease are often preventable, policymakers are encouraged to make environmental public health a top priority.     

Magnitude and distribution of option value for the Washakie Wilderness,northwest Wyoming,USA

Option value is estimated for the Washakie Wilderness, northwest Wyoming, USA, using the contingent valuation technique. Consumer surplus, the traditional measure of economic value, is estimated separately and compared with option value. Several populations are tested, including Washakie visitors, Yellowstone National Park visitors, and residents from four metropolitan test markets: Salt Lake City, Utah; Portland, Oregon; Nashville, Tennessee; and Orlando, Florida, USA. The average annual preservation option value (consumer surplus) expressed by on-site wilderness visitors is $46.17 ($80.13), by urban residents is $9.70 ($8.97), and by rural residents is $8.43 ($7.80). Four selected attributes are determined to be important in motivating option demand for the Washakie, including existence value, bequest value, the desire for an on-site visit, and interest in securing the visiting privileges of others. The results suggest that option value is important in wilderness valuation and that off-site users account for a large part of the economic value of wilderness.     

A practical real option methodology for the evaluation of farm-in/out joint venture agreements in mineral exploration

Although the “real option valuation” (ROV) methodology offers extremely valuable insights in optimising investment decisions in the face of uncertainty, its practical acceptance in the mining industry has until recently been slow because of its perceived computational complexity. Recent conceptual advances in the use of binomial lattices and software developments in the areas of decision trees and dynamic programming, have significantly simplified ROV analysis and made it of practical application in day-to-day financial evaluations and decisions involving uncertainty. This paper provides general background on the ROV methodology and an example of how a typical farm-in/out agreement, as a preliminary to the establishment of a joint venture (JV), can be valued as a series of sequential and compound real options. For illustrative and quality assurance purposes, a simple farm-in/out agreement is valued from the point of view of the party acquiring equity in the project (the farm-inee) using two distinct methods, i.e. (a) a binomial lattice and (b) a decision tree in combination with binomial stochastic processes, in both cases neutralising risk using the user-friendly “risk-neutral probability”. The fact that exactly the same ROV is obtained by both methods provides confidence in the modified decision tree approach, which opens up the capacity to value the more complex sequential/compound real options inherent in real-life farm-in/out agreements. The model is then modified to incorporate a number of realistic contractual conditions often encountered in typical exploration and mining farm-in/out deals. The paper demonstrates how the increased complexity of the model can be relatively easily addressed using a decision tree with dynamic programming capability.     

Can California coastal managers plan for sea-level rise in a cost-effective way?

This paper examines five representative sites on the California coast to illustrate a cost-effective methodology using tools and data that local decision makers can apply to analyse the economics of sea level rise (SLR) adaptation. We estimate the costs/benefits of selected responses (e.g. no action, nourishment, seawalls) to future flooding and erosion risks exacerbated by SLR. We estimate the economic value of changes to public/private property, recreational and habitat value, and beach related spending/tax revenues. Our findings indicate that the costs of SLR are significant but uneven across communities, and there is no single best strategy for adaptation. For example, Los Angeles's Venice Beach could lose $450 million in tourism revenue by 2100 with a 1.4 m SLR scenario while San Francisco's Ocean Beach would lose $80 million, but the impacts to structures could total nearly $560 million at Ocean Beach compared to $50 million at Venice Beach.     

Optimal control of soybean aphid in the presence of natural enemies and the implied value of their ecosystem services

By suppressing pest populations, natural enemies provide an important ecosystem service that maintains the stability of agricultural ecosystems systems and potentially mitigates producers' pest control costs. Integrating natural control services into decisions about pesticide-based control has the potential to significantly improve the economic efficiency of pesticide use, with socially desirable outcomes. Two gaps have hindered the incorporation of natural enemies into pest management decision rules: (1) insufficient knowledge of pest and predator population dynamics and (2) lack of a decision framework for the economic tradeoffs among pest control options. Using a new intra-seasonal, dynamic bioeconomic optimization model, this study assesses how predation by natural enemies contributes to profit-maximizing pest management strategies. The model is applied to the management of the invasive soybean aphid, the most significant serious insect threat to soybean production in North America. The resulting lower bound estimate of the value of natural pest control ecosystem services was estimated at $84 million for the states of Illinois, Indiana, Iowa, Michigan and Minnesota in 2005.     

Who Visits a National Park and What do They Get Out of It?: A Joint Visitor Cluster Analysis and Travel Cost Model for Yellowstone National Park

Yellowstone National Park visitor data were obtained from a survey collected for the National Park Service by the Park Studies Unit at the University of Idaho. Travel cost models have been conducted for national parks in the United States; however, this study builds on these studies and investigates how benefits vary by types of visitors who participate in different activities while at the park. Visitor clusters were developed based on activities in which a visitor participated while at the park. The clusters were analyzed and then incorporated into a travel cost model to determine the economic value (consumer surplus) that the different visitor groups received from visiting the park. The model was estimated using a zero-truncated negative binomial regression corrected for endogenous stratification. The travel cost price variable was estimated using both 1/3 and 1/4 the wage rate to test for sensitivity to opportunity cost specification. The average benefit across all visitor cluster groups was estimated at between $235 and $276 per person per trip. However, per trip benefits varied substantially across clusters; from $90 to $103 for the “value picnickers,” to $185–$263 for the “backcountry enthusiasts,” $189–$278 for the “do it all adventurists,” $204–$303 for the “windshield tourists,” and $323–$714 for the “creature comfort” cluster group.     

FEASIBILITY OF SEASONAL WATER PRICING CONSIDERING METERING COSTS1

ABSTRACT: Efficiency implications of seasonal pricing, uniform pricing, and optimal seasonal pricing with metering costs are analyzed qualitatively using classical optimization technique. The first two schemes are special cases of the last pricing scheme. A nonlinear-integer programming model is formulated for a case study application to Salt Lake City to examine the feasibility of seasonal pricing. The analysis indicates that uniform pricing is preferable unless metering costs are substantially lower than present levels.     

Managing the cooling capacity of the upper rhine: A case study

In most industrialized countries, environmental standards exist which prescribe the maximum allowable man-made increase in water temperature of a river. Together with flowrate and weather conditions, these standards determine the rate at which waste heat may be discharged into a river at any moment. Power generating stations with variable cooling systems can adjust their heat discharge into the river in compliance with environmental standards and by doing so exert an influence on power generation capacity. In this paper, a scheme is developed that allows a chain of power stations discharging into the same river to operate their cooling systems such that the output of total electricity is maximized and water temperature standards are accomodated. The optimum balance between stations is determined through dynamic programming. From the results of a simulation model using historical data, simple decision rules for day-to-day operation are abstracted. These rules are based solely on the river flow rates at each power station.     

Filling the gap: A comparative analysis of stormwater utility fees and stormwater program budgets in the Puget Sound watershed

Stormwater utility fees (SUFs) are one way to fill the growing gap between stormwater management needs and available funding. However, there is a lack of data on the overall role they play in stormwater program budgets. This paper presents an evaluation of SUFs across multiple jurisdictions to understand their contributions to overall revenue, the uses of revenue, and the extent to which ratemaking is equitable within and between jurisdictions. We compiled data on SUFs for 124 jurisdictions and program budgets for 80 jurisdictions to describe the composition of revenues and influence of municipal stormwater permit status. We also calculated SUFs applied to individual parcels in 11 jurisdictions to assess two equity outcomes: proportionality and affordability. Results indicate that SUF revenue contributed 91% of the $537.7 million in total 2019 stormwater program operational revenue. There was enormous variation among jurisdictions in annual SUF revenue per capita ($17–328), per housing unit ($42–1007), and on an area-normalized basis (<$0.01–2.70 per ft² impervious surface). SUFs in some cities were large enough to burden low-income households, and the way they are billed may preclude assistance for renters. In the context of escalating costs driven in part by new regulatory requirements, these results illustrate the tension between achieving full cost recovery for stormwater services and ensuring prices are affordable for ratepayers.     

Evaluating the PM damage cost due to urban air pollution and vehicle emissions in Seoul, Korea

This study evaluated the prospective damage costs of PM(2.5) inhalation. We performed a health risk assessment based on an exposure-response function to estimate the annual population risk in the Seoul metropolitan city, Korea. Also, we estimated a willingness-to-pay (WTP) amount for reducing the mortality rate in order to evaluate a statistical life value. We combined the annual population risk and the value-of-statistical-life to calculate the damage cost estimate. In the health risk assessment, we applied the PM(2.5) relative risk to evaluate the annual population risk. We targeted an exposure population of 5,401,369 persons who were over the age of 30. Using a Monte-Carlo simulation for uncertainty analysis, we estimated that the population risk of PM(2.5) inhalation during a year in Seoul is 2181 premature deaths for acute exposure and 18,510 premature deaths for chronic exposure. The monthly average WTP for 5/1000 mortality reduction over ten years is $20.20 USD (95% C.I: $16.60-24.50) and the implied value-of-statistical-life (VSL) is $485,000 USD (95% C.I: $398,000-588,000). The damage cost estimate due to risk from PM(2.5) inhalation in Seoul is about $1057 million USD per year for acute exposure, and $8972 million USD per year for chronic exposure. It is important to note that this cost estimate does not reflect all health damage cost estimates in this urban area. This recommendation is a model for evaluating a mortality risk reduction and as such we must re-evaluate an integrated application of morbidity risk.     

Assessment of Economic and Water Quality Impacts of Land Use Change Using a Simple Bioeconomic Model

The objective of this study is to assess the economic and water quality impact of land use change in a small watershed in the Wiregrass region of Alabama. The study compares changes in water quality and revenue from agricultural and timber production due to changes in land use between years 1992 and 2001. The study was completed in two stages. In the first stage, a biophysical model was used to estimate the effect of land use change on nitrogen and phosphorus runoff and sediment deposition in the main channel; in the second stage, farm enterprise budgeting tools were used to estimate the economic returns for the changes in land use condition. Both biophysical and economic results are discussed, and a case for complex optimization to develop a decision support system is presented.     

Population viability analysis as a tool in wildlife conservation policy: With reference to Australia

Wildlife conservation policy for endangered species restoration follows a six-phase process. Population viability analysis (PVA) can play a major contributing role in four of these. PVA, as discussed here, is a technique where extinction vulnerabilities of small populations are estimated using computer simulation modeling. The benefits and limitations of using PVA in wildlife decision and policy processes are reviewed based on our direct experience. PVA permits decision makers to set time frames for management, estimate the required magnitude of restoration efforts, identify quantitative targets for species recovery, and select, implement, monitor, and evaluate management strategies. PVA is of greatest value for rare species policy and management. However, a limitation of PVA simulation models is that they are constrained by the amount of biological data available, and such data are difficult to obtain from small populations that are at immediate risk of extinction. These problems may be overcome with improved models and more data. Our experience shows benefits of PVA far outweigh its limitations, and applications of the approach are most useful when integrated with decision analysis and completed within an adaptive management philosophy. PVAs have been carried out for 14 Victorian species and less used elsewhere in Australia. Management and recovery plans are developed from these PVAs. We recommend that PVA be used to guide research programs, develop conservation strategies, and inform decision and policy making for both endangered and nonendangered species because it can significantly improve many aspects of natural resource policy and management.     

A DYNAMIC SYSTEM MODEL FOR SIMULATING SEDIMENT DISCHARGE1

ABSTRACT: A dynamic sediment discharge model was developed and proposed for the simulation of watershed systems. It war developed from an expansion of splash and flow erosion relationships under steady state conditions. It was described as a general erosion model that can be reduced to forms comparable to many conceptual soil erosion and sediment yield models. The model incorporates eight parameters such as rainfall intensities, runoff rates, and previous sediment discharges. The model was tested with two small watersheds with simulation results which were very satisfactory compared to the data.