Evaluating Recreational
Benefits of Water Resources
on Small Geographical Areas
An Application to Rivers in Puerto Rico
Prepared by:
Juan Marcos González & John B. Loomis
Dept. of Agricultural and Resource Economics
Colorado State University
Outline

Recreation Demand Models
Travel Cost Model
 Contingent Valuation Model
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Travel Cost Models: A closer look
Empirical Application
Results
Implications: Water Resources Valuation
Concluding Remarks
Recreation Models

Travel Cost Model (TCM)
Revealed Preferences
 Relates intensity of use (number of trips) to
variables of interest
 Allows us to determine a demand schedule directly

Quantity demanded (trips) versus price paid (travel cost)
 Implicitly captures trade-offs between characteristics and
money

Travel Cost Model
The individual demand for seasonal visits to the
sites considered is defined as:
rij  f ( p j,v j,mi, zi)
rij
is the number trips taken in a season by individual i to site j
pj
vj
mi
zi
is the cost associated to site j
the
is a vector of characteristics site j has
stands for the income
represent a set of particular individual characteristics of
visitor
Recreation Models

Contingent Valuation Model (CVM)
Stated Preferences
 Obtains information on contingent behavior of
visitors
 Relates response to changes in prices and site
characteristics
 Allows us to determine consumer’s surplus directly

Contingent Valuation Model
The marginal demand for a visit to the sites
considered is defined as:
ansij  f (bid j,v j,mi, zi)
ansij
is the answer (yes/no) to the contingent valuation question
bidj
vj
mi
zi
the hypothetical bid amount increase to visit site j
the
is a vector of characteristics site j has
stands for the income
represent a set of particular individual characteristics of
visitor
TCM : A Closer Look

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Travel Cost Models rely
on a continuous spatial
market
Each ring is of a given
distance increment
Visitors residing in each
ring have a determined
travel cost to visit the site
$400
$250
$100
TCM : The Island Effect
$400
$100
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Some sites have limited
market area around them
(islands)
The maximum travel
cost that a visitor can
incur is limited or
truncated
Travel cost will then be
less than their maximum
willingness to pay
Empirical Application

Location
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El Yunque, Caribbean National
Forest.
Sites
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Visitors from 11 sites were
surveyed.
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Espiritu Santo
Mameyes
In person interviews
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Interviews were done during
summer 2005.
Included weekdays, weekends and
holydays.
Questions included visitor
demographics, number of visits
and perceived site conditions.
Results
Variables
CVM
TCM
Intercept
2.4296
1.2237
4.3223
3.5029
-0.0104
-0.0108
-9.2360
-5.3192
-0.2347
0.0920
-2.4443
1.5642
-1.1143
0.1055
-2.6580
0.9051
-0.0004
0.0002
-2.5237
1.9748
0.2200
-0.0182
2.3496
-0.6467
-0.0083
-0.0002
-2.0475
-0.1325
Bid
Road
Mean Annual Discharge
Median Grain Size
Pool Volume
Pool Volume Squared
Demand Schedules
450
400
350
300
250
200
150
100
50
0
TCM
Number of Trips
13.3
12.2
11.1
10
8.9
7.8
6.7
5.6
4.5
3.4
2.3
1.2
CVM
0.1
Price
Implied Demand Curves for Number of Trips for
CVM and TCM
Implications: Water Resources
Valuation

Mean Willingness to Pay
Mean WTP
 CVM
CVM
TCM
$ 109.42
$ 92.75
valuation is 18% larger !!
Concluding Remarks
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TCM conditions might not be met by the area
studied
TCM results are truncated only when the value
of the site is greater than the maximum possible
travel cost considered
CVM results might be an alternative to evaluate
site WTP
Water resources valuations depend heavily on
the accuracy of the models that used
Thank you!
Questions?
Comments?