Outdoor recreation is among the most popular leisure activities in the world. As it takes place in an uncertain environment, agents incur travel costs to discover the payoff only after arriving at the site. Building on recent developments in behavioral economics suggesting a variety of patterns of behavior inconsistent with expected utility, we specify recreationists' preferences as rank-dependent. Using data from a 2022 stated preference survey in the East Coast summer flounder recreational fishery, our results confirm that previous empirical findings can be applied to the domain of recreation. As in the case of financial, insurance, and medical decisions, our subjects exhibit a pattern of probability weights consistent with an inverse S-shaped probability weighting function that overweights small-tail probabilities and underweights intermediate and large probabilities. Our results have important implications for the management of outdoor recreation. Finally, we illustrate how our model could be estimated using revealed rather than stated preference data.

Recreational fishing is among the most popular outdoor recreational activities in the world. However, uncertainty in angler response to changes in regulation has limited managers' ability to prevent overfishing. We need to understand the heuristics anglers use to overcome informational and cognitive constraints that may limit their ability to assess stochastic attributes such as catch and environmental amenities. Using data from choice experiments, we specify and estimate preferences that rely on the theory of decision under unknown risks or ambiguity. We build on the observation that anglers interpret possession limits as targets or signals on stock productivity that anchor their expectations on retained catch, to specify a multiple prior model that relies on less onerous assumptions on anglers' information and numeracy than conventional demand models. We integrate the economic submodel into a bioeconomic model to show that our specification provides better out-of-sample predictions than linear and CARA utility models.

We study the optimal allocation of a resource in a second-best world in which parties may be liquidity-constrained due to credit frictions and capital market imperfections. In this setting, common to various natural resource industries, agents are unable to bid more than their budget regardless of their valuation. While auction markets are widely used mechanisms for allocating natural resource extraction rights and conservation contracts, we show that in these circumstances the competitive market –which allocates items based on rank order of bids– fails to achieve the first-best allocation. The market outcome is welfare-dominated by a hybrid mechanism consisting of random assignment followed by resale in a secondary market. Via the initial lottery, the hybrid-mechanism allocates the items with positive probability to high-valuation low-wealth individuals who would not have been able to afford them in a competitive market. High-valuation high-wealth agents, on the other hand, acquire the items in the secondary market if they do not receive them in the initial lottery. Therefore, equity in the allocation of access to the resource may be justified not only by distributional concerns but also by economic efficiency. We illustrate our model using data from buybacks of harvesting rights in the seafood industry.

We study the use of discrete choice models in the context of recreation when there may be discrepancy between the anticipated (ex ante) and the experienced quality of site attributes due to imperfect information. Unlike previous literature on the topic, we relax the assumption of risk neutrality. Adopting a model with quasi-linear preferences, we characterize the disparity between ex ante and ex post utility by decomposing expected utility into a term stemming from bias in beliefs and a component representing willingness to pay for reducing uncertainty in site attributes. Our results show that ex post corrections of welfare losses are attenuated by greater dispersion in beliefs about amenities.

Welfare measures from travel cost models net out variable costs such as travel expenses specific to each trip. Costs that are fixed in the short run, such as expenses for equipment that is used over multiple trips, are typically ignored and implicitly netted out. The resulting net value of recreation trips, or consumer surplus, is appropriate for long-run analysis when consumers can fully adjust their expenditures. However, in cases where some costs are difficult to adjust in the short run, such as when boat owners do not sell their boats in response to the transient effects of an oil spill, traditional consumer surplus measures underestimate the total welfare change. We explain this underestimation and show how to correct for it by adjusting traditional consumer surplus estimates upward. We illustrate our procedure using a model of recreational boating developed to assess damages from the Deepwater Horizon oil spill. In that case, accounting for boating fixed costs resulted in a 50% increase in estimated value relative to estimates of consumer surplus alone.

The cost and time required to produce original benefit estimates makes benefit transfers a highly valuable component of the process of assessing the benefits and costs of environmental improvements. Because of the great variety of benefit estimates, conducted at different times with different data sources and different techniques, there is concerted effort to understand the validity of transfers. The research in this paper approaches the validity issue of benefit transfers by asking whether there is indirect evidence of the benefits. The premise of the paper is that policies that give significant benefits should induce expected and unexpected behavioral changes. We look for evidence of potential indirect evidence by by estimating the effect of differences air pollutants on activities such as outdoor recreation and work, as found in the American Time Use Survey.

We investigate the relationship between the sale prices of apartment buildings and ozone levels in Los Angeles. The hedonic estimation controls for the potential bias resulting from the endogeneity of air pollution measures. We find that renters' valuations for air quality are capitalized into the asset price of apartment buildings. For a 1% reduction in the 1990 ambient air pollution level, renters' annual marginal willingness to pay (MWTP) is estimated at $14 to $52 in constant 2010 dollars. These estimates are somewhat smaller than current MWTP estimates from the owner-occupied single family house literature.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico was the largest ever in U.S. waters, eclipsing the 1989 Exxon Valdez spill in terms of the sheer quantity of oil released and the scale and scope of activities impacted. We developed a recreation demand model to monetize economic damages associated with lost shoreline recreational user days attributable to the spill. The unprecedented magnitude of the spill disruption led to a variety of innovations. We estimate a model of shoreline recreation trips to the Gulf Coast region from the general population of the contiguous U.S., combining single and multiple-day trips, calculating travel costs that incorporate detailed information on flying costs and transportation mode choice, and using alternative-specific constants to control for site characteristics. Losses per recreational user day are assessed using utility adjustments that reproduce the decline in recreation observed through onsite counts. Sensitivity analyses demonstrate our lost user day value is robust to changes in income imputation, nesting structure, site aggregation and spill calibration, and show the importance of accounting for flying as a mode choice. Estimated losses from the primary shoreline study are $520 million (±166) out of the total recreational damages of $661 million (2015$).

Information frictions imply it is reasonable to expect the same commodity, in a given location, to sell for different prices at the same time. Aguiar and Hurst (AH) [2007] demonstrate how the search behavior implied by these price differences can be used estimate the opportunity cost of time. Their important insight allows the estimation of time prices over the lifecycle and the evaluation of the impacts of macro shocks on them. We provide the first assessment of the plausibility of this type of search behavior as a window on time prices. AH’s measures of the opportunity cost of time are shadow values that are jointly determined with individuals’ decision to search for bargains. Our analysis overcomes the challenges posed by this endogeneity by exploiting the complementarity between time and some types of market goods and services. We use changes in the expenditures for these goods in response to macro shocks as a basis for evaluating the AH choice margin. Using three different data sources we find that changes in expenditures on recreation related goods and services and time spent recreating are consistent with the AH framework’s assessment of the impact of the Great Recession for the opportunity cost of time.

In the wake of a massive offshore oil spill, federal and state agencies undertook studies to determine the reduction in outdoor recreational trips along the Gulf of Mexico. This paper describes three of those efforts, which gauged the impact of the oil spill on beach visits, boating, and fishing. Together the studies represented an enormous undertaking, involving nearly half a million aerial photographs, 35,000 onsite counts, and 129,000 interviews over a period of three years. For each activity, samples of time-place combinations were quickly developed and systematic data collection covering hundreds of miles of the most affected areas began within six weeks of the start of the spill and soon expanded to cover more than 1,000 miles of shoreline. The research used a mix of aerial and onsite counts and interview data to estimate the reduction in recreation due to the spill. "Baseline" estimates were developed that represented what the level of recreation would have been in the absence of the spill. These estimates were derived from the observed levels of recreation at a later period when the spill was unlikely to have had continuing effects on recreation, with adjustments for differences in the weather between the baseline period and the period immediately after the spill. Overall, the results suggest that there were about 12.3 million fewer visits to the beach because of the spill. In addition, 215,000 fewer boaters went out in the Gulf and anglers made 144,000 fewer fishing trips. We conclude with a discussion of the lessons learned from the study.

This paper studies the returns on the allocation of harvest to the recreational sector when anglers exhibit risk aversion for random catch. By using data from choice experiments that explicitly introduce uncertainty in harvest as a trip attribute, we specify and estimate different models of constant absolute risk aversion (CARA). With evidence that anglers exhibit disutility from randomness in the catch, we use our estimates to draw comparisons with standard linear models. We calibrate a model of the Northeast Region summer flounder fishery and run Monte Carlo experiments to simulate alternative policy strategies for enforcing the recreational total allowable catch (TAC). Our results show that risk aversion leads to different predictions on angler participation and welfare from those assuming risk neutrality. Unlike the case of risk neutrality, the same TAC enforced with different catch restrictions and season lengths results in different numbers of expected trips and welfare estimates under CARA preferences. It is the entire catch distribution rather than the mean catch that determines anglers’ behavior and implied values. Under risk aversion for random catch, regulators may also find enforcement of harvest restrictions to be less costly. More broadly, our approach provides a consistent way to incorporate risk in quality attributes into the discrete choice framework that is pervasive in the literature on recreational demand modeling.

Economists have long known that properly designed markets allocate resources efficiently. However, in many circumstances markets are unfeasible. In this paper, we construct a general model of access which allows us to value different assignments when resources are allocated in the absence of markets. We demonstrate that marginal value schedules are far less useful in allocating access when property rights are unattainable. The criteria for optimal allocation combine information on both the marginal value schedules and the assignments determining the probabilities of access to the resource. Our approach allows us to rank rationing policies in a wide range of real-world, second-best settings.

Benefit–Cost Analyses for Security Policies describes how to undertake the evaluation of security policies within the framework of benefit–cost analysis and offers a unique contribution to analysis of homeland security regulations in the United States. The authors outline how established procedures for benefit–cost analysis must adapt to meet challenges posed by current security policy, through examining specific security related regulations. The logic of risk assessment, selection of a discount rate, valuation of travellers’ time when delayed due to screening, valuation of changes in risks of injury or death, and impacts of terrorist events on the economy as a whole are among the issues discussed. An outline of the research and policy evaluation steps needed to build robust benefit-cost methods to evaluate security related regulations in the future is presented in the book.

While economists have successfully addressed the endogeneity of congestion in revealed preference approaches, little attention has been devoted to measuring congestion. In fact, most applications measure congestion as a simple count of users or, at best, consider the shares of users, defined as the proportion of people visiting a site during the course of the season. However, only when all sites have a similar size or length and the total number of visitors is constant over time, can these measures be used as a proxy for congestion. In general, these assumptions are unrealistic. In this paper we examine site density measures rather than participation shares as a measure of congestion. We show that endogeneity problems can be addressed using a control function approach and demonstrate that the density of users leads to more statistically significant coefficients of congestion.

This paper presents a Poisson model of expected angler catch during a sportfishing trip and employs the expected catch in a random utility model of site choice. The approach permits greater heterogeneity in expected catch and in individual welfare stimates from policies such as creel limits.

Resources are often allocated without property rights and the attendant market exchanges. Households commonly encounter these situations-access to schools, on-street parking. Fishing firms typically exploit stocks in a limited-entry setting under input controls. Absent transferable rights and the sorting of marginal values induced by price mechanisms, it is critical to understand the rules governing access. We study allocation of harvest among fishing sectors in this second-best context and demonstrate that optimal allocation combines information on probabilities of access with the standard information in marginal value schedules. We illustrate our arguments with data from the Gulf of Maine.

We conducted an experiment with 30,000 users of a virtual nanotechnology facility, nanoHUB.org. We investigate the effect of virtual points and message framing on user participation in a survey. In one treatment, users receive points for completing the survey. In another treatment, users are exposed to a visual observation cue. We vary the social message, either emphasizing the private benefit to the user or the social benefit to the community of participation. Participation rates are increased through virtual points and for users receiving the private benefit messaging. The observation cue doesn't have an effect.

We use a contingent valuation approach to estimate the economic value assigned to Iranian households for the preservation of coral reefs at Kish Island These coral reefs survive in extreme weather conditions and, therefore, are used as a natural laboratory to study impacts of climate change. A one-and-one-half-bound elicitation process was implemented through a face-to-face survey. The vehicle payment is the purchase of a family pass to visit Kish Island. This pass is valid for five years. The collected funds would be used for conservation purposes. Total willingness to pay for five years of services provided by coral reefs at Kish Island is estimated in the range of US$20 to US$155 million, and from US$1.21 to US$9.13 on a per-household basis. This value is interpreted as a non-use value assigned by Iranian visitors and non-visitors of Kish Island.