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Using Revealed Preferences to Infer Environmental Benefits:Evidence from Recreational Fishing Licenses

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Author Info

  • Lori Bennear

    ()

  • Robert Stavins

    ()

  • Alexander Wagner

    ()

Abstract

We develop and apply a new method for estimating the economic benefits of an environmental amenity. The method is based upon the notion of estimating the derived demand for a privately traded option to utilize an open access good. In particular, the demand for state fishing licenses is used to infer the benefits of recreational fishing. Using panel data on state fishing license sales and prices for the continental United States over a 15-year period, combined with data on substitute prices and demographic variables, a license demand function is estimated with instrumental variable procedures to allow for the potential endogeneity of administered prices. The econometric results lead to estimates of the benefits of a fishing license, and subsequently to the expected benefits of a recreational fishing day. In contrast with previous studies, which have utilized travel cost or hypothetical market methods, our approach provides estimates that are directly comparable across geographic areas. Our findings show substantial variation in the value of a recreational fishing day across geographic areas in the United States. This suggests that current practice of using benefits estimates from one part of the country in national or regional analyses may lead to substantial bias in benefits estimates. Copyright Springer Science+Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11149-005-3107-7
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Bibliographic Info

Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 28 (2005)
Issue (Month): 2 (09)
Pages: 157-179

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Handle: RePEc:kap:regeco:v:28:y:2005:i:2:p:157-179

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Web page: http://www.springerlink.com/link.asp?id=100298

Related research

Keywords: revealed-preference valuation; environmental benefits; recreational fishing day; Q26; Q21; Q22; H41;

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Cited by:
  1. Abdulbaki Bilgic & Wojciech Florkowski, 2009. "The impact of license regulation on the number of recreation trips: is it worth considering?," Journal of Regulatory Economics, Springer, vol. 35(1), pages 45-69, February.
  2. Alexander F. Wagner & Friedrich Schneider, 2006. "Satisfaction with Democracy and the Environment in Western Europe – a Panel Analysis," CESifo Working Paper Series 1660, CESifo Group Munich.
  3. Ojumu, Oluwagbemiga & Hite, Diane & Fields, Deacue, 2009. "Estimating Demand For Recreational Fishing In Alabama Using Travel Cost Model," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46858, Southern Agricultural Economics Association.

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