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Combining Farrell Frontier and Hedonic Travel Cost Models for Valuing Estuarine Quality

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  • Smith, V Kerry
  • Palmquist, Raymond B
  • Jakus, Paul

Abstract

This paper extends the Brown-Mendelsohn hedonic travel cost model by estimating the travel cost function for each recreationist as a technically efficient frontier. It also constrains the marginal prices for desirable characteristics to be nonnegative. The model is used to value improvements in the quality of sport fishing in the Albemarle-Pamlico Estuary in North Carolina. The application compares the performance of the frontier hedonic travel cost with ordinary least squares estimates, and finds the former to be free of problems identified in the literature and to provide more plausible and robust benefit estimates for quality improvements. Copyright 1991 by MIT Press.

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  • Smith, V Kerry & Palmquist, Raymond B & Jakus, Paul, 1991. "Combining Farrell Frontier and Hedonic Travel Cost Models for Valuing Estuarine Quality," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 694-699, November.
    • Handle: RePEc:tpr:restat:v:73:y:1991:i:4:p:694-99
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    1. Raymond J. Kopp, 1981. "The Measurement of Productive Efficiency: A Reconsideration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(3), pages 477-503.
    2. Kling, Catherine L. & Bockstael, Nancy & Hanemann, W. Michael, 1987. "Estimating the Value of Water Quality Improvements in a Recreational Demand Framework," Staff General Research Papers Archive 1594, Iowa State University, Department of Economics.
    3. V. Kerry Smith & Yoshiaki Kaoru, 1987. "The Hedonic Travel Cost Model: A View from the Trenches," Land Economics, University of Wisconsin Press, vol. 63(2), pages 179-192.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    5. Brown, Gardner M, Jr & Mendelsohn, Robert, 1984. "The Hedonic Travel Cost Method," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 427-433, August.
    6. Forsund, Finn R. & Lovell, C. A. Knox & Schmidt, Peter, 1980. "A survey of frontier production functions and of their relationship to efficiency measurement," Journal of Econometrics, Elsevier, vol. 13(1), pages 5-25, May.
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    1. Pendleton, Linwood, 1999. "Reconsidering the hedonic vs. RUM debate in the valuation of recreational environmental amenities," Resource and Energy Economics, Elsevier, vol. 21(2), pages 167-189, May.
    2. Erda Wang & Jianhua Wei & Jiawei Zhu, 2017. "The effects of improving coastal park attributes on the recreation demand—A case study in Dalian China," Tourism Economics, , vol. 23(1), pages 133-149, February.
    3. Anton Nahman & Dan Rigby, 2008. "Valuing Blue Flag Status And Estuarine Water Quality In Margate, South Africa1," South African Journal of Economics, Economic Society of South Africa, vol. 76(4), pages 721-737, December.
    4. Stoeckl, Natalie & Farr, Marina & Larson, Silva & Adams, Vanessa M. & Kubiszewski, Ida & Esparon, Michelle & Costanza, Robert, 2014. "A new approach to the problem of overlapping values: A case study in Australia׳s Great Barrier Reef," Ecosystem Services, Elsevier, vol. 10(C), pages 61-78.
    5. Aiken, Deborah Vaughn, 2006. "Application of the distance function to nonmarket valuation of environmental goods and services: An illustrative example," Ecological Economics, Elsevier, vol. 60(1), pages 168-175, November.
    6. Nerlove, Marc, 1995. "Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers," European Economic Review, Elsevier, vol. 39(9), pages 1697-1716, December.
    7. Whitehead, John C. & Haab, Timothy C. & Huang, Ju-Chin, 2000. "Measuring recreation benefits of quality improvements with revealed and stated behavior data," Resource and Energy Economics, Elsevier, vol. 22(4), pages 339-354, October.
    8. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
    9. Scrogin, David & Hofler, Richard & Boyle, Kevin J. & Milon, J. Walter, 2004. "On The Frontier Of Generating Revealed Preference Choice Sets: An Efficient Approach," 2004 Annual meeting, August 1-4, Denver, CO 20134, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Phaneuf, Daniel J. & Smith, V. Kerry, 2006. "Recreation Demand Models," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 15, pages 671-761, Elsevier.
    11. Linwood Pendleton & Robert Mendelsohn, 2000. "Estimating Recreation Preferences Using Hedonic Travel Cost and Random Utility Models," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(1), pages 89-108, September.

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