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

Author

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  • 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

Suggested Citation

  • Lori Bennear & Robert Stavins & Alexander Wagner, 2005. "Using Revealed Preferences to Infer Environmental Benefits:Evidence from Recreational Fishing Licenses," Journal of Regulatory Economics, Springer, vol. 28(2), pages 157-179, September.
    • Handle: RePEc:kap:regeco:v:28:y:2005:i:2:p:157-179
    DOI: 10.1007/s11149-005-3107-7
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    Citations

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    Cited by:

    1. David A. Keiser, 2018. "The Missing Benefits of Clean Water and the Role of Mismeasured Pollution," Center for Agricultural and Rural Development (CARD) Publications 18-wp581, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. de Frutos, Pablo & Rodríguez-Prado, Beatriz & Latorre, Joaquín & Martínez-Peña, Fernando, 2019. "Environmental valuation and management of wild edible mushroom picking in Spain," Forest Policy and Economics, Elsevier, vol. 100(C), pages 177-187.
    3. 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.
    4. Travis Warziniack & David Finnoff & Jonathan Bossenbroek & Jason Shogren & David Lodge, 2011. "Stepping Stones for Biological Invasion: A Bioeconomic Model of Transferable Risk," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(4), pages 605-627, December.
    5. Robert N. Stavins, 2017. "The Evolution Of Environmental Economics: A View From The Inside," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 251-274, June.
    6. Keiser, David A., 2018. "The Missing Benefits of Clean Water and the Role of Mismeasured Pollution," ISU General Staff Papers 201806290700001048, Iowa State University, Department of Economics.
    7. 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.
    8. Alexander F. Wagner & Friedrich Schneider, 2006. "Satisfaction with Democracy and the Environment in Western Europe – a Panel Analysis," CESifo Working Paper Series 1660, CESifo.
    9. Ojumu, Gbenga & Hite, Diane & Fields, Deacue, 2016. "Economic Impact Of Recreational Fishing In Alabama," Professional Agricultural Workers Journal (PAWJ), Professional Agricultural Workers Conference, vol. 3(2), pages 1-15.

    More about this item

    Keywords

    revealed-preference valuation; environmental benefits; recreational fishing day; Q26; Q21; Q22; H41;
    All these keywords.

    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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