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Clean Coastal Waters: Understanding and Reducing the Effects of Nutrient Pollution
capture only the value to the property owner. In particular, they do not capture the value to other users of the marine resource (e.g., recreationists) who do not own property near the resource.
The most commonly used method for estimating the value of improved water quality to recreationists is the travel cost method. Although recreationists may not pay an access fee for use of a recreational resource, they incur costs in the form of travel costs (including the opportunity cost of their time) and other out-of-pocket expenses. These costs can be viewed as the price paid for the recreation trip. Individuals who live farther from a site must pay a higher price (in the form of higher travel costs) and hence would be expected to demand less (i.e., take fewer trips). Thus, by relating travel costs to the number of trips taken, the demand for trips and the associated willingness to pay for them can be estimated. Improved water quality should increase the value of a recreational trip, which should in turn result in more frequent trips or trips from farther away. The changes in demand that result from a water quality improvement can be used to infer the economic value of the improvement.
There is a large theoretical and empirical literature on application of travel cost methods to the valuation of changes in environmental quality, particularly improvements in water quality. In a study of the benefits of improvements in water quality in the Chesapeake Bay, Bockstael et al. (1989) used the travel cost method to examine the impacts on three activities: beach use, boating, and fishing. For beach use and boating, water quality was represented by the level of nutrient enrichment as measured by the total input of nitrogen and phosphorus. For fishing, water quality was proxied by the catch rates for striped bass. From their travel cost study, they estimated the fishing, boating, and swimming benefits of a hypothetical 20 percent improvement in water quality in the bay to be in the range of $18 to $55 million per year in 1987 dollars. Bockstael et al. (1989) also used contingent valuation to estimate the benefits of water quality improvements in the bay (see discussion below).
Single-site travel cost models do not account explicitly for the possibility of substitutability across sites. As water quality at one site changes, users may switch to other sites, even if switching leads to increased travel costs. Random utility models are designed to model the choices that individuals make among alternative sites, as determined by environmental quality, distance, and other site characteristics. By examining the tradeoffs that individuals are willing to make between environmental quality and travel costs, estimates of the value of environmental improvements can be derived. In one study, Kaoru et al. (1995) applied a random utility model to the estimation of the value of reductions in nitrogen loadings in the Albemarle and Pamlico Sounds of North Carolina. Their estimates of the benefits to an individual of a 36 percent decrease in nitro-