Diving Demand and Economic Impact for Public Resources Bill Huth and Ash Morgan University of West Florida and Appalachian State University Jackson Blue.

Diving Demand and Diving Demand and Economic Impact for Economic Impact for

Public ResourcesPublic Resources

Bill Huth and Ash MorganBill Huth and Ash MorganUniversity of West Florida andUniversity of West Florida andAppalachian State UniversityAppalachian State University

Jackson Blue Spring Basin Jackson Blue Spring Basin Working Group, Marianna, FL Working Group, Marianna, FL

20102010

JB, Blue Spring Park, JB, Blue Spring Park, and the Mill Pondand the Mill Pond

Economics 101Economics 101Public Good (vs. Private Good): Public Good (vs. Private Good): A A good that is non-rivaled and non-good that is non-rivaled and non-excludable. Your consumption doesn’t excludable. Your consumption doesn’t reduce mine and we can consume it at reduce mine and we can consume it at will, nothing in place to prevent will, nothing in place to prevent consumption. (eg. national defense, a consumption. (eg. national defense, a navigable water way, a public park, a navigable water way, a public park, a lighthouse, a natural or artificial reef, lighthouse, a natural or artificial reef, etc.). Markets fail here.etc.). Markets fail here.

Common Property Resource: Common Property Resource: A good A good that is not private but has issues with that is not private but has issues with respect to either rivalry or excludability respect to either rivalry or excludability (quasi public goods). Still market (quasi public goods). Still market failure.failure.

Economics 102Economics 102 Consumer Surplus: Consumer Surplus: The benefit to consumers The benefit to consumers

from paying a price less than what they were from paying a price less than what they were willing to pay (also termed consumer value). It willing to pay (also termed consumer value). It is rare that anyone pays their WTP. This is is rare that anyone pays their WTP. This is what we measure here…the difference between what we measure here…the difference between what you were WTP and what you actually pay.what you were WTP and what you actually pay.

Example: Someone (a seller) is asking $200k Example: Someone (a seller) is asking $200k for a house, you (a buyer)are willing to pay for a house, you (a buyer)are willing to pay $175k but offer $150k and the seller accepts $175k but offer $150k and the seller accepts your offer, you get a $25k Consumer Surplus. your offer, you get a $25k Consumer Surplus.

Another ExampleAnother Example$300 surplus if you by today assuming you were willing to pay $300 surplus if you by today assuming you were willing to pay

$1295$1295

Economic ImpactEconomic Impact

Direct impact is the expenditure injection.Direct impact is the expenditure injection. Indirect and induced impacts are multiples Indirect and induced impacts are multiples

of the initial expenditure.of the initial expenditure. Total impact is the sum of direct, indirect, Total impact is the sum of direct, indirect,

and induced.and induced. Models used to measure economic impact:Models used to measure economic impact:

ImplanImplan RIMS (U.S. BEA)RIMS (U.S. BEA) REMIREMI

Florida SpringsFlorida Springs

Florida has one of the largest Florida has one of the largest concentrations of fresh water concentrations of fresh water springs on the planetsprings on the planet Over 700 known natural springsOver 700 known natural springs 33 First Magnitude Springs (>100 cu. 33 First Magnitude Springs (>100 cu.

ft. per s.)ft. per s.)

Jackson County Blue Spring ParkJackson County Blue Spring Park

JB Spring VentJB Spring Vent

Jackson Blue Survey MapJackson Blue Survey Map

GA Blind Cave GA Blind Cave SalamanderSalamander

((Haideotriton wallacei)Haideotriton wallacei)

Motivating LiteratureMotivating Literature Bonn, M. and Bell F. (2003). Bonn, M. and Bell F. (2003). Economic Impact of Selected Economic Impact of Selected

Florida Springs on Surrounding Local AreasFlorida Springs on Surrounding Local Areas. Florida . Florida Department of Environmental Protection, Springs Department of Environmental Protection, Springs Initiative Task Force. ($17m annual Visitor Spending for Initiative Task Force. ($17m annual Visitor Spending for a “typical spring.”)a “typical spring.”)

Morgan, A.O., Massey, M., and Huth, W.L. (2009). Morgan, A.O., Massey, M., and Huth, W.L. (2009). Demand for Diving on Large Ship Artificial ReefsDemand for Diving on Large Ship Artificial Reefs. . Marine Marine Resource EconomicsResource Economics. (Travel cost model to measure the . (Travel cost model to measure the diving demand for the USS Oriskany sunk off Pensacola diving demand for the USS Oriskany sunk off Pensacola in 2007)in 2007)

Morgan, A. O., and Huth, W.L. (Forthcoming). Morgan, A. O., and Huth, W.L. (Forthcoming). Using Using Revealed and Stated Preference Data to Estimate the Revealed and Stated Preference Data to Estimate the Scope and Access Benefits Associated with Cave DivingScope and Access Benefits Associated with Cave Diving. . Resource and Energy EconomicsResource and Energy Economics. (Jackson Blue Spring). (Jackson Blue Spring)

Huth, W.L., and Morgan, A.O. (Under Review). Huth, W.L., and Morgan, A.O. (Under Review). Measuring the Willingness to Pay for Fresh Water Cave Measuring the Willingness to Pay for Fresh Water Cave DivingDiving. . Journal of Environmental ManagementJournal of Environmental Management. (Wakulla . (Wakulla Spring)Spring)

Research ObjectivesResearch Objectives Estimate diving demand and, where possible,

economic impact for Florida springs Measure value to divers from new cave dive

sites and improving access to existing sites Bundling public goods impact on value

Measure demand and willingness to pay for diving related public goods Provide state park policy information

Measure scope effects associated with public good demand

Delicate FormationsDelicate Formations

Swimming Through Swimming Through ThemThem

Survey DesignSurvey Design Traditional mail survey using information from Traditional mail survey using information from

the Jackson County Sheriff’s Office cave diver the Jackson County Sheriff’s Office cave diver registration forms (500+)registration forms (500+)

Asked both revealed (past) and stated (future) Asked both revealed (past) and stated (future) preference diving behavior questionspreference diving behavior questions

Asked diver expenditure questions for Asked diver expenditure questions for economic impact measurement economic impact measurement

Above items were pilot tested at the 2008 Above items were pilot tested at the 2008 NSS/CDS workshop that was held in MariannaNSS/CDS workshop that was held in Marianna

Thank you for taking part in the survey. There are a total of 32 questions in twoparts. It should take no more than 15 minutes to complete the entire survey.Please enter your answers in the spaces provided and return the survey in theenclosed postage paid envelope. Thanks again and results will be shared.

Part 1: Merritt’s Mill Pond SurveyPlease answer each of the following questions. The questions are designedto derive an understanding of the socio-economic background of visitors thattravel to the area to dive at Merritt’s Mill Pond, and to gather informationregarding the length of trip and all related expenditures incurred. All answers arestrictly confidential and the accuracy of the study depends upon your answeringall the questions. No questions will be asked regarding your identity and nopersonal information will be shared.

Background InformationQ.1. In what year were you born?ANSWER_____________________________Q.2. What is the zip code of your primary residence?ANSWER_____________________________

Survey Text Excerpts

Merritt’s Mill Pond-specific Diving-Merritt’s Mill Pond-specific Diving-related Questionsrelated Questions

Q.13. How many day trips have you Q.13. How many day trips have you taken to dive at Merritt’s Mill Pond over taken to dive at Merritt’s Mill Pond over the past 12 months?the past 12 months?

Q.14 How many overnight trips have you Q.14 How many overnight trips have you taken to dive at Merritt’s Mill Pond over taken to dive at Merritt’s Mill Pond over the past 12 months?the past 12 months?

Q.26. What was your approximate Q.26. What was your approximate diving-related spending during your diving-related spending during your most recentmost recent stay in the area for each of stay in the area for each of the following categories?the following categories?

Diver plus KitDiver plus Kit

Finally, we would liken you to think about Finally, we would liken you to think about two two

different hypothetical scenarios.different hypothetical scenarios.

Q.29. Suppose there was another newly Q.29. Suppose there was another newly discovered cave near Jackson Blue that discovered cave near Jackson Blue that was roughly the same size as Jackson Blue. was roughly the same size as Jackson Blue. Based on the number of trips you stated Based on the number of trips you stated you would take in Q.28, would the number you would take in Q.28, would the number of trips you expect to take to dive at of trips you expect to take to dive at Marianna in the Marianna in the nextnext 12 months change? 12 months change? Please circle one.Please circle one.YesYes NoNo

If yes, how many If yes, how many moremore trips would you take trips would you take over the next year to dive at Marianna?over the next year to dive at Marianna?

ANSWER_____ANSWER_____

Q.30. Suppose the hypothetical scenario posed in Q.30. Suppose the hypothetical scenario posed in Q.29. didn’t happen, but instead it was possible Q.29. didn’t happen, but instead it was possible to access Twin cave from the shore, based on to access Twin cave from the shore, based on the number of trips you stated you would take the number of trips you stated you would take in Q.28, would the number of trips you expect in Q.28, would the number of trips you expect to take to dive at Marianna in the to take to dive at Marianna in the nextnext 12 12 months change? Please circle one.months change? Please circle one.

YesYes NoNo

If yes, how many If yes, how many moremore trips would you take over trips would you take over the next year to dive at Marianna?the next year to dive at Marianna?

Answer_______Answer_______

The Travel Cost Model (TCM)The Travel Cost Model (TCM)

zytctcx zystcxtc sx

xs

tc

tc

x dtczytctcfCS

chokex

x

),,,(0

X

tcX

B

A

X0

tcX0

‘choke price’

A = CS: $1.4m

B = CE $? B*Multiplier=EI $?

Demand = WTP

Trips

TravelCost

Travel CostTravel Cost

Number of Trips Depends on:Number of Trips Depends on: Travel cost = monetary plus opportunity Travel cost = monetary plus opportunity

costscosts Equipment-intensive recreational activityEquipment-intensive recreational activity Costs Included:Costs Included:

Access feesAccess fees Breathing gasBreathing gas Equipment rentalEquipment rental Other diving opportunities (Substitue, ie. Other diving opportunities (Substitue, ie.

GSO)GSO)

Estimation InformationEstimation Information

Travel Cost: A Stacked modelTravel Cost: A Stacked model Negative binomialNegative binomial

Test for hypothetical biasTest for hypothetical bias Isolate impact of second system and Isolate impact of second system and

improved access on tripsimproved access on trips Consumer surplus implicationsConsumer surplus implications Contingent Valuation via a standard Contingent Valuation via a standard

logit model with mle logit model with mle

TCM Survey Descriptive TCM Survey Descriptive StatisticsStatistics

n=186n=186VariableVariable Mean Std. Dev Mean Std. Dev

Actual trips (08-09)Actual trips (08-09) 8.62 12.858.62 12.85

Expected trips (09-Expected trips (09-10)10)

6.67 9.14 6.67 9.14

Exp. trips new Exp. trips new cave/twincave/twin

9.15 /7.81 9.15 /7.81 11.68/10.5911.68/10.59

Travel cost (JB)Travel cost (JB) $647 $614 $647 $614

Age (years)Age (years) 45.3 10.8145.3 10.81

IncomeIncome $99,590 $99,590 $43,260$43,260

Travel cost Travel cost (Substitute)(Substitute)

$668 $626 $668 $626

Male (dummy)Male (dummy) 0.870.87

Jackson Blue TCMJackson Blue TCMNegative Binomial MLE/TCM Negative Binomial MLE/TCM

EstimationEstimationVariableVariable CoefficienCoefficien

ttp-valuep-value

ConstantConstant 1.9391.939 0.000.00

TC_JBTC_JB -0.006-0.006 0.000.00

TC_SubTC_Sub 0.0050.005 0.000.00

AgeAge -0.022-0.022 0.000.00

MaleMale 0.3030.303 0.010.01

IncomeIncome 0.0030.003 0.000.00

SP_dummSP_dummyy

-0.275-0.275 0.010.01

NewCaveNewCave 0.3680.368 0.000.00

TwinTwin 0.1790.179 0.090.09

JB Consumer Surplus JB Consumer Surplus EstimatesEstimates

Without Without New New CaveCave

With With New New CaveCave

With With Twin Twin AccessAccess

PredictePredicted Tripsd Trips

8.638.63 9.599.59 9.059.05

Avg. Avg. Annual Annual Value Value per per DiverDiver

$1,401.6$1,401.655

+156.11+156.11

+68.89+68.89

Total Total Annual Annual Value*Value*

$1,401,6$1,401,65050

$1,557,7$1,557,76060

$1,470,5$1,470,54040

* Based on 1,000 cave divers

Thank You, Questions?Thank You, Questions?