The Economics of Coastal Tourism and
Research Perspectives for Florida:
A Workshop Proceedings
Compiled by Dr. Charles M. Adams
The Economics of Coastal Tourism
Research Perspectives for Florida:
A Workshop Proceedings
Compiled by Dr. Charles M. Adams
Florida Sea Grant Marine Economist
Department of Food and Resource Economics
Institute of Food and Agricultural Sciences
University of Florida
Project No. IR-88-1
Grant No. NA86AA-D-SG068
Sea Grant Technical Paper 54
Table of Contents
Summary of Session Objectives 2
Barry E. Pitegoff, Florida Department of Commerce 3
Abraham Pizam, University of Central Florida 7
Frederick W. Bell, Florida State University 11
Theodore Graham-Tomasi, University of Minnesota 12
J. Walter Milon, University of Florida 35
James C. Nicholas, University of Florida 37
Allan J. Worms, University of Kentucky 40
Summary of Research Opportunities in Coastal Tourism 46
List of Attendees 48
Florida's 1350-mile shoreline is infinite in its variety and offers
an array of recreational opportunities. These opportunities include
boating, sportfishing, beachgoing, snorkeling, diving, and sight-seeing.
All of these activities provide an important economic benefit to coastal
communities. There are about 1500 public and private marinas with
10 or more slips in Florida to serve the growing fleet of resident-
and tourist-owned recreational boats. About 14 percent of all public
and 29 percent of all private marina business results from tourists.
Over 58 million angler days are spent annually engaged in marine sport-
fishing in Florida by residents and tourists. This sportfishing activity
generated $1.9 billion in direct retail expenditures in 1980 and employed
over 44,000 persons. One-third of these angler days are attributed
to tourists. Marine beach activity may be the most popular mode of
outdoor recreation in Florida. Of 13.2 million residents and tourists
using Florida's beaches in 1984, about 61 percent were tourists. Beach-
use activity generated total beach-related sales of $4.6 billion and
created 179,256 jobs, $1.1 billion in payroll, and $164 million in
The recreational use of Florida's coastal marine resources continues
to grow from both resident and out-of-state sources. The extent of
coastal recreation-related activities is directly dependent on the
finite natural resource base (i.e., beaches, wetlands, bays, fisheries,
aesthetic coastal vistas, etc.) which is collectively unique to Florida.
To cope with the growth in recreational activity, state and local policy
makers must ensure the wise utilization and efficient management of
the state's coastal marine resources. Coastal management decisions
should reflect the importance of the coastal marine recreation industry.
Statewide academic involvement aimed at gaining a better
understanding of the coastal tourism industry in Florida has been
limited. Given the apparent lack of research effort directed toward
this important marine-related industry, the Florida Sea Grant College
Program sponsored a workshop on 29 February 1988 to address the research
opportunities which may exist. The overall purpose of the workshop
was to identify the researchable issues of importance in assessing
the role coastal tourism plays in the economy of Florida. A selection
of key speakers and respondents from various federal, state, academic,
and private institutions addressed topics concerning the extent and
nature of coastal tourism, how to measure the economic benefits
associated with coastal tourism activity, and current/future policy
related issues in Florida.
Summary of Session Objectives
To fulfill the overall purpose of the workshop, five topic areas
were to be covered: the status of tourism research in Florida, the
extent and nature of coastal tourism in Florida, measuring the benefits
of coastal tourism, coastal tourism policy in Florida, and the challenge
to academic Extension planning. The session objectives for each of
these topic areas are briefly summarized as follows:
Status of Tourism Research in Florida
What are the goals, research functions, operational procedures
and data distribution systems currently in place in Florida? Who is
responsible for these data? How is current research designed?
Extent and Nature of Coastal Tourism
What is coastal tourism? What findings and conclusions are
available? What research needs are not currently being met by the
available data? How do academic, private industry, and regulatory
agency efforts mesh in addressing research regarding coastal tourism
Measuring the Benefits of Coastal Tourism
What are the methods and practical importance of measuring the
economic benefits associated with coastal recreation? What are the
market and non-market values associated with recreation and tourism?
What are current research needs?
Coastal Tourism Policy
Clarify the policy variables affecting coastal tourism, both as
direct purposes of policy and as inadvertent consequences of tax, land
use, environmental and other policies, etc. How does Florida's
comprehensive planning process fit in? What are the policy research
opportunities related to coastal tourism and how might they benefit
the implementation of effective future policies?
Extension Program Planning
What role can Extension play in developing effective coastal tourism
research? Conversely, how can these research findings be used in
developing effective educational Extension programs? What are the
current opportunities for Extension with respects to marine-related
The following papers represent remarks given by topic speakers
and respondents. Some of the remarks are provided in outline form.
Outline of Remarks to
Florida Sea Grant Conference on Tourism
n By Barry E. Pitegoff
-e Tourism Research Administrator
Florida Department of Commerce
Division of Tourism
Le 1. Introduction to the Department of Commerce Division of Touris
gs A. The goal is to enhance the economy of the state through
To do this, we welcome visitors with information; we E
interest in travel among travel industry profession
It among consumers; and we conduct research.
an B. Research programs have three functions: To monitor tl
ad of and characteristics of those visiting the state
)n us understand the current product user; to put these
is into perspective, by accumulating data on tourism
)w destinations; and conducting and commissioning res<
i. specific marketing issues to enhance the performance
;e Division of Tourism and the tourism industry. In th
Is category, some topics we have looked at recently incluc
market, group leisure travel, the impact of baseball
training on the state, Canadian visitor characters
3m travel patterns, and advertising development and pos
ig C. Data distribution systems --- We maintain a mailing
Ly the visitor study exit interviews results on an an
!t a quarterly basis; announcements of completed research
Lc in the Department Newsletter, "On The Record." And
y are regularly distributed to the Florida Tourism
it Council. We try to stay active in the Florida Ch
.s the Travel and Tourism Research Association and present
at its conference.
1, II. The Role of Florida Coastal Resources in Attracting Vi
t A. We have conducted no specific research on the role
coast, basically because that would be research for
of the state, which is not our purview. However, t
seems to come up in much of our research, because it
an integral part of tourism, both on a literal leve
)f a symbolic level.
ie B. A few years ago we conducted eight focus group sessi
>n Florida visitors in their origins to gather insight i
im is important to them about the state, in order to
Is new advertising.
1. Beaches were essential to the trip.
2. "First Mentions" in response to "Florida" included:
sunshine, warm weather, sand and sea, and sea gulls.
3. When we asked them for symbols of Florida, we received:
Palm trees, sun, ocean, sounds of surf, smell of sea,
beaches, white sand, and shells.
4. Between 65% and 73% of those in these groups reported
enjoying water sports in Florida.
C. However, in our annual visitor study, only about 16% of the
visitors report enjoying the beaches in Florida. This leads
to the question of "necessary and sufficient." Is it important
to have a feature even it it. is not used? Possibly so. Many
New York visitors may not go into the Empire State Building,
yet is a symbol of that destination.
III. The Role of the Academic Community in Tourism Research
A. Who knows? In all seriousness, the biggest problem is lack
of effective communications, which is needed before effective
partnerships can be established. We may go in cycles, but
I feel that we are in a period again when the academic community
is too esoteric and the business community is too practical
and we are not really talking to each other. We have felt
that some of the reports we have received from the academic
institutions have been "so literate that you could not
understand them." Improvement is possible, with an example
being the layman-oriented newsletters of the medical schools
of some great universities, like Harvard, the University of
California, and the University of Alabama. The sources are
credible, one assumes that the authors understood the very
technical source material, and yet the output is clear and
understandable by those in other fields.
B. In the past, we have worked with the University of Central
Florida, the Florida State University, Niagara University,
the New School for Social Research, and the University of
Florida. Some projects coordinated by students were too
elemental, and some projects coordinated by professors were
C. The future must hold ways to improve this dilemma if we are
to work more closely together.
1. Create a better sense of what each group is doing.
2. Create more involvement with each other's programs. For
example, I have been asked twice recently to be an
independent reviewer for a grant request for academic-based
tourism research. The most recent one was from within
this field, from the "National Coastal Resources Research
& Development Institute." These groups apparently welcomed
industry input on these grants.
3. Similarly, tourism programs could use more academic input.
I am thinking of the Florida Tourism Advisory Council
and it various subcommittees....perhaps something to
4. Here is a sore point with me. To achieve credibility,
you need to begin by doing very well what you are expected
to do well. When I receive mail from any unit of a
university, it is a reflection of that university. When
that mail has spelling and syntax errors in it, it reflects
problems with the basics of what a University should do
well. That happens more often than I prefer.
IV. Needs for More Research, Particularly Coastal
A. Research on levels below state information, such as regional
B. Research on expenditure patterns of visitors, which now cannot
be measured accurately because of two problems; difficulty
with methodology, such as diaries and recall; and because
of some similar expenditure patterns between visitors and
residents, like buying leisure shoes.
C. The roles of the coastal activities in the overall tourism
product, both on the indirect and symbolic level and on the
direct and activities enjoyed level. This could open a
controversial area because tourism development funds are often
used for beach renourishment and to what extent do visitors
really use the facilities. On the other hand, to what extent
do visitors need these facilities to be in top-notch shape
to be able to enjoy the idea of visiting the destination in
the first place?
V. The Need for International Tourism Research
A. Yes, there is a substantial need, particularly because our
budget cutbacks have reduced our ability to study this area.
A. It is great that this conference brings us all together, because
it is long overdue. We need to fully understand what each
other is doing before we can suggest new areas to each other.
B. You should have a better idea now of what we do. You are
welcome to visit us when you are in Tallahassee to learn more
about these programs.
C. My suggestions for change have included:
1. Have the business sector and the academic sector welcome
more input from the other side.
2. Look at coastal research on the many values of the coast
to the Florida tourism product.
3. Look at local research and regional reports.
4. Look at expenditure research.
5. Look at international research.
6. Talk to each other, in language each other understands,
and begin this way.
Outline Of Remarks To The Sea Grant Conference On
The Economics Of Coastal Tourism
College of Business
University of Central Florida
Coastal Tourism Travel Motivators
(4) Status & Prestige
S Relaxation and rest sporting activities
and medical treatment
- All connected to body health
- Motivator desire to learn about other
people, countries and cultures, etc.
S Desire to visit friends and relatives,
escape from family, make new friends, etc.
S Identified with needs of personal esteem
and personal development i.e. business
or professional interest, education.
Coastal tourism satisfies mostly the physical needs of individuals.
By participating in coastal tourist activities individuals fulfill
the following sub-needs (or objectives)
*relaxation and refreshment of body and mind
*health purposes fresh air, sunshine and warmth
*active participation in sporting activities, i.e. swimming, sailing,
fishing, water skiing, surfing, etc.
*sheer pleasure, fun and excitement.
In addition to those, people visit coast lines because:
(1) The sea itself has a magical quality for many people and
(2) The coastal scenery is infinite in its variety
(3) The large availability of recreational facilities
Magnitude of coastal tourism in countries with an abundance of coastal
resources is that a large percentage of domestic and international
tourism occurs at coasts.
S United Kingdom 75% of vacations of British citizens are spent
at the sea-side.
Spain over 80% of international tourism occurs in the coastal
areas and islands of southern Spain.
Yugoslavia over 90% of international tourism on the Adriatic
Caribbean & South Pacific Islands in many cases close to 100%
of tourism takes place in coastal areas.
Florida 1986 Major purpose of visit of out of state tourists
*Beaches, climates and water sports
Air visitors = 23%
Auto visitors = 27%
Est. Total = 9 million
Total nights spent = 157.3 million
Research needs of coastal tourism
1. Market analysis identification and description of current and
*counts of visitors at destinations
*survey conducted with tourists at home
*demography and economic characteristics of current and
Types *expenditures: magnitude and pattern
*psychographics and life-styles
Methods *surveys (regional forms exit surveys, in-flight, mail,
Users *public authorities
2. Supply analysis inventory at the tourism related components
Types/ *desk research
methods *expert surveys
Users *public authorities
Performers *National Travel Organizations
*state travel office
*private research organizations
3. Evaluation research assessing the effect of various marketing
Types *advertising research
*sales promotion effect
*product changes and modifications
Methods *coupon conversion
pretestt of alternatives
Users *public authorities
Performers *private research organizations
*Non-profit research organizations
4. Monitoring tourist activities periodic analysis of tourist
activities and products.
Types *Seasonal variation
*effects of external factors (gas price inflation, currency
Users *public authority
Performers *academic institutions
*Non-profit research organizations
*private research organizations
5. Impact analysis estimating the positive and negative effects
Types *economic impacts
Methods *expenditure studies
*multipliers and input-output models (income, employment
*attitudinal surveys of residents
*analysis of case studies
*observation and measurement of changes in the ecosystem
(distribution of two nations, distribution of habitats,
erosion of dunes, interference with habitats of wildlife,
alteration of water levels and nutrient concentration,
pollution and aesthetic pollution, damages to marine
life (manatees, overfishing, etc.))
*carrying capacity analysis
Users *public authorities and governments
Performers *planning organizations
*private resident organizations
Comments On Barry Pitegoff's Talk at
"The Economics Of Coastal Tourism" Workshop
Dr. Frederick W. Bell
Department of Economics
Florida State University
Tallahassee, Florida 32306
Mr. Pitegoff gave an excellent talk here this morning. I am
encouraged by his dedication to tourism research. I do have some
reservations. For example, it is certainly instructive to ask certain
groups such as Canadians just why they visit Florida; however, it is
not quite clear who uses this information! Also, some of the tourism
research is fragmented within State government. For example, the State
econometric model has a tourism equation which attempts to explain
what variables influence tourism in Florida. Then value of the U.S.
dollar is an important variable so the Division of Tourism could do
some research on predicting exchange rates. Maybe, the State econometric
model could be discussed in the Department newsletter, "On The Record."
How often does the Division of Tourism relate (or use) the State
The Division of Tourism does coastal research such as focus group
sessions with Florida visitors. Beaches were essential to the trip.
What is not answered is, how essential? The DNR has information on
beach erosion so why not see how sensitive tourism is to crowding on
an eroding beach. This would give us a better predictive model. The
hypothesis that beaches are necessary, but not physically used is an
intriguing hypothesis. The Division should pursue the meaning of this
hypothesis and the supply of beach resource for tourism.
A cutting edge of research is a tourist's willingness to pay for
the use of common property resources such as beaches, fish and the
waterways. Willingness to pay questions help place an economic value
on Florida's resources which attract tourists. The Division might
consider cooperating with Sea Grant efforts in this regard.
I believe the Division can use the academic community more
effectively in its research efforts. For example, Sea Grant reports
are usually very practical and can be understood by businessmen. I
agree with Barry that the "... output is clear and understandable by
those in other fields." But, give the university people a chance to
do this by matching funds, for example, with Sea Grant. We would be
happy to serve on the Florida Tourism Advisory Council and its
subcommittees if asked. I welcome the opportunity, as I am sure all
of us do, to visit with Barry and the Division of Tourism in the near
future. I, for one, am supportive of his comments and hope he will
keep in touch with the Florida Sea Grant Program. We have a lot to
learn from each other so let's take advantage of this opportunity.
Measuring the Economic Benefits
Of Coastal Recreation
Department of Agricultural & Applied Economics
University of Minnesota
In this paper, I will attempt to assess the state of the arts for placing
an economic value on recreation resources in coastal areas of Florida.
However, the literature that is relevant to this task is vast and I will
be able to only touch on a few of the aspects of this issue which, in my
opinion, are most important. Since full justice cannot be done to this
topic in so short a space, the interested reader strongly is encouraged to
seek out the sources contained in the bibliography. My goal here is to
provide an overview of some of the work that has been done, to note the
potential for research which is useful to policy makers, as well as to
point out some of the problems with existing methods and current
suggestions regarding their resolution.
By recreation resources I mean the natural and environmental resources as
well as the built facilities upon which recreation and tourism depend.
Thus, the approach taken is quite "micro" in its orientation, focusing on
the characteristics of the final destinations of tourists. In addition,
emphasis here will be placed on public recreation facilities and public
policy concerning them, although much of what is discussed also will have
some applicability to private facilities.
II. Recreation Benefits
Before proceeding much further, it is reasonable to answer the question:
what is meant by the economic value (or benefits) of recreation resources?
A distinction must be drawn between the economic benefits of recreation
and the economic impacts associated with it. Much useful research has
been done on the manner in which the money spent by recreationists makes
itself felt in local and regional economies. Attention has been given to
the estimation of expenditure and employment multipliers via input-output
or other methods. This regional economic research is important for
planning and for assessing the desirability of alternative development
strategies. However, expenditures by recreationists do not represent the
benefits generated by recreation facilities or investments in them.
The benefits of recreation are the value that would be gained (or lost) by
the whole economy if recreation resources are created (or eliminated) or
altered in some fashion. As an example, suppose that a sport fishery is
harmed by the filling of wetlands for housing, so that catch rates fall
and fishing is less attractive than previously. Anglers may fish less
often and some may stop fishing altogether. The money they spent on
fishing will be spent on something else, maybe for going to movies more
often. But the charter boat operator's loss is the theater owner's gain
and this nets out in the total economy. A transfer of that expenditure
within the economy as a whole will have taken place, with no overall loss.
Revised version of a paper presented to the Florida Sea Grant Workshop on
Coastal Recreation, Orlando, Florida. My thanks go to Wally Milon for
comments on an earlier draft.
Of course, this depends on what one considers to be "the economy as a
whole." If the boundary of the economy is Florida and a former angler
goes to a movie across the state line in Alabama, then a loss of income
does occur and this represents a real cost to Floridians. Similarly,
improving Florida's recreation resource base may attract new income
(expenditures) into the economy, and this is a real benefit to the State.
It is important to note, however, that this counting of expenditures as
value must only be applied to new expenditures. If a visitor would have
gone to a different site in Florida instead of the one improved, a
transfer has again taken place (though it may be that a stay of longer
duration than would otherwise have taken place occurs and this additional
expenditure is new and therefore.a component of value). These types of
"macro" effects typically are fairly difficult to uncover; for the most
part it is assumed that changes in expenditures are transfers within the
economy and not losses from it. While this approach may be reasonable
for fairly small changes, it is unreasonable for large ones, and in any
event, one risks a fallacy of composition in an important non-resident
destination such as Florida. The state would do well to attempt to
assess the long-term relationship between the resource base and
This distinction between values and expenditures does serve to focus
attention on the quite obvious but often neglected point that the value of
something cannot be defined independently of the person or persons for
whom the value is supposed to exist. Thus, a county will have a different
valuation of the same event than will a state or city or individual, since
impacts outside of its "jurisdiction" will not matter to it.
Ignoring the export of expenditures outside of the relevant jurisdiction,
what is lost to the economy due to the filling of wetlands is the value of
the fishery, not expenditures previously spent on fishing but now
transferred elsewhere in the economy. If expenditures are not lost when a
recreation site is harmed, and are not necessarily created when a
recreation site is improved, it would seem they cannot be used to place a
value on recreation. How then might this value be measured? The
economist's approach is known broadly as "willingness to pay." More
attention will be given to this in the sequel; suffice it to say here that
what something is worth plausibly can be assessed by what someone will
give up to obtain it (or by what they must be given to relinquish it).
This concept of economic benefit could then be compared to the costs of
whatever policy, program, or investment was being considered.
It sometimes is the case that we are interested in the "total value" of
the recreation resource, e.g., the value of a particular wetland. In this
circumstance, one seeks the willingness to pay to have the resource in its
current state versus having to do without it completely. But in many
instances, the action being considered will alter the character of a
recreational resource, rather than create a new or destroy an existing
resource. Thus, managers often will not be as interested in the total
value of recreational resources as they are in how their values change as
the nature of the recreation experience they provide changes. Examples
are improvements in the facilities at an existing site, or deterioration
in environmental quality, especially water quality, associated with
recreational activities. Recently, research has focused on this aspect
of the valuation problem.
II. Willingness to Pay
The concept of willingness to pay (WTP) is somewhat more complicated than
it appears on the surface. There actually are several measures of the
basic idea of willingness to pay, and the relationship among these has
been a source of consternation and confusion among economists and
Imagine some event which can either improve or harm an individual's well-
being. In specifying the benefits or costs of such an event, two points
of view are possible: the event is assumed to happen, or it is assumed to
be avoided or foregone. In the first view, if the event is beneficial, we
can seek the amount of money which could be taken from the person to leave
her as well off before the event as after it. This represents her
willingness to pay (WTP) for the change. If, on the other hand, the
change is detrimental, we could find the amount of money which could be
given to the individual to leave her as well off as if it had not
happened. This is her willingness to accept compensation (WTA).
Following the second point of view, suppose now that the event does not
happen. Then for a beneficial event foregone, the person would have to be
compensated for giving it up (WTA), while if the change is harmful, she
would be willing to pay to avoid it (WTP).
The first set of measures, where the change is supposed to occur, are
known as compensating variations. The second set of measures are known as
equivalent variations. Note that either of these can represent a payment
by the individual or a payment to her depending on whether the change is
an improvement or not of the status quo. These measures of benefit or
cost first were defined by Sir John Hicks and therefore are also known as
Hicksian measures of welfare change. The possibilities are depicted in
the table below.
Given that a choice exists, which should be used? The answer to this
question is provided by the institutional setting surrounding the
valuation problem and the implicit property rights that these institutions
define. For example, suppose that the event in question is the abatement
of pollution that is suppressing fish reproduction and thereby damaging
recreational fishing. If the law gives the right to clean water to the
anglers, then the appropriate conceptual measure of benefit is the
reduction in the compensation they would have to be paid for bearing
pollution. This is the Hicksian equivalent variation (EV). That is,
since the right of clean water lies with the anglers, and this beneficial
situation is not occurring due to the pollution, anglers should be
compensated (conceptually if not in fact) by the polluters. As pollution
is abated, the amount of this "payment" can be reduced, and this is the
measure of the benefits of abatement. In contrast, if the right to
pollute is granted to polluters, then anglers must purchase clean water
from them, and their willingness to pay for it is the relevant measure.
This is compensating variation (CV). In some instances, the property
right will be clear; in others cases it will not be.
Event Event Doesn't
Beneficial WTP WTA
Event To Obtain To Forego
Detrimental WTA WTP
Event Compensation To Avoid
How much does all of this matter? Until quite recently it was thought,
based on theoretical research, that these two measures should be fairly
close together (Freeman; Randall and Stoll). If this is the case, then
for practical purposes the distinction does not matter. However, a wide
variety of empirical investigations have revealed very large differences
between the equivalent and compensating variations and the distinction
appears to matter a great deal; the answers they give can differ by an
order of magnitude or more.
Economists forwarded one of two explanations for this: either (i) the
theory predicting "closeness" is faulty (does not accurately predict real
behavior), in which case new theory which better captures the psychology
of decision-making is needed, (see e.g., Gregory), or (ii) the tests of
closeness were faulty, in which case all was fine, at least in theory.
Recent (traditional) theoretical research has refined the debate by
pointing out that the two measures need not be close if the event in
question affects aspects of well-being that cannot easily be substituted
for by income (Hanemann). For environmental changes or loss of species,
this may be reasonable; for changes in recreation facilities, the familiar
prediction of "closeness" of the two measures would seem to apply.
This whole area is somewhat unresolved, and one should give careful
consideration to the property rights implied by the situation vis a vis
those implied by the WTP measure chosen. In my opinion, all aspects of
this issue are important and worthy of further effort. That is, the
traditional theory has served us very well for most purposes; but it is
vitally important to use it to deduce very specific testable hypotheses
regarding behavior and to devise accurate tests of these hypotheses. If
it cannot stand up to such empirical scrutiny, it cannot be used to guide
applied policy research. In this case (which has by no means been
established), more refined psychologically-based theory will be needed to
account for individual behavior and to guide the further development of
methods for measuring the benefits of providing public goods.
III. Measuring WTP: Market Goods and Consumer Surplus
The issue at hand, of course, is the measurement of the quantity WTP (or
WTA). Before turning to how this can be done for non-market goods such as
recreational opportunities, it will be useful to assess briefly the use of
market data to compute the benefits of providing market goods.
There is yet another measure of economic benefits known as consumer
surplus. It is given by the area under a market demand curve for a good,
net of the persons's expenditure for the good. In general, consumer's
surplus is not equal to either of the conceptually correct Hicksian
measures. However, its ease of computation makes it a quite attractive
alternative. Until relatively recently it was thought that consumer's
surplus is measurable empirically, while the Hicksian measures CV and EV
were not. Attention focused on the potential magnitude of the difference
between these (Willig). However, new techniques have been developed to
compute the Hicksian measures from demand curves that have been estimated
with data. There are two reasons for discussing consumer surplus here;
one is that it is a useful heuristic device, the second is that it is used
quite frequently in applied research.
How does the area under a demand curve relate to WTP? Consider the
valuation of a good traded on an organized market. Since people are
buying this good we can observe how much they purchase at different
prices. The relationship between the price and the quantity demanded is
called a demand curve. A typical one is exhibited in Figure 1. Its
downward slope reflects the fact that at high prices people purchase fewer
units than they do at a low price. One way of looking at this curve is to
ask, if the price of the good is $pO, how many units will you buy? An
alternative way to view it, which is more suggestive for our purposes, is
to ask, if this is the quantity of the good, what is the most you would
pay for it per unit? The answer to this latter question is, of course,
the price given by the demand curve corresponding to that quantity. Thus,
the most this person would be willing to pay for QO units of the good is
$pO per unit. This suggests a tie between demand curves and willingness
to pay (WTP).
Price of Good
Quantity of Gcod
FIGURE 1: Demand Curve for a Good
As an example, suppose that the good in question is.red wine from the
Beaujolais region in France. At $20 a bottle, I might buy one bottle a
year; if it is $14, I might buy two a year; while if it is $5, I might buy
a case and have one a month. Suppose that this wine is, in fact, $5 per
bottle. Then I would have been willing to pay $20 for the first bottle
that I buy, and $14 for the second. But I only had to pay $5 for both of
these, since I get to buy all of the wine I consume at the single price.
Hence, I receive a net benefit, or surplus, of $15 on the first bottle,
and $9 on the second, and so on with all of the bottles I purchase in the
case. Adding this up over all of these bottles yields the consumer
surplus: my willingness to pay for wine over-and-above what I actually
had to pay.
In fact, it can be shown that the area under the demand curve up to the
actual quantity purchased (i.e., the area OABQ in Figure 2) is an
approximation to total willingness to pay for the good, while the total
willingness to pay, net of what actually was paid (the expenditure on the
good is given by the area OPBQ) is an approximation to the desired
quantity Hicksian WTP as defined above. This net willingness to pay is
given by the area under the demand curve and above the price line (area is
PAB in the figure); this is the consumer's surplus. It represents the
benefit to me of being able to buy Beaujolais at $5 a bottle, rather than
do without it (i.e., face a price higher than $20 so that I don't buy it).
FIGURE 2: WTP and Consumer Surplus
There are several things to note about consumer's surplus. First, it
easily can be computed given observations of the quantities of a good
purchased at various prices. Second, it appropriately excludes
expenditure on the good, as is consistent with earlier discussion. And
third, its magnitude depends on the steepness of the demand curve. One of
the most important determinants of this steepness is the availability of
substitutes for the good. If the good in question has many good
substitutes, an increase in its price will lead to a relatively large
change in quantity demanded as individuals switch to these readily
available substitutes. In this case, the demand curve is relatively flat,
as is exhibited in Figure 3a. If, on the other hand, the good has few
substitutes, then the demand curve will be relatively steep, since a rise
in price will not induce much of a response in purchases as it is "the
only game in town." This is shown in Figure 3b. Note that the
expenditures in the two panels of Figure 3 are equal. As can be seen from
Figure 3, the magnitude of consumer's surplus depends critically on the
availability of substitutes for the good. In essence, a good is more
valuable if it is unique. One also can compute the change in consumer's
surplus induced by a change in the price of a good or by a change in its
quality. The quality of a good will act as a shifter of the demand
curve. That is, if the quality of a good improves, more will be purchased
at a given price. This is shown as an outward shift in the demand curve
(from Do to D1 in Figure 4). The benefit of this improvement is the change
in consumer surplus given by the area between the two curves.
FIGURE 3: The Role of Substitutes
(a) Few Substitutes
(b) Many Substitutes
This discussion of consumer's surplus points toward a basic approach for
measuring the benefits of being able to purchase a good at a specified
price if one has access to data on the quantities purchased by individuals
at alternative prices: statistically estimate a demand curve from these
data using regression techniques and then compute consumer surplus. There
are a couple of things that one must worry about using these approaches,
The first concerns my earlier statement that the consumer's surplus
measure is only an approximation to the true WTP or WTA quantity that one
desires. It was shown by Willig that this approximation was quite good
for price changes that were relatively small and for goods that make up a
fairly small part of the consumer's budget. If one is interested in the
whole of consumer's surplus, however, the change in price is large (i.e.
from p in Figure 2 to point A at which demand for the good is driven to
zero) and the approximation may not be very good at all (Bocksteal and
McConnell, 1978). However, this really is a moot question now, since
methods have been developed for computing the exact measures WTP and WTA
FIGURE 4: Changes in Consumer Surplus
P (a) Price Change and (b) Quality Change
from an estimated demand curve, as long as the demand curve form is
consistent with economic theory. Examples of such exact benefit measures
for some specific functional forms for demand curves have been provided by
Hausman and by Bocksteal, et al. (n.d.).
An issue that must be faced when one is concerned about the complete
elimination of access to a good is the choice of price that drives the
quantity of the good demanded to zero. This will differ according the
whether one is using the WTP, WTA, or consumer's surplus approach. As
well, some specific functional forms for demand curves do not have any
such price, so that the good is thought to be essential to individuals.
This seems far-fetched when applied to recreation goods.
The theory of estimation of benefits (or costs) of price changes for
marketed goods is relatively well developed and accepted within the
profession. There are, however, some practical problems that arise in
this area. Economic theory provides some guidance about the specifics of
estimation, but leaves considerable leeway as well. For example, it says
almost nothing about the specific functional form for the demand curve one
should estimate (see Adamowicz, et al.). Is a linear model or one linear
in the logarithms of the variables best? What do we mean here by best?
What variables should be included in the analysis? Income and prices
clearly should be in there, but how many prices of related goods should be
included? What about other variables, such as age or health attitudes?
Can goods be aggregated into groups? Since almost all data concerns some
type of aggregation, one hopes so, but how much grouping is appropriate?
What happens if one has access to data on only some of the goods people
purchase, as is typically the case (see Hanemann)?
It is important to recognize that these kinds of issues are ones of the
type of data one has available and of statistical theory as they interact
with economic theory. These are difficult issues, but they pervade any
statistical estimation problem and cannot be avoided. In my opinion, they
do not by any means obviate the use of the basic approach, but they do
highlight the need for continued research. They also somewhat undermine
the credibility of the resulting numbers, since different somewhat
arbitrary assumptions or approaches can lead to quite different final
results. I will return to this in the specific context of recreation
demand modeling below.
This discussion certainly points out the crucial importance of careful
research guided by statistical and economic theory. When one employs a
technique based on individual observations of actual behavior, alternative
approaches become restrictions on the data and are testable hypotheses.
It is unlikely that any single approach will be best across all
situations. Thus, standardized procedures that are ad hoc and applied in
every circumstance by practitioners are to be avoided, since the benefit
estimates so generated are not defensible.
IV. Measurement of WTP for Recreation
The analysis presented in the previous section concerned a marketed good.
In many situations, the actions being evaluated by public or private
agents which affect recreation and resource-based tourism are not
marketed. Many recreation sites have no entrance fees at all, or those
that exist are not set to clear the market. In this case, they are not
useful for benefit calculation. Also, sometimes a public good, such as
environmental quality, is the object of study. Hence, it is desirable to
consider methods designed for the estimation of the benefits of such non-
The methodologies that have been developed for measuring WTP for non-
market goods can be divided into two basic groups, direct and indirect.
The direct methods conceptually are very simple. They are based on the
following idea: if you want to know someone's WTP, ask them. They employ
survey techniques to set up hypothetical markets for goods on which people
can "buy" the offered good. In the context of recreation valuation, this
approach is known as contingent valuation (CV).
The indirect methods attempt to infer what individual's WTP must be from
observations of their behavior. The use of a market demand curve to
compute consumer's surplus or one of the Hicksian welfare measures is
indirect in this sense. Two types of behavior are particularly useful in
this regard. The first is travel behavior, which forms the basis for the
travel cost technique and the closely related discrete choice methods.
The second is purchases (or rentals) of real estate, which forms the basis
for the hedonic method. There also is an approach, called the hedonic
travel cost technique, which is a amalgam of these two, as might be
Indirect Recreation Valuation Methods
As mentioned above, there are two indirect valuation methods potentially
applicable to recreation resources: travel cost and hedonic analysis.
These will be addressed in turn.
The Travel Cost Technique
The most famous and widely used of the indirect methods was designed
specifically for valuation of recreation and is known as the travel cost
method. It was suggested in a letter to the director of the National Park
Service by Harold Hotelling in 1947 and has been much elaborated in the
The basic idea parallels exactly the approach outlined above for marketed
goods. The good in question is the number of visits to the recreation
site, and its "price" is taken to be the travel costs of gaining access to
it. This analogy is quite close, since the cost of obtaining one more
unit of a marketed good is its price, while the cost of taking one more
recreation trip is what it costs to get there. One can use the observed
relationship between travel costs and numbers of visits to trace out a
demand curve for visits to the site. The consumer's surplus can then be
computed as the area under this curve, or the exact benefit measures WTP
or WTA calculated from it. Note that the value of the site is not equal
to the cost of travel to it; rather, these travel costs are used as a
proxy for a price, which then is used to compute consumer surplus.
All of the research concerning the use of this method is directed to its
implementation; the basic idea is as accepted as is valuation of benefits
for market goods. In this paper, I will concentrate on three aspects of
using this approach: i) participation, truncation, and censoring, ii) the
value of time, and iii) a variety of issues regarding use of multiple-
site models to value changes in characteristics of recreation areas.
In its original incarnation, the technique employed as a dependent
variable the number of trips per capital from a zone around the site (only
a single site was investigated) with similar distance from it. As one
moved farther from the site, the number of visits per capital for the more
distant zones declined and a distance-decay function could be estimated
statistically. The price of recreation that one wants for the demand
curve is an entrance fee; if one assumes that individuals would respond in
the same manner to an increase in travel costs as they would to an
increase in an entrance fee, one can use the distance-decay function to
trace out what the response would be to increases in entrance fees and the
desired demand curve has been obtained.
A simple example should help to clarify the procedure. Suppose there are
two zones A and B, with zone A $10 in travel cost from the site and zone B
$15 in travel costs from it. The visit rate is 50 trips per season per
10,000 population for A, and 20 trips for zone B. If a $5 entrance fee
(price) is imposed at the site, then it should be that the visit rate for
zone A would fall to 20 per season per 10,000 population, since now the
total cost of a visit from A is $15 and this is just the visit rate for
zone B when that zone faces $15 in cost. It is reasonable to control for
demographic differences among zones at this stage. Now, multiplication of
the visit rate by the population of each zone and adding up across zones
yields the total quantity demanded at the hypothesized entrance fee.
Doing this for a variety of such fees traces out the demand curve.
A number of issues related to this use of zonal averages have been raised,
many of which are beyond the scope of this short review. In general, the
practice has fallen out of favor and the use of individual observations
now is preferred. An exception to this view has been voiced by Brown and
colleagues, who note that different participation rates for individuals
from different distances from the site will lead to biased results if this
is not adjusted for. This bias is naturally controlled by using zonal
averages for participation.
This leads us directly to one of the key areas of current research in this
area: how to account for different participation rates for individual
data. The travel cost model typically asks people at a site where they
came from, among other things. Naturally, people who do not visit the
site are not included in the sample, so no information exists about people
who choose not to participate. There are several aspects of this
participation issue upon which I wish to comment.
The first is a sampling problem: people from close by (who use the site
more often) have a higher probability of being included in the sample.
This leads to bias in statistical estimates; an example of how to correct
for this in a recreation study is provided by Jones (1987).
Second, statistical bias in estimated coefficients will result from the
truncated or censored nature of the sample. These problems arise when
values of the dependent variable (number of trips) are observed only if it
is zero or positive (censoring) and/or if individuals are included in the
sample only if they are users (truncation). Note that if an entire
population is sampled, rather than just the participants, there will not
be truncation, but there still will be censoring, since the number of
trips observed cannot be negative. What one needs to correct for this
is an explicit model of participation combined with an appropriate
statistical estimation method. Several approaches exist for obtaining
valid estimates for both truncated or censored samples (Maddala), which
should be employed with greater frequency in this area. Unfortunately,
these somewhat complicate the estimation procedure.
A third problem occurs with a truncated sample. One would imagine that an
improvement in the characteristics of a visit would induce some people to
visit who previously had been non-participants. In Figure 5, this is
illustrated for a change in the original demand curve, Do, which shifts
due to improvement of the site to D'. The new participants are
represented by the segment AB. These people had zero trips along the old
demand curve. No estimate of the size of this effect can be obtained if
Figure 5: Truncation Bias
the model does not account for non-participation explicitly. In the
absence of this information, we underestimate the value of the improvement
by the area ACE. All we can do is to estimate (adjusting for censoring)
the change in the amount of activity of current recreators. This is
potentially a severe shortcoming of this type of data. Unfortunately, a
general survey of the population usually has to have a large sample size
in order to pick up enough recreators at specific sites or in specific
activities, and this is expensive.
The second basic area of current research on use of the travel cost model
concerns the valuation of time. Earlier I defined the travel cost
variable to be the cost of an additional trip to the site in terms of
travel and time costs. What is this time cost and why does it matter?
Recall the example with the two zones; it was stated that when a fee of $5
is in place the visit rate for A would fall to the visit rate for B when B
faces a zero entrance fee. But will this really happen? No; the full
cost of travel from A is $10 plus, say, an hour of travel time, while the
full cost from B is $15 plus an hour and a half of travel time. Hence, at
an entrance fee of $5, the full cost from A is less than the full cost
from B at a fee of zero, and participation would not fall off as much as
predicted when travel time is ignored. Thus, ignoring travel time leads
to underestimates of recreation value. Empirical research has shown that
this effect can be quite large, with value estimates four times as large
when time is included as when it is not (Bishop). But how should this
time cost be valued?
Naturally, if one spends time travelling to a recreation site and
undertaking some set of activities, one cannot simultaneously do
something else. Hence, there exists an opportunity cost of allocating
time to recreation (or to any other activity for that matter). What we
seek is the opportunity cost of time spent traveling. Unfortunately,
accounting for this is a highly problematical issue to which much
attention has been devoted with little resulting guidance for applied
work. One practical approach which often is employed is to use the
individual's wage rate to value time and to add the time cost of travel to
its money cost. To cope with the fact that trips are of varying
durations, one can simply stratify the sample into people who take visits
of equal duration and conduct separate analyses of each group. This can
be a problem, though, since if the overall sample size is not very big,
there will be too few observations in each strata.
However, it is not all that clear that the opportunity cost of travel time
for recreation is equal to the wage rate for several reasons. First, one
presumably enjoys travel for leisure activities more than one does working
and this needs to be accounted for (Wilman). Second, if one were not
recreating, one very often would be undertaking some other leisure
activity. The opportunity cost of time depends on what the other
opportunity is, and this kind of information seldom is obtained in
surveys. Some research by Adamowicz and Graham-Tomasi discovered that
these sorts of issues had a substantial impact on time valuation. These
considerations have led many researchers to use some fraction of the wage
rate, typically 1/4 to 1/2. This is an ad hoc approach that has little
theoretical support, however. A somewhat more rigorous way to estimate
this fraction from sample data was proposed by McConnell and Strand, but
their specific technique is not broadly applicable.
In any event, all of these ways of coping with time valuation separate
travel time and on-site time and thereby ignore possible trade-offs
between the two. What one really needs to do is to estimate this trade-
off as a simultaneous choice of both trip duration and number of trips.
Huang and Graham-Tomasi employed the McConnell-Strand method to value both
travel time and on-site time in such a simultaneous model and found no
consistency in time value across individuals in the sample, or across
sites that are visited. These discouraging empirical results echo the
theory, which basically warns: it depends.
Finally, individuals cannot make any choice between work and leisure that
they want to. There are rigidities in the way that leisure time is
available, e.g., with fixed weekends and vacations. Some techniques of
analysis developed for the analysis of labor markets should prove useful
in the recreation context, but there has been little applied work along
these lines to date.
Attempts to date to cope with all of these issues concerning the value of
time have been useful but not entirely successful. The theoretical and
applied issues are on the forefront of demand modeling in general and are
very exciting. But no easy answers (or even difficult ones) have been
forthcoming. This somewhat undermines the credibility of the methodology
in its current state, and certainly calls for more research using data
specifically designed to tackle these questions. In the absence of exact
guidance about how to incorporate time, a range of estimates for
recreation value corresponding to a range of time estimates should be
The third set of issues I wish to address concern the use of multiple-site
models and the valuation of changes in site characteristics. Recall the
earlier discussion of the role of substitutes in the determination of WTP
via consumers' surplus. Clearly, how these substitutes are accounted for
is critical to the operation of the travel cost technique. In large part,
how this should be accomplished depends on the objectives of the
Early work by Burt and Brewer and by Cicchetti, et al., focused on the
benefits of introducing a new site into an existing system of sites. In
both of these investigations this was modelled as a price (travel cost)
change for each individual for an existing site assumed to be a perfect
substitute for the new one. A very complicated system of interrelated
demands was estimated for these sites. However, if only one price change
is envisioned, it is perfectly reasonable to only estimate one equation
(rather than a very complicated system), as long as this equation has the
prices of all the substitute sites in it as explanatory variables (Hof, et
However, if one is interested in assessing changes in the characteristics
of sites, one clearly cannot estimate demand for only one site. What one
needs is information about how demand for recreation varies across sites
of different qualities. In this case, several relevant concerns arise.
First, what does one do about all of the sites that an individual does not
visit? Most models (such as the system models mentioned above) assume
that each person buys some of each good. But this obviously is not the
case with recreation data; individuals may have available 20 or 30 sites,
only a handful of which they actually visit. Moreover, recreation data
very often contain information on only a single trip, i.e., the one the
person was on when he or she was interviewed or, in the case of mail or
telephone surveys, their last trip. The system models need information an
all of the places the individuals went.
Recently, work has progressed on the use of models which can cope with
these limitations. Called discrete choice-random utility models, these
suppose that there is randomness in individual choices and seek to
estimate the probability that a person visits a site. This probability
can depend on travel costs to the site as well as site characteristics.
While there is a positive probability that people visit any particular
site it is feasible for them to get to (given that they will recreate),
this is not inconsistent with observations of visits to only a few sites
for any group of trips. As well, these probabilities can be estimated
with information on only one trip.
These models have proven useful in research on water quality and lake
fishing in Wisconsin (Caulkins), acid rain in Minnesota (Graham-Tomasi, et
al.), on water quality and stream trout fishing in Michigan (Graham-
Tomasi), water quality and beach use in the Boston area (Hanemann), catch
rates for salt water fishing in the Pacific Northwest (Morey and Rowe) and
construction of artificial reefs off of South Carolina (Bocksteal, et
Several other concerns arise in any attempt to value changes in site
characteristics. Notable among these is the choice of characteristics.
These must do double duty in the analysis: they.must adequately represent
the site and thereby help to "explain" recreation choices, and they also
must capture relevant aspects of the policy being evaluated. This is a
difficult measurement issue and existing research only poorly has dealt
with the fact that the perceived attractiveness of a site to an individual
is a variable that we cannot observe. We seek proxy variables that we
hope a related to the true attractiveness. Statistical methods do exist
for coping with these measurement issues, but they have not been used by
investigators in the recreation field.
A number of difficult issues are raised by these three topics:
participation, time value, and multiple-site models. If we recall the
additional concerns raised at the end of the second section regarding the
inherent problems of statistical demand estimation (choice of functional
form, etc.) it may seem that my impression of the'travel cost technique is
pretty unfavorable. This would be a misapprehension of my stance. I
believe that the basic idea is sound and that the empirical procedures
used currently are appropriate for the most part. The method has a proven
track record in applied work, and it gives sensible answers that are
reasonably consistent across applications. The things to which I have
devoted attention above are needed refinements, but they do not undermine
the basic usefulness of the method. In general, however, they imply that
the method is not of the "off the shelf" variety; each application
requires careful assessment of the unique theoretical and statistical
issues raised by that situation. They also imply that more research
remains to be done.
Hedonic analysis also is an indirect method which employs observations on
behavior to deduce WTP. With this technique, the behavior is purchases or
rentals of real estate. All else equal, a home that is near a desirable
recreation site is more valuable than one that is not. The price of a
home will reflect all of its attributes, and if one has access to data on
sales prices of homes as well as their attributes, one can estimate
statistically the functional relationship between sales price (or rental
price) and these attributes. Such a relationship is known as a hedonic
price function. One can use the relationship between how the overall
price changes in response to variations in one characteristic and the
quantities of the characteristics purchased by different individuals to
estimate a demand curve for a characteristic (Rosen; Freeman).
As a simple example, suppose that the hedonic price functions is such that
sales price depends on the number of rooms, lot size, and distance to a
marina. Having estimated this relationship with appropriate data, one can
then infer how much individuals are willing to pay for a house that is
closer to a marina. This information could then be used to compute the
benefits of a new marina, which changes the distance to a marina for each
The method is not well suited to the computation of the total value of
recreation facilities, but it can be used to value changes in their
characteristics as long as the sites are associated in some way with
housing markets. Using the technique requires access to fairly extensive
cross-section data on home purchases or rentals, since one needs
sufficient variation in the recreation characteristics obtained across
other attributes. For example, suppose that condominium prices depend
only on the number of tennis courts and the quality of freshwater fishing
within a 45 minute drive. If one is to use this information to compute
the value of improving water quality in lakes, then one needs observations
of the prices of condos with every combination of good and poor fishing
and many and few courts in order to sort out the various effects.
It may be that this kind of extensive data are not readily obtained, but
that the necessary variation does exist in the housing or rental markets.
In this case, one suffers some statistical inefficiency by not having the
data, but the estimation can proceed if the deficiency is not too severe.
However, it often is the case that the necessary variation does not exist
in the market. For example, if I move to a city a look for housing, the
quality of schools may be an important variable, with as proximity to a
golf course of secondary importance. But, if the only good school
district has no golf courses and the only district with golf courses has
very poor schools and there is nothing in between, I am stuck with kids
who have small classes, but who can't hit a 5 iron. My choice does not
fully reveal my willingness to make fine trade-offs between these two
attributes of housing. The existence of lumpinesss" in the set of choices
creates ambiguity in the valuations obtained.
Recent research has sought to identify a set a conditions under which the
hedonic model works (Mendelsohn, 1985 a,b; McConnell and Phipps).
Unfortunately, the conditions are quite restrictive and serve to limit the
applicability of the technique. One situation in which it may work
reasonably well is in the valuation of changes in developed recreation
areas associated with rental properties for vacations or for homes
purchased by retirees, when there are a wide variety of available
properties. We can be more sanguine about use of the hedonic approach in
this situation for several reasons.
First, the condition that there is a wide variety of types eliminates the
lumpiness problem referred to above. Second, vacations and retirement are
times when wage differentials across locations are unimportant, and these
wage differentials have proven to be a problem for hedonic analyses in
other contexts. Finally, if areas are developed commercially, then the
array of characteristics provided is the result of (mostly) reasoned
choice instead of by nature. This latter feature of undeveloped
recreation is a problem in applications of the Hedonic Travel Cost method
(Brown and Mendelsohn). This hedonic technique uses increases in travel
costs over some minimum in order to gain access to a more desired
recreation destination as the "price" variable for the site in a hedonic
price function. But if the locations of sites with characteristics are
given by nature rather than by a profit-maximizing supplier, then, given
some travel origin for an individual, it is possible that hedonic prices
will be negative (which is not sensible) and the hedonic price function
can have very odd shapes (Bocksteal, et al.). The full implications of
this have yet to be determined, but it seems that the procedure breaks
down (or at least is very difficult to interpret) in this case.
The use of hedonic analysis to value small changes in the quantity of a
marketed commodity is a fairly standard demand analysis. Thus, they would
certainly be of interest to condominium and other developers. But our
focus here is on public, as opposed to private, actions and it is not at
all clear that the hedonic techniques are well-suited to such
Direct Valuation Methods
The primary direct method for recreation valuation is known as contingent
valuation (or CV, which should not be confused with the compensating
variation initials used previously). Instead of using data on choices to
infer individual WTP, in a CV study people are directly queried regarding
the value they attach to recreation opportunities. Application of this
approach to non-market goods such as recreation is of relatively recent
origin, and the field is undergoing rapid development. Although I would
not quite characterize the method as exploratory, it seems clear to me
that considerable research needs to be undertaken before confidence can be
placed in its widespread use for practical policy analysis.
Contingent valuation is a very flexible technique which can be applied in
a wide variety of valuation situations. Its primary deficiencies, to be
explored in somewhat more detail below, are related to two propositions.
The first is that people will lie in response to such questions; the
second is that if you ask such questions, people will have no idea what
you are talking about, or more precisely, you will have no idea what they
are thinking about when they respond.
The method proceeds via a sample survey. The interview can be
administered either in person, through the mail, or via telephone,
although this latter approach has not seen wide use in contingent
valuation studies due to the need for extensive use of visual aids in the
survey. There is a considerable preference for personal interviews over
mail surveys. In general, to maintain the validity of any sample survey
the interviewing should be done by a reputable professional survey outfit
and the survey instrument carefully developed with considerable pre-
testing of the instrument. This significantly increases the cost of the
CV approach relative to the others, which may rely on secondary data
exists for their implementation.
A typical CV experiment sets forth a hypothetical market for a public good
and seeks bids for alterations in the quantity of the good provided. An
example might be valuation of improvements in water quality. Visual aids
and descriptions of alternative scenarios can be used to depict various
levels of water quality that could be achieved by some policy change. One
could then ask how much a respondent would be willing to pay to obtain
higher quality. Investigators have experimented with a variety of
formats for such questions.
One approach is iterative bidding, with the respondent answering yay or
nay to payment increments (or decrements) from some starting point. This
contrasts with a "take it or leave it" payment of some fixed amount.
Recently, researchers have used contingent behavioral responses (e.g., how
many more trips would you take if fishing success improved?) as well as
voting on hypothetical referenda. These latter two appear quite
The technique is attractive for two reasons. First, respondents may have
a variety of reasons for valuing a resource and their own perceptions of
the opportunities and constraints they face in making choices. With the
indirect methods, the researcher must assume some of this information,
undoubtedly with some error. With CV, no such assumptions need to be
made, since they automatically are built into responses. Second, the
method is very flexible and can be applied in a variety of situations
where appropriate data for the indirect methods are absent. However, the
technique suffers from some potential difficulties. Two excellent,
comprehensive books on the potential as well as the problems of the CV
technique have appeared recently (Mitchell and Carson; Cummings, et al.).
I will concentrate here on just two issues: strategic bias and
Economists originally thought that the method suffered from a fatal flaw:
when valuing a publicly-provided good, individuals have an incentive to
strategically misrepresent their true valuations of the good. In short,
when asked their willingness to pay, people would lie. My own
interpretation of this proposition is that it is based on an inadequate
model of social behavior, and that people have all sorts of incentives,
based on the successful long-term operating of a society, to cooperate
with others when it appears on the surface that they could do better in
the short run if they were uncooperative. The data on this is
inconclusive. Indeed, there is no real ability to test the proposition in
the field since individual valuations are inherently unobservable. This
is a basic problem with the CV method. Personally, I think that, unless
the survey is so poorly done as to make obvious the incentives to lie,
people will in general attempt to give accurate responses. Unfortunately,
evidence is accumulating that asking a person how much compensation they
would accept for a change constitutes such poor practice; thus, contingent
valuation surveys prove inaccurate in some property-rights situations
where WTA is indicated, as was discussed earlier in this paper.
To me, the hypothetical nature of the valuation exercise is more
problematical than is the concern for strategic responses. The
difficulty here is that of assuring that the policy change that the
analyst seeks to evaluate is exactly the change that all of individuals
have in mind when they respond to the questions. Two things must hold for
this to occur. First, the depiction of the change used by the researcher
in the survey must be able to be tied to the policy at issue. And second,
the depiction must be sufficiently precise that the individuals in the
sample have the same mental image of the change when formulating their
valuation of it. This is very difficult to achieve.
There exists some evidence of this problem of hypothetical bias. In the
iterative bidding procedure, it has been established that the final bids
are sensitive to the starting point for the bids. Thus, a higher starting
point induces a higher valuation. This "starting point bias" may be due
to respondents who have little idea how to value the good, or even what
the good is, and are searching for a clue from the starting point as to
what an appropriate valuation is. This inability to establish a stable
valuation would be evidenced by responses that vary with small changes in
the survey, the information presented in it, or in attempted replications
of the analysis. Earlier it was stated that an advantage of the method is
that individuals have their own perceptions of goods and the constraints
they face and that these must be assumed in the indirect methods, but not
in a CV study. The problem is that these perceptions, etc., are not
constantly in our consciousness; they are brought to mind and made salient
by events, such as answering survey questions, and different questions can
make different things salient and thereby alter valuations. Much more
research is needed along these lines.
A related issue is that individuals may give valuations that they do not
really hold. In opinion surveys, this is called the problem of "non-
attitudes," i.e., answers to attitude questions which are fabricated for
the benefit of the interview, or perhaps more charitably, induced by the
stimulating event of being confronted by a question. These non-attitudes
are very unstable in replications of the analysis, in contrast to real
attitudes, which are stable. Consider a person who has never thought
about the existence of National Wildlife Refuges, who happens to be
included in a sample of subjects for a CV analysis. When asked their
valuation of a wildlife refuge, they will state some positive value,
perhaps a non-attitude due to yay-saying. This is an induced value that
would not exist if the person had not been asked the question. How
should this response be aggregated over the population that the sample is
supposed to represent? After all, the population did not have the
question; only the sample did. This is a sticky problem in the philosophy
of science: the only way to falsify the existence of the value is to ask
the question, which creates the value. Does the value exist?
While a large amount of research has been done on the general problem of
using surveys, very little has been done in this regard for the unique
difficulties presented by CV studies. In my opinion, much more basic
research, experimental research, needs to be done on this technique before
substantial confidence can be placed in it use on a regular basis by
practitioners. It does, however, have great promise and this research
program should go forward.
In this paper, I have attempted to provide a brief overview of some-of the
concepts and techniques for valuing non-market goods such as coastal
recreation. I think that one can reach some general conclusions from this
review: (i) a lot of work has been done on these methods and that they
potentially are valid, useful and accepted techniques, (ii) their
application involves some fairly complex issues of both economic theory
and statistics, (iii) cannot be applied in the same manner in all
situations, i.e., they are not "off the shelf" technologies, and (iv)
there is some exciting and potentially valuable research to done be in
Of these, I wish to stress here the first conclusion. It is possible to
read this paper a get the impression that so many difficulties are
presented by the techniques that they are not really practical yet for
applied policy analysis. This would be a misapprehension of my stance.
These are useful methods that can be employed with confidence now.
Moreover, they are able to address important questions regarding the
allocation of coastal and other recreation resources. To not employ them
would, I believe, lead to considerably worse decisions than would their
careful, judicious use by policy makers.
1. Freeman, M.. The Benefits of Environmental Improvement.
Baltimore. Johns Hopkins University Press for Resources for the
2. Randall, A. and R. Stoll. "Consumer Surplus in Commodity
Space." American Economic Review, 71(1980):449-57.
3. Gregory, R. "Interpreting Measures of Welfare Loss: Evidence
from Contingent Valuation and Experimental Studies." Journal of
Environmental Economics and Management, 13(1986):325-37.
4. Hanemann, M. "WTP and WTA as Benefit Measures How do They
Differ? How can They be Measured?" Department of Agricultural and
Resource Economics, University of California, Berkeley. 1987.
5. Willig, R. "Consumer's Surplus Without Apology." American
Economic Review, 66(1976):589-97.
6. Hausman, J. "Exact Consumer's Surplus and Deadweight Loss."
American Economic Review, 71(1981):662-76.
7. Bocksteal, N., M. Hanemann, and I. Strand. Measuring the
Benefits of Water Quality Improvements Using Recreation Demand
Models. Office of Policy Analysis, U.S. Environmental Protection
Agency, Washington, D.C.
8. Adamowicz, W. J. Fletcher, and T. Graham-Tomasi. "Functional
Form and the Statistical Properties of Welfare Measures."
Working Paper #87-28, Department of Agricultural Economics,
Purdue University, 1988.
9. Hanemann, M. "Welfare Measures Based on Partial Demand
Systems." Department of Agricultural Economics, University of
California, Berkeley. 1986.
10. Jones, C. "The Economic Value of the Les Cheneaux Fishery,
Michigan." School of Natural Resources, University of Michigan,
Ann Arbor, 1988.
11. Maddala, Limited-Dependent and Qualitative Variables in
Econometrics. Cambridge University Press, New York, 1983.
12. Bishop, R. "Measuring Value of Extra-Market Goods: Are
Indirect Measures Biased?" American Journal of Agricultural
13. Wilman, E. "The Value of Time in Recreation Benefit Studies."
Journal of Environmental Economics and Management, 7(1980):272-
14. Adamowicz, W. and T. Graham-Tomasi. "Time in Recreation
Modeling and Decision-Making." Staff Paper #P87-19, Department
of Agricultural and Applied Economics, University of Minnesota,
15. McConnell, K. and I. Strand. "Measuring the Cost of Time in
Recreation Demand Analysis." American Journal of Agricultural
16. Huang, H. and T. Graham-Tomasi. "Value of Time in a
Simultaneous Model of Recreation Trips and On-Site Time."
Department of Agricultural and Applied Economics, University of
17. Burt, O. and D. Brewer. "Estimation of Net Social Benefits
from Outdoor Recreation." Econometrica, 39(1971):813-28.
18. Cicchetti, C., A. Fisher, and V.K. Smith. "An Economic
Evaluation of a Generalized Consumer Surplus Measure: The Mineral
King Controversy." Econometrica, 44(1976):1259-76.
19. Hof, J., and D. King. "On the Necessity of Simultaneous
Recreation Demand Equation Estimation." Land Economics,
20. Caulkins, P. An Empirical Study of the Recreational Benefits
Generated by Water Quality Improvement. Ph.D. Dissertation,
University of Wisconsin-Madison, 1982.
21. Graham-Tomasi, T., M. Feldman and W. Wade. "A Benefit-Cost
Analysis of the Minnesota Acid Deposition Control Program."
Department of Agricultural and Applied Economics, University of
22. Graham-Tomasi, T. "The Economic Value of Damages to the
Pigeon River, Michigan Due to an Abnormal Discharge of Sediment."
Department of Agricultural and Applied Economics, University of
23. Hanemann, M. A Methodological and Empirical Study of the
Recreation Benefits from Water Quality Improvement. Ph.D.
Dissertation, Harvard University, 1978.
24. Morey, E. and R. Rowe. "The Logit Model and Exact Expected
Consumer's Surplus: Valuing Marine Recreational Fishing."
Presented at the AERE Workshop on Recreation Demand Modeling,
Boulder, Colorado, 1985.
25. Bocksteal, N. "The Economic Benefits of Artificial Reefs."
Report to the Sport Fishing Institute, 1987.
26. Rosen, S.. "Hedonic Prices and Implicit Markets: Product
Differentiation in Pure Competition." Journal of Political
27.Mendelsohn, R. "Estimating the Structural Equations of
Implicit Markets and Household Production Functions." Review of
Economics and Statistics, 66(1984):673-77.
28. McConnell, K. and T. Phipps. "Identification of the
Parameters of the Preference Function: Consumer Demands with
Nonlinear Budgets." In K. McConnell et al., Eds. Identification
of Preferences in Hedonic Models, Office of Policy Analysis, U.S.
Environmental Protection Agency, Washington, D.C.
29. Brown,G. and R. Mendelsohn. "The Hedonic Travel Cost Method."
Review of Economics and Statistics, 66(1984):427-33.
30. Bocksteal, N., M. Hanemann, and C. Kling. "Modeling
Recreational Demand in a Multiple Site Framework." Water
Resources Research, (1987).
31. Mitchell, R. and R. Carson. Using Surveys to Value Public
Goods: The Contingent Valuation Method, Resources for the Future,
Washington, D.C., 1988.
32. Cummings, R., D. Brookshire, and W. Schulze. Valuing
Environmental Goods: A State of the Arts Assessment of the
Contingent Method, Rowan and Allanheld, Totowa, N.J., 1986.
Florida Coastal Recreation and Economic Research
J. Walter Milon
Food and Resource Economics Dept.
University of Florida
No one doubts that Florida's natural resources, and her coastal
resources in particular, make an important contribution to the Florida
economy. National and international promotion campaigns emphasize
the quality and abundance of the beaches, the diversity of fishing
opportunities, the numerous boating pursuits, and the unique wildlife
inhabiting Florida's coastal environment. Everyone knows these
attractions bring millions of tourists annually and contribute to the
quality of life for Florida's residents. Yet, it is surprising how
little is known about the value of specific resources and their
importance to both tourists and residents. Private and public planning
decisions are made every day that influence the use of these coastal
resources but most of these decisions must be reached without adequate
data and research on the economic implications.
In his paper, Graham-Tomasi provides a comprehensive and insightful
review of the most widely discussed techniques for identifying the
economic value of coastal recreation resources. His discussion of
the contingent valuation, hedonic and travel cost techniques is a
balanced, fair appraisal of the current state of knowledge. I am very
much in agreement with his assessment that this type of research can
provide useful insights for policy decisions. But, the research must
be conducted with a clear recognition of the potential problems and
policy makers must understand the limits of this type of research.
These are not "off the shelf" techniques, but this does not mean that
well designed studies cannot improve the information available about
coastal resource decisions.
An important issue not addressed by Graham-Tomasi is the reason
why coastal resource management agencies in Florida, such as the
Department of Natural Resources, the Department of Environmental
Regulation, and the Marine Fisheries Commission, have devoted so few
resources to research on the economic value of coastal resources.
While these agencies are required to complete an economic impact analysis
(EIA) for any rule or regulation under the Florida administrative code,
in practice these EIAs are typically little more than descriptive
statements based on limited facts and figures. The State of Florida
spends millions of dollars each year promoting the natural resource
base but only a fraction to understand how resource use and management
decisions affect the economic value of these resources. Even basic
management issues, such as the potential impact of a saltwater fishing
license or a user fee charge for beach access, are discussed as
speculations and conjectures rather than being supported by basic
research. Private industries providing recreation services such as
Disney World do not make management decisions without solid information
about the potential consequences. Given the enormous economic interest
the State of Florida has in its coastal resources, it is surprising
how few resources the State has devoted to these research problems.
The Florida Sea Grant College has been a leader in the State in
encouraging and funding research on important coastal resource allocation
problems. However, it is clear that future progress depends on more
interest and involvement from coastal resource management agencies
in defining management problems and in providing support to conduct
economic research. Researchers in agencies and universities around
the U.S. are using the methods described by Graham-Tomasi to provide
information about the economic consequences of management decisions.
It is time for Florida's resource management agencies to build an
effective partnership with the Sea Grant College to provide the type
of research needed for wise use of our coastal resources.
Commentary On Florida's Policy With Respect To Its Coast
James C. Nicholas
Professor of Urban and Regional Planning
Affiliate Professor of Law and
Co-Director Growth and Management Studies
University of Florida
Florida has the second longest coastline in the United States,
second only to Alaska. Florida's 1,350 miles of coast and 8,426 miles
of tidal shoreline represent approximately 10% of the nation's total--
including Alaska. By contrast, California has only 840 miles of
coastline and 3,427 miles of shoreline -- approximately one-half that
Florida's coast is the product of millions of years of natural
evolutionary forces. What we see today is but a momentary glimpse
of this continuing evolution.
This coast has been protected by mosquitoes, heat, hurricanes,
and common sense. Pioneers and early residents knew better than to
build on the coast. Annual hurricanes demonstrated the consequences
of such a location. But Florida's hurricanes have declined in frequency
and severity, and with them common sense has declined, too.
Floridians have forgotten the biblical admonition that only a
fool builds his house on sand. But perhaps this sounds like some left
wing intellectual who cares nothing about property rights.
Mosquitoes and heat at one time combined as the most effective
protection of the Florida natural environment, both coastal and interior.
Now, air conditioning, drainage, and pest control have reduced these
natural defenses to insignificance. In fact, we could say that air
conditioning, drainage, and pest control have attacked and destroyed
Florida's immunity from the destructive effects of growth. Since
Floridians have not yet learned how to defend against attacks on their
environment, we see a corpus ravaged by an uncontrolled virus called
The growth virus, like all other viruses, is part of a system.
It has a holistic role to play, and it is an important role. However,
when the natural defenses against that virus are stripped away, what
was once a positive component of a balanced whole becomes a monster
consuming that whole. Then, until we develop a cure or preventive,
we can only avoid tragedy by exercising great care.
When growth is not controlled, it becomes the natural environment
- the coast, in this case rather than existing in harmony with it.
When growth is solely competition among builders to develop the coast
to its maximum, then that growth is uncontrolled growth, and dangerous.
From outward appearances, it seems that coastal developers are competing
to see just which builder can most effectively build in such a way
that the public cannot get to the public's coast.
The buildings constructed along the coast are frequently so located
that, first, the dune system is destroyed and along with the system
goes the beach, and, second, the buildings themselves are frequently
destroyed because the buildings were simply too close to the ocean
and they were built on sand. A third consequence is exclusion of the
public from the beaches which are owned by the public.
The matter of receding beaches, a result of dune destruction,
bring forth an oddity of modern American philosophy. When matters
of public access to public beaches are discussed, the owners of
oceanfront land hold that those are private beaches and the owners
are strict believers in private enterprise and private property rights.
That is, they are strict adherents to these principles until it comes
time to renourish the beach which eroded because of their buildings
or until it comes time to pay for buildings damaged by storms. Then
it's the public's beach.
Unfortunately, the coast is seen simply as real estate, albeit
very valuable real estate, to be developed and sold. This approach
implies that there is no other role or function of the coast. Such
an implication is simply wrong.
Approximately 30 million out-of-staters visit Florida annually.
Assuming that each of the 13 million Floridians act as tourists within
Florida at least once a year, the total would be 43 million tourists
The Florida Division of Tourism reports that the average length
of stay is 11.9 days and the average expenditure is $100 per person
per day**, 43 million individuals staying 11.9 days and spending $100
per person per day would yield $51.2 billion in annual expenditures.
Tourism surveys indicate 70% of tourism is coastally influenced, that
is, where the coast plays a role.
This means that coastal expenditures amounts to $35.8 billion
annually. By contrast, the total sales value of citrus is $4.2 billion
Assuming that the coast is, on average, 1,000 ft. wide, there
would be 163,637 acres of coast. At $35.8 billion per year, income
to Floridians per acre from the coast is $218,894 per year. This is,
of course, gross revenue. A real estate rule of thumb is that the
site land is attributed 15% of gross receipts. This would attribute
a site value of $32,834 per acre per year for coastal land. Capitalizing
$32,834 per year @ 6% for 99 years, yields an economic value of the
coastal land at $545,525 per acre.
This value is to the public Floridians and is not necessarily
capitalized into the market value of the land. Moreover, property
owners frequently find that it is much more profitable to withdraw
coastal land into private use. For example, a coastal condo selling
**The author has taken note of this datum and has suggested to his
family that they, in the future, restrict themselves to that amount.
at $250,000 at 20 units per acre would yield a land value of $750,000
From a private perspective the issue raised in this example is
clear the value of a coastal acre is $545,525 to the public while
the value of this example is $750,000 value per acre if that acre
is withdrawn from the inventory of the coast.
However, in order that the individual receive the $750,000 per
acre the public suffers a loss of up to $545,000 in tourism.
Miami Beach is a classic and particularly disturbing example.
Miami Beach had some of the most fantastic beaches that ever existed.
However, it withdrew these beaches from inventory it made them
private and they washed away. Tourism virtually stopped. The last
new hotel in Miami Beach "topped off" in 1967. In an attempt to
reverse the mistakes of the past, the public has paid hundreds of
millions to try to restore the beaches which were privatized.
Florida needs to look to its coast its beaches in a different
manner. We could learn from the so-called less developed countries
- the backward countries.
In Brazil, for example, the beaches are owned by the public as
they are here and no one can impede the access of the owners to
their land. No individual has the right to destroy another's land
even if its the public which owns the land.
In Florida we view the coast simply as real estate, to be sold.
We could learn from Michigan and how they view the auto industry.
Imagine the reaction if it were suggested, or tried, that a General
Motors, Ford or Chrysler plant an active one was to be converted
to a condo? What's the difference between that and converting
Florida's beaches to private housing?
Florida has been blessed with a marvelously productive and resilient
coast. This coast provides employment, recreation and a place to
live for millions. It also provides solace and refuge to a cornucopia
of life. Unfortunately, Floridians have not yet come to see the
coast in this manner. Rather, Floridians, through their official
enactments, continue to see the coast in a narrow way, almost as
if the only function of the coast is a source of real estate
commissions. This view is changing. As it changes, the prospects
for Florida's coast become brighter.
Tourism Research: A Challenge To Extension Planning
Allan J. Worms
Associate Extension Professor and
Recreation and Tourism Specialist,
Department of Forestry
University of Kentucky
Lexington, KY 40546-0073
Thank you, Dr. Clarke, for your kind introduction and the invitation
to address this particular group. I find this subject area of special
interest because it addresses an educational role and responsibilities
which are directly related to my work in tourism education in Kentucky.
But, frankly, it is of still greater interest to me because of the
special set of planning and management problems apparently manifesting
themselves in this state and because of the urgent need to find solutions
to these problems. Let me see if I can identify the task at this
Today, previous speakers have described the status of tourism
research in Florida, setting out on-going activities and, also,
illustrating needs for other research. The size and character of the
coastal tourism industry and its importance economically and
recreationally has been discussed. And, while it was not identified
as a topic of primary attention in the advance program, concern with
maintenance of a quality resource environment in the face of an
aggressively growing tourist industry is an evident issue. Florida
has an immense and complex tourist industry which is demand driven
by both the recreation seekers and the business profit seekers and
which is superimposed on or in a finitely fragile ecology. Many
businesses, more than merely those in tourism, are increasingly land
consumptive, increasingly ecology impactive, and in need of economic,
physical and civic guidance. And, to a large extent, tourism and related
forms of recreation are functioning as the big generator, the power
force, if you will, behind this process.
Thus, a fundamental problem seems to have arisen. Several speakers
have addressed it today, either directly or in passing. It is that
the prospect exists for major deterioration in both physical and social
levels of environmental quality from a development/use overload.
I feel sure some will disagree with this proposition. Apparently,
dissension exists among the previous speakers as to research priorities
and directions. To some, research of the markets to improve business
is the first mandate. Others apparently are concerned, first, with
research to enhance recreation experience. Still others are concerned
with the propriety of who should be doing what research. In such a
mixed setting it is easy to assume there would be differences in
assessment with the size of the problem and its derivative
Perhaps the task then, involves collective agreement that a
significant problem exists and that a cooperative effort to deal with
it should be launched among business, government, academia (both research
and extension), and, ultimately, the citizenry. Certainly, the
organizers of this conference should be commended for taking the first
step in calling this group together to identify and discuss the problems.
What should be the next steps? What should be the role of research,
Sea Grant and Cooperative Extension, private businesses and state and
other governments? And how can a functional linkage or liaison be
established which will promote cooperative pursuit of problem
identification, program implementation and the related widespread
education which seems almost certainly necessary to such program
From my perspective, the need for more applied research which
convey real meanings to help improve management and successful function
of all aspects of the industry in concert with a quality environment
is simply fundamental. Virtually no major industry operates
competitively and successfully in contemporary society without sound
research, whether it has to do with new product or service development,
market research, management or procedural research or whatever. Tourism,
as an industry or as an individual business simply does not function
better in ignorance of the conditions impinging upon it. And directly
related must be a primary effort to disseminate the right kinds of
information. ---This is a main philosophy of the land grant university
research-extension-citizenry partnership program.
The problem of determining research needs, and relating this to
the best procedures for delivery of the information and how to apply
it in the industry is not new, of course. More than a dozen years
ago, it was addressed by researchers, managers and extension specialists
in the context of the 1975 Southern States Recreation Workshop. Three
principal keynotes representing each of these professional groups
described fhe difficulties of this process from their individual
Managers were concerned: 1st, that researchers often did not
really understand their needs; 2nd, researchers did research that met
researchers interests and reward system needs; and, then, 3rd, didn't
write the results in a manner that was readily digestible by managers.
Much of this criticism could be leveled by tourism business entrepreneurs
today, of course. Further, it seemed dialogue between business and
managers with researchers was difficult if it existed at all. In my
work in Kentucky I've found many instances where dialogue among business
people was also nonexistent. They often don't talk to each other much
less with researchers or researchers with them.
This workshop further pointed out, from the viewpoint of
researchers, management often wanted answers almost immediately to
Proceedings of the Southern States Recreation Research Applications
Workshop. USDA Forest Service General Technical Report SE-9, Asheville,
NC, June 1976.
here and now types of operational questions. They frequently did
not take a long view of conditions affecting their industry --and
certainly were less tolerant of the long view perspective in which
researchers must often operate. In short, researchers felt it took
more time to identify researchable problems, develop funding, design
research techniques, and conduct the research and prepare the results.
Moreover, academic researchers often were not rewarded for "here and
now" investigation and preparation of data in highly readable and
applicable form, but for publication in refereed journals, to be read
and re-applied by other researchers.
Perhaps the management keynoter put some of the problems in
perspective with this series of questions:
Why is it managers and other field people aren't clamoring for
your fantastic finding? Perhaps we can find part of the answers
in this series of introspective questions. Is your research geared
to the urgent-immediate needs of managers? Have you presented
(packaged) your results so they will sell? Can managers understand
what you've written? Have you geared your write up to management
people or is it geared to fellow researchers? Do you aim at
publications of interest to managers or publications of interest
to no one? Do you describe the problem then prescribe the cure
with step 1-10 recommendations? Did you work with management
personnel i2 describing he problem or did you do a fine job without
The same manager challenged research, and indirectly Extension,
even further with:
"The interpreter or disseminator -- he will save us!" Extension
Service personnel and even folks like me spend considerable
time telling others about research findings. It seems now, though,
these professionals are to be prime linkage between the researcher
and the manager. This is a dandy scheme, one I'm sure which will
be covered well, indeed, by the following speaker. If it works,
the research can take even less responsibility for providing
relevant answers in understandable language.
The extension specialist is part of the answer, but asking him
to do a job you've failed to do won't help our common dilemma.
Well, the 1988 setting differs considerably from the days of this
workshop. We now possess much more rapid capacity to analyze research
data. Communication of new information is almost immediate. And
business, academic researchers and private researchers have now
lubricated and streamlined the process, right?
Wrong. With notable exceptions, we still have companies paying
for private research to generate quick answers to short view issues.
21bid., p. 3
Ibid., p. 4.
We still have universities needing to conduct research which is
publishable in refereed journals. Such research is often presented
in a form which is difficult for managers to digest. And we still
have managers doing their own thing, without really trying to learn
how to talk to researchers in terms they can use to cross over the
And extension? What is the Cooperative Extension Service doing
about business management education in Florida's number one industry?
How is this premier educational organization helping to resolve the
complex problem fabric existing between tourism business success,
recreation consumer enjoyment objectives and social and environmental
stress? Well, I am not a Floridian but I'm sure much has been done.
It is also obvious that tourism business education and how to go about
some sort of increased, more aptly applied effort would be a useful
result of this meeting.
An interesting observation of the 1985 ECOP Subcommittee on CRD
was that Extension is "demand driven." The Florida situation is
certainly one in which extension and university researchers could come
to feel demand driven. But I don't think responding to short term
pressure is a good way to go about finding answers and solving problems.
A well organized, comprehensive education program with lasting
educational achievements is certainly more justified.
Some years ago in Kentucky, we swallowed our extension-researcher
professional pride and took some lessons from a number of small tourism
businesses, particularly the marinas and boat docks across the state.
We sat down with a number of them and asked them what were their most
pressing business problems and if we could help. They had problems
with very basic issues. Pricing for moorage, insurance, service to
customers, and the like were central to successful competition.
Understanding how much customers would pay for moorage, products and
services and the like could make a difference in their degree of success
or even, in some cases, survival. Over a few years we were able to
first, look beyond our need to do research with highly quantifiable
statistically sound results which was publishable in journals to ways
to deal with very here and now industry subjects. Gradually, as we
(Extension and business) learned to work together and communicate on
a variety of knotty problems, several things began to happen. We were
able to develop a longer term program of education dealing with a more
educated business clientele who began to see things in a broader and,
we think, more sophisticated fashion.
But importantly, we had to learn how to do research in their arena
and disseminate the findings in their language and in support programs
of their liking, first. Now, they put on the programs and are beginning
to fund more sophisticated research. But this is only one small example
of approaches to this maze of problems.
CRD Research/Extension Linkages. A Report of the ECOP Subcommittee
on Community Resource Development and Public affairs, December 1985.
It seems the task before you additionally, involves several up-front
1. The Florida Cooperative Extension Service and Sea Grant should
recognize the enormous educational needs facing the state's
primary industry and take steps to deal with the
responsibilities inherent in this condition.
2. The FCES should accept and support a need to be expert in
dealing with this industry. The FCES can't "be all things
to all people", but being fearful of embarrassment by other
experts is surely not a solution.
3. A series of program priorities should be developed which relate
to overall long term problem solutions within the tourist
industry and in related areas of the Florida environmental
and societal fabric.
4. Steps within the relationship mix between business, extension
and researchers must be taken to identify both issue problems
and working/cooperation problems. Functional three-way dialogue
is, obviously, a first level priority.
5. Cooperative efforts between the business/extension/research
"team" should be initiated, carried out and evaluated along
the program priority lines.
Without the support of government on both administrative and
research action levels and the support and involvement of business
representation, there will be no really effective "team" program.
Further, identity and wide acceptance of such a program are probably
one of the primary criteria for success to any significant degree.
Research of the tourist industry in Florida presently seems to
be far more narrowly applied than necessary to deal with problems
confronting the industry and the presumably deteriorating environment
important to its high success. Several areas of concern seem important.
1. There is a need to define acceptable limits of physical and
social carrying capacity pursuant to maintaining quality
standards appropriate to varied recreation settings. Research
in these areas should be pragmatic and the results should
be implementation oriented.
2. Understandings of the management and controls options available
to alleviate portions of the problems must be identified and
communicated. This effort probably begins with collaboration
among government, business, research and extension/Sea Grant,
should be followed up by research actions and then communicated
widely, again through a collaborative effort.
3. The status of public awareness and concern with identifiable
tourist industry and resource management problems should be
measured. This would seem to be fundamental to development
of sound education programs following agreement on the problem
The relationship between research findings and extension education
of the tourist industry's membership should appear obvious. However,
this is only a minimal portion of the task. From the very outset,
probably the most vital commitment should be to establish a continuing
cooperative effort among the tourist industry, state government, the
universities' segments involved with tourism and the recreational
environment and eventually, also, local governments and interested
organizations. Florida is a special and unique place with special
and often unique problems. While this may seem trite, the immensity
and complexity of the confrontations between the forces of the
recreation/tourism/developmental interests and ecological stability
presents a challenge which will probably not be met without a major
broad-based program. Ultimately, an ethic of husbandry for Florida's
natural and cultural resources must be much more widely and firmly
established. Until the effects of such an ethic are portrayed in
business development, community management and many other individual
acts throughout the state's environment, a level necessary to sustain
some balance with the state's ecology will not be reached.
Summary of Research Opportunities in Coastal Tourism
Jim Cato, Larry Libby, and Marion Clarke
Research opportunities focused on the Florida tourism sector can
be grouped into four major categories. Specific research ideas are
noted under each category.
Demand As in production of any commodity, the tourism opportunity
combines various monetary and nonmonetary inputs in generating definable
units of output available at a series of prices. In some cases, those
prices are not traditional market prices but require indirect indicators
of what consumers are willing to pay for that opportunity.
It is necessary for the public sector to provide consistent
indicators of recreation demand through a comprehensive and systematic
data system. This data set coupled with specific surveys will then
allow the "willingness to pay" aspect of effective demand to be inferred
from nonmarket indicators of cost incurred to enjoy a given recreation
experience. Further, price and income elasticities related to various
coastal recreation opportunities could be determined. This would allow
the effects of changing the coastal tourism product mix to be measured.
Florida might also be viewed as a bundle of resources. Many of these
are fragile and limited in quantity. The effects of increasing demands
on these resources to satisfy coastal tourism also should be known.
Supply Studies of the supply characteristics of coastal tourism
would focus on the market failures associated with the willingness
to supply various coastal recreation opportunities. For example,
overfishing and beach congestion are supply "malfunctions" resulting
from the absence of usual market signals on both the demand and supply
side. Better market signals would have perhaps prevented these market
failures. Research is needed to better document the economic
characteristics of these market failures through case study and survey
work. The purpose is to facilitate appropriate policy options that
may encourage a more complete set of economic "signals" for suppliers
of coastal recreation.
Marketing Research on the marketing of coastal tourism services
and opportunities should focus on returns to product differentiation,
promotion, generic "come-to-Florida" marketing versus target specific
approaches, and the economic performance associated within each market
sector (number of firms, concentration, degree of competitiveness,
Policy Major research in this category would focus on four areas.
The first would be a diagnostic analysis of the political economy of
coastal tourism in Florida. This would involve the description of
major participants in tourism economics and policy decisions in the
state, linkages among those major interests, identification of decision
authority, and where the policy discretion lies with respect to tourism
decisions. This knowledge constitutes the information flow that defines
the "structure" of tourism policy.
The second is measuring the consequences of current tourism policy.
These would include costs and benefits associated with a given policy
as well as the distributional characteristics. Such current policies
as private waterfront condominium development, cars on the beaches,
and waterfront zoning provide examples. The positive and negative
impacts of tourism should extend beyond that of just monetary values.
Also of importance are the social and environmental aspects of "carrying
capacity" of our coast in regard to tourism as one of its many uses.
Third, certain impacts of policies inadvertently affect coastal
areas. Research in this category would focus on policies designed
to accomplish other purposes but that indirectly affect coastal tourism
opportunities. Studies might address policies that concern land
taxation, environment, growth management, and economic development.
Fourth, performance consequences of alternative policies designed
to change the use of coastal resources need analyzing. Studies here
would focus on proposals for selected changes with emphasis on
identification of gainers and losers and the magnitude of the impact.
In summary, research on coastal tourism can be focused on (1)
identification and measurement of the demand and supply characteristics
of the various commodities and services involved, (2) economic
performance of alternative marketing structures and arrangements designed
to alter the pattern of coastal resource use, and (3) the performance
of policies affecting rights and obligations with respect to coastal
resources. Emphasis will be on development and application of
theoretically sound measurement techniques to determine benefits and
values of tourism options. The development of a systematic data set
to understand the economics and demographics of coastal tourism in
Florida and the public choice problems of resource use underlies all
List of Attendees
Florida Sea Grant
University of Florida
Bureau of Econ. Analysis
Division of Econ. Dev.
Dept. of Economics
Florida State University
Florida Sea Grant
University of Florida
Florida Sea Grant
University of Florida
Food and Resource Econ. Dept.
University of Florida
Div. of Recreation & Parks
Dept. of Natural Resources
Dept. of Agricultural and
University of Minnesota
Florida Sea Grant
Florida Dept. of Community
Food and Resource Econ. Dept.
University of Florida
Lougheed and Associates
Food and Resource Econ. Dept.
University of Florida
1000 Friends of Florida
Growth Management Studies
University of Florida
Florida Dept. of Commerce
Division of Tourism
Dick Pope, Inst. for
College of Business
Univ. of Central Florida
Marineland of Florida
Dept. of Economics
Florida International Univ.
Dept. of Forestry
University of Kentucky
THE ECONOMICS OF COASTAL TOURISM:
RESEARCH PERSPECTIVES FOR FLORIDA
United Technologies Conference Facility
Walt Dishey EPCOT Center
Living Seas Pavilion
29 February 1988
Larry Libby, Chairman
Food and Resource Economics Dept., Univ. of Florida
The Status of Tourism Research in Florida:
Voids, Where More Information is Needed
Barry Pitegoff, Director
Office of Marketing Research,
Florida Dept. of Commerce
Div. of Tourism,
EXTENT AND NATURE OF COASTAL TOURISM
Marion Clarke, Coordinator
Florida Sea Grant Marine Advisory Program
Abe Pizam, Director
Center for Tourism Research, Univ. of Central
Fred Bell, Professor
Dept. of Economics, Florida State Univ.
MEASURING THE BENEFITS OF COASTAL TOURISM
Ted Graham-Tomasi, Professor
Dept. of Economics, Univ. of Minnesota
Wally Milon, Assoc. Professor
Dept. of Food and Resource Economics, Univ. of Florida
POLICY RELATED TO COASTAL TOURISM
Chuck Adams, Marine Economics Specialist
Florida Sea Grant
Jim Nicholas, Professor
Dept. of Urban and Regional
Jim Murley, Director
1000 Friends of Florida
(Formerly Division Director
Dept. of Community Affairs)
Planning, Univ. of Florida
of Planning, Florida
12:15 PM LUNCHEON
United Technologies Conference Facility
1:30 INTRODUCTION OF ATTENDEES
MODERATOR: Marion Clarke
James C. Cato, Director
Florida Sea Grant Program
Panel will include speakers and respondents from previous sections.
A major focus of the panel discussion section will be to develop
a set of priorities for future research and extension activities
related to Coastal Tourism in Florida.
Tourism Research: A Challenge to Extension Planning
SPEAKER: Allan J. Worms
Extension Tourism Specialist
University of Kentucky
An IFAS Perspective:
Institute of Food and Agricultural Sciences (IFAS)
Univ. of Florida
CLOSING REMARKS AND IMPLICATIONS FOR FUTURE SEA GRANT RESEARCH
Optonal tour of The Living Seas Pavilion.