Handbook of Environmental Economics

Chapter 15

RECREATION DEMAND MODELS

DANIEL J. PHANEUF and V. KERRY SMITH

Department of Agricultural and Resource Economics, North Carolina State University, USA

Contents

Abstract 672

Keywords 672

1. Introduction 673

2. What do we know about preferences for outdoorrecreation after 50+ years? 674

2.1. Recreation and consumer expenditures 674

2.2. Preferences for recreation 676

2.3. Policy impacts 681

3. Modeling recreation behavior 683

3.1. Modeling preferences 683

3.2. An “ideal” implementation of the basic model 691

3.3. Structure of the primary empirical models describing recreation demand 693

3.3.1. Single equation and demand system travel cost models 693

3.3.2. Random utility and related models 696

3.3.3. Corner solution models 712

3.3.4. Price index models 715

3.3.5. Overall prognosis on the modeling strategies 716

4. Recreation data 717

4.1. Data collection as an economic process 718

4.2. Combining revealed and stated preference data 719

4.3. Linking site characteristics to behavioral data 722

4.4. Measuring travel distances and costs 724

5. Econometric issues in recreation demand modeling 725

5.1. Single site demand models 725

5.2. Systems of recreation demand equations 728

5.3. Random utility models 731

5.4. Dynamic models 734

5.5. Nonparametric methods and models 736

6. Measuring consumer surplus with travel cost models 739

6.1. Price versus quality changes 739

6.2. Valuation measures with extensive margin choices and unobserved heterogeneity 742

Handbook of Environmental Economics, Volume 2. Edited by K.-G. Mäler and J.R. Vincent

© 2005 Elsevier B.V. All rights reserved

DOI: 10.1016/S1574-0099(05)02015-2

672 D.J. Phaneuf and V.K. Smith

7. Research ahead 745

Acknowledgements 751

References 751

Abstract

Travel cost recreation demand models stem from a simple, but penetrating, insight. Con-

sumption of an outdoor recreation site’s services requires the user to incur the costs of

a trip to that site. Travel costs serve as implicit prices. These costs reflect both people’s

distances from recreation sites visited and their specific opportunity costs of time. To-

day, economic analyses of recreation choices are among the most advanced examples

of microeconometric modeling of consumer behavior in economics.

The primary focus of this chapter is on the methods used to describe individuals’

recreation choices. We are interested in the economic assumptions made in descriptions

of behavior and measures of the economic value of amenities. Before developing this

summary, in Section 2 we discuss how outdoor recreation fits within consumers’ over-

all expenditures. Section 3 describes how we might ideally like to estimate consumers’

preferences for recreation resources and the compromises implied by the models cur-

rently being used. Econometric details are deferred until Section 5, after a discussion

of the features of recreation data in Section 4. In Section 6 we turn to conceptual is-

sues in welfare measurement. We close in Section 7 with a discussion of a few research

opportunities that seem especially important for the future.

Keywords

recreation demand, random utility models, opportunity cost of time, corner solution

models, travel cost

JEL classification: Q51, Q26, L83