CHOICE SET DEFINITION ISSUES IN A KUHN-TUCKER MODEL OF RECREATION DEMAND

Much of the literature on choice sets has focused on how alternative specifications of market scope and site definition impact site selection models and the resulting welfare estimates per choice occasion. In this paper, choice set definition issues are investigated using the Kuhn-Tucker model, which integrates the site selection and participation decisions in a unified and utility theoretic framework. This allows us to consider the impact that alternative site set definitions may have on both where individuals recreate and the numbers of trips they take. Using data from the 1997 Iowa Wetlands Survey we examine the effects on estimates and welfare measures of choice sets representing various levels of site aggregation and market scope. We find that significant differences in welfare measures arise from changing choice set definitions.Resource /Energy Economics and Policy,

Estimation and Welfare Calculations in a Generalized Corner Solution Model with an Application to Recreation Demand

The Kuhn-Tucker model of Wales and Woodland (1983) provides a utility theoretic framework for estimating preferences over commodities for which individuals choose not to consume one or more of the goods. Due to the complexity of the model, however, there have been few applications in the literature and little attention has been paid to the problems of welfare analysis within the Kuhn-Tucker framework. This paper provides an application of the model to the problem of recreation demand. In addition, we develop and apply a methodology for estimating compensating variation, relying on Monte Carlo integration to derive expected welfare changes.

What's the Use? Welfare Estimates from Revealed Preference Models when Weak Complementarity Does Not Hold

In this paper we consider the theoretical and empirical ramifications of welfare measurement in revealed preference models when weak complementarity does not hold. In the context of a Kuhn-Tucker model of recreation demand we show that, while it is possible to estimate preferences that do not appear to exhibit weak complementarity, the calculation of welfare measurements from these models requires a cardinal interpretation of preferences that cannot be tested. Furthermore, we reiterate the under-appreciated fact that even traditional use value estimates require a cardinal restriction on preferences that, while often intuitive, also cannot be tested. We demonstrate empirically that the choice of restrictions can have significant ramifications, as use value estimates can vary widely based on the assumed preference structure.

Valuing Water Quality As a Functionof Water Quality Measures

This paper incorporates a rich set of physical water quality attributes, as well as site and household characteristics, into a model of recreational lake usage in Iowa. Our analysis shows individuals are responsive to physical water quality measures. Willingness-to-pay estimates are reported based on improvements in these measures.

What\u27s the Use? Welfare Estimates from Revealed Preference Models When Weak Complementarity Does Not Hold

In this paper we consider the theoretical and empirical ramifications of welfare measurement in revealed preference models when weak complementarity does not hold. In the context of a Kuhn–Tucker model of recreation demand we show that, while it is possible to estimate preferences that do not appear to exhibit weak complementarity, the calculation of welfare measurements from these models requires a cardinal interpretation of preferences that cannot be tested. Furthermore, we reiterate the under-appreciated fact that even traditional use value estimates require a cardinal restriction on preferences that, while often intuitive, also cannot be tested. We demonstrate empirically that the choice of restrictions can have significant ramifications, as use value estimates can vary based on the assumed preference structure

Estimation and Welfare Calculations in a Generalized Corner Solution Model with an Application to Recreation Demand

The Kuhn-Tucker model provides a utility theoretic framework for estimating preferences over commodities for which individuals choose not to consume one or more of the goods. This paper provides an application of the Kuhn-Tucker model to the problem of recreation demand and site selection, modeling the demand for fishing in the Wisconsin Great Lakes region

Estimation and Welfare Calculation in a Generalized Corner Solution Model with an Application to Recreation Demand

The Kuhn-Tucker model of Wales and Woodland (1983) provides a utility theoretic framework for estimating preferences over commodities for which individuals choose not to consume one or more of the goods. Due to the complexity of the model, however, there have been few applications in the literature and little attention has been paid to the problems of welfare analysis within the Kuhn-Tucker framework. This paper provides an application of the model to the problem of recreation demand. In addition, we develop and apply a methodology for estimating compensating variation, relying on Monte Carlo integration to derive expected welfare changes

What\u27s the Use? Welfare Estimates from Revealed Preference Models When Weak Complementarity Does Not Hold

The focal point of the revealed preference (RP) valuation literature, including recreation demand and random utility maximization (RUM) models, has been on eliciting the “use” value associated with environmental amenities; i.e., that portion of value associated with direct use of a resource. Mäler’s (1974) concept of weak complementarity is typically invoked to justify this focus. Indeed, weak complementarity explicitly or implicitly underlies most of the RP literature. In this paper, we consider the measurement of welfare in RP models when weak complementarity does not hold. In particular, the Kuhn-Tucker (KT) framework (e.g., Phaneuf et al. 2000) does not impose weak complementarity a priori, raising the possibility of rejecting weakly complementary in estimation and the question as to what is the proper welfare measure to report. Although existence value cannot be measured, we argue that in some circumstances there are components of total value outside of use value onto which RP methods may be able to shed light

Matching Grants and Public Goods: A Closed-Ended Contingent Valuation Experiment

Matching grants are commonly used to influence the bundle of public goods provided by governments. We design a contingent valuation experiment to determine the value individuals place on improved recreational facilities under a matching grant proposal. The experiment provides an opportunity to examine preferences given the public good exists in an active and well-defined market, and the valuation experiment is perceived as meaningful to public policy. We estimate a mean willingness-to-pay for park improvements of $8.30, far less than the implied tax increase of$21 provided by local politicians opposed to the project, but nearly doubled the actual tax increase for the average property owner