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Private Options to Use Public Goods: Exploiting Revealed Preferences to Estimate Environmental Benefits

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  • Snyder, Lori

    (Harvard U)

  • Stavins, Robert

    (Harvard U and Resources for the Future)

  • Wagner, Alexander

    (Harvard U)

Abstract

We develop and apply a new method for estimating the economic benefits of an environmental amenity. The method fits within the household production framework (Becker 1965), and is based upon the notion of estimating the derived demand for a privately traded option to utilize a freely-available public good. In particular, the demand for state fishing licenses is used to infer the benefits of recreational fishing. Using panel data on state fishing license sales and prices for the continental United States over a fifteen-year period, combined with data on substitute prices and demographic variables, a license demand function is estimated with instrumental variable procedures to allow for the potential endogeneity of administered prices. The econometric results lead to estimates of the benefits of a fishing license, and subsequently to the expected benefits of a recreational fishing day. In contrast with previous studies, which have utilized travel cost or hypothetical market methods, our approach provides estimates that are directly comparable across geographic areas. Further, our results suggest that the benefits of recreational fishing days are generally less than previously estimated.

Suggested Citation

  • Snyder, Lori & Stavins, Robert & Wagner, Alexander, 2003. "Private Options to Use Public Goods: Exploiting Revealed Preferences to Estimate Environmental Benefits," Working Paper Series rwp03-013, Harvard University, John F. Kennedy School of Government.
    • Handle: RePEc:ecl:harjfk:rwp03-013
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    References listed on IDEAS

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    1. Douglas M. Larson, 1993. "Joint Recreation Choices and Implied Values of Time," Land Economics, University of Wisconsin Press, vol. 69(3), pages 270-286.
    2. Bockstael, Nancy E & McConnell, Kenneth E, 1983. "Welfare Measurement in the Household Production Framework," American Economic Review, American Economic Association, vol. 73(4), pages 806-814, September.
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    Cited by:

    1. Stavins, Robert N., 2004. "Environmental Economics," Discussion Papers 10841, Resources for the Future.
    2. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.

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    More about this item

    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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