Economic Impacts of Parks, Rivers, Trails and Greenways

3.7 Benefit EstimationParks, rivers, trails, and greenways provide many benefits which do not have establishedmarket values and are difficult to price and express in monetary terms. This sectionintroduces techniques of economic analysis which attempt to quantify these non-marketvalues to ensure a more complete measure of total benefits associated with rivers, trails, andgreenways.The first subsections present methods used to estimate the benefits of recreation. Alsoincluded, is a discussion of how people may value park, river, trail, and greenwayresources, even when they may not visit these areas. Benefit cost analysis is also introducedas an economic technique which may be helpful for some river and greenway projects.3.7.1 Introduction to Benefit EstimationTotal recreation benefits are defined as the sum of the maximum amount individuals arewilling to pay to engage in a recreation activity, rather than forego it (Loomis, 1997). Thisconcept is referred to as willingness-to-pay and is considered an appropriate economicmeasure of the benefits of outdoor recreation. As we will show, these economic benefits aredistinct from monetary expenditures on recreation.The standard method of illustrating this concept is shown in Figure 7. The downwardslopingline represents the market demand curve (for total visits to a park, outings on a trail,canoe trips, etc.). The curve illustrates that, theoretically, the lower the cost of an activity,the more likely it is that people will engage in that activity. At a $2 fee, the park willreceive 1000 visits. In this simplified example, the market value of the park is the annualnumber of visitors times the fee, or $2000, shown by the shaded rectangle APCB. For somepeople, the $2 fee is the maximum they would be willing to pay to visit the park. Theywould choose other activities if the fee were raised.Many people, however, would be willing to pay more than the $2 fee. Therefore, theseconsumers would be receiving extra benefits for which they don’t pay. This concept isreferred to as consumer surplus, as shown by the triangle DPC in Figure 7. The totalbenefits associated with the park are illustrated by the entire shaded area. If no fee werecharged, visitation would be expected to increase to E and total benefit would be the entirearea under the curve.117