A Simulation Approach to Comparing Multiple Site Recreation Demand Models Using Chesapeake Bay Survey Data

Abstract

To value water quality improvements in the Chesapeake Bay or elsewhere, it is necessary to choose an appropriate model of consumer behavior. A number of different travel cost based recreation demand models have been employed to value changes in water quality or beach access. Among the possible models to choose from are the typical trip model, the pooled observations approach, a varying parameter model, and a logit model. Each approach makes different assumptions about the structure of individual preferences and the choice process underlying individual decisions. The purpose of this paper is to implement a methodology that can be used to suggest a model (or models) appropriate for valuing quality improvements in the Chesapeake Bay. To compare these approaches, a series of outdoor recreation user populations is constructed by choosing a utility function, its parameter values and an error distribution. This information is combined with the characteristics of individuals and recreation sites from a Chesapeake Bay recreation demand survey to solve the individuals maximization problem. Each of the models is estimated using these data, and the compensating variation of a quality change is calculated. Benefit estimates are compared with simulated welfare change to evaluate the models.