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Rural Economy Project Report RURAL ECONOMY A Random Utility Analysis of Southern Alberta Sportfishing T. Peters, W.L. Adamowicz and P.C. Boxall Project Report 95-02 PROJECT REPORT Department of Rural Economy Faculty of Agriculture, Forestry, And Home Economics A Random Utility Analysis of Southern Alberta Sportfishing T. Peters, W.L. Adamowicz, and P.C. Boxall Project Report 95-02 The authors are: Research Assistant, Department of Rural Economy, University of Alberta, Associate Professor, Department of Rural Economy, University of Alberta, and Non-timber Valuation Economist, Canadian Forest Service, Edmonton. ACKNOWLEDGEMENTS We thank Frank Bishop and Della Clish of the Alberta Fish and Wildlife Division for important suggestions concerning sportfishing in southern Alberta and technical assistance. We also welcome the interest of Trout Unlimited in supporting the study. We gratefully acknowledge the Alberta Fish and Wildlife Division and the Fisheries Enhancement Fund for funding this project. PREFACE This is the third report resulting from the study: "A Socioeconomic Evaluation of Sportsfishing Activity in Southern Alberta." The first report dealt with general results from the survey, while the second focused specifically on the impacts of the Oldman River Dam on recreational fishing in the Crowsnest area. This, the third report, examines the economics of fishing in a more regional framework, and investigates a number of behavioural assumptions in deriving non-market values associated with fishing in the area. A number of resource management scenarios are examined in this study. These were chosen with no particular knowledge of actual or contemplated management actions. However, the treatment of these scenarios illustrate how a vast number of management alternatives which result in changes in environmental or recreation quality could be examined in an economic context. Readers interested in this study should see the other two reports: Adamowicz, W.L., P.C. Boxall, D. Watson, and T. Peters. 1992. A socio-economic evaluation of sportsfishing activity in southern Alberta. Project Report 92-01; and Watson, D., W.L. Adamowicz, and P.C. Boxall. 1993. An economic analysis of recreational fishing and environmental quality chnages in the Upper Oldman River Basin. Project Report 93-01. available from the Department of Rural Economy, University of Alberta, Edmonton, Alberta, Canada. TABLE OF CONTENTS SECTION 1 - INTRODUCTION .......................................................... - 1 - 1.1 Introduction ....................................................................... - 1 - 1.2 Southern Alberta Sportfishing Study ................................................... - 2 - 1.3 Objectives and Goals of the Research Project ........................................... - 3 - SECTION 2 - THEORETICAL FRAMEWORK ............................................... - 5 - 2.1 Benefit-Cost Analysis ............................................................... - 5 - 2.2 Non-Market Goods ................................................................. - 7 - 2.3 Non-Market Valuation Techniques ..................................................... - 7 - 2.4 The Travel Cost Model .............................................................. - 9 - 2.5 Random Utility Models ............................................................. - 10 - 2.6 Welfare Analysis .................................................................. - 11 - 2.7 Environmental Quality .............................................................. - 12 - 2.8 RUM Welfare Estimation ............................................................ - 13 - 2.9 Summary ........................................................................ - 14 - SECTION 3 - THE DATA .............................................................. - 16 - 3.1 Southern Alberta Sportfishing Survey ................................................. - 16 - 3.2 Awareness of Recreational Fishing Sites in Southern Alberta .............................. - 17 - 3.3 Quality Data ...................................................................... - 19 - 3.4 Distance Data .................................................................... - 21 - 3.5 Summary ........................................................................ - 21 - SECTION 4 - RESULTS AND MODEL ESTIMATION ........................................ - 22 - 4.1 Attitudes and Opinions about Fishing ................................................. - 22 - 4.2 A Digression on Awareness ......................................................... - 22 - 4.3 Southern Alberta Sportfishing Models ................................................. - 24 - 4.4 The Basic Random Utility Model ..................................................... - 26 - 4.5 A Modification of the Standard RUM .................................................. - 27 - 4.6 Awareness Model ................................................................. - 28 - 4.7 Model Comparisons ............................................................... - 29 - SECTION 5 - WELFARE ESTIMATES .................................................... - 31 - 5.1 Introduction ...................................................................... - 31 - 5.2 Some Potential Policy Proposals ..................................................... - 32 - 5.3 Per-Trip Welfare Measures ......................................................... - 35 - 5.4 Aware Welfare Estimates ........................................................... - 36 - 5.5 Aggregate Welfare Measures ........................................................ - 38 - 5.6 An Application: The Oldman Dam .................................................... - 39 - 5.7 Summary ........................................................................ - 40 - SECTION 6 - CONCLUSIONS .......................................................... - 41 - 6.1 The Research Objective ............................................................ - 41 - 6.2 Limitations ....................................................................... - 41 - 6.3 Future Research .................................................................. - 43 - BIBLIOGRAPHY ..................................................................... - 46 - APPENDIX A ........................................................................ - 48 - APPENDIX B ........................................................................ - 49 - APPENDIX C ........................................................................ - 51 - APPENDIX D ........................................................................ - 52 - APPENDIX E ........................................................................ - 53 - LIST OF TABLES Table 3-1: Southern Alberta Sportfishing Survey Response Rates ............................ - 16 - Table 3-2: Quality Attributes used in Models ............................................... - 20 - Table 4-1: OLS Regression to Estimate Awareness ........................................ - 23 - Table 4-2: Random Utility Models ....................................................... - 25 - Table 5-1: Habitat Impacts of the Oldman River Dam ....................................... - 33 - Table 5-2: Per-trip Welfare Estimates .................................................... - 34 - Table 5-3: Annual Aggregate Welfare Estimates ........................................... - 38 - LIST OF FIGURES Figure 3-1: Map of SitesUsed in the Fishing Survey ........................................ - 18 - SECTION 1 - INTRODUCTION 1.1 Introduction Sportfishing in Alberta is a major recreational activity. In 1985, anglers fished a total of approximately 5.4 million days and spent approximately $132.5 million on activities and supplies directly connected with this sport (Alberta Forestry, Lands, and Wildlife (AFL&W), 1988). The economic benefits of this activity include the benefits derived from the consumption of an environmental good. Every five years, a national survey on sportfishing is conducted. However, the results of this survey do not adequately address issues of growing economic concern. The survey results identify general environmental quality as the most important factor influencing the enjoyment of recreational sportfishing, however, a detailed economic analysis of the influence of objective environmental quality attributes on angler behaviour is not performed. Furthermore, information about trips taken to specific sites is not collected, and the welfare impacts of environmental policies affecting these sites, and the corresponding changes in angler behaviour, are not explored. A regional economic analysis of sportfishing activity incorporating the deficiencies noted above will supplement the general socio-economic results of the national survey and aid policy makers and resource managers in identifying and implementing effective environmental policy in the future. There are several approaches to address the issues noted above (Clawson and Knetsch 1966, Freeman 1979, McConnell 1985, Madalla 1983). This project report will endeavour to meet the aforementioned deficiencies within the constructs of the random utility model (RUM) where each fishing site will be modelled as a bundle of quality attributes. The underlying assumption with this approach is that an angler will choose one site, i, over another, j, only if the utility or satisfaction associated with site i is higher than that associated with site j. RUM analysis allows researchers to model site-choice behaviour among a choice set of sites as well as extending
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