Estimating the Value of Water Quality Improvements in a Recreational Demand Framework

With the advent of Executive Order 12291, policymakers involved in water quality regulation are increasingly interested in assessing the benefits of their programs. Several methods for valuing water quality improvements using recreational demand models have been developed by economists, most of which depend on observing recreationists visiting an array of sites with varying water quality and costs of access. In this paper, three general types of models are described: systems of demands, discrete choice models, and the hedonic travel cost approach; the latter two models are demonstrated using a common data set on water quality and swimming behavior in the Boston area. The models are contrasted and their relative usefulness in answering policy questions explored.

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