Preference Heterogeneity in a Count Data Model of Demand for Off-Highway Vehicle Recreation
Holmes, Thomas P., Englin, Jeffrey E., Agricultural and Resource Economics Review
This paper examines heterogeneity in the preferences for OHV recreation by applying the random parameters Poisson model to a data set of off-highway vehicle (OHV) users at four National Forest sites in North Carolina. The analysis develops estimates of individual consumer surplus and finds that estimates are systematically affected by the random parameter specification. There is also substantial evidence that accounting for individual heterogeneity improves the statistical fit of the models and provides a more informative description of OHV riders.
Key Words: consumer surplus, off-highway vehicles, outdoor recreation, Poisson model, random parameters
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The demand for off-highway vehicle (OHV) use on public land is not new-motorcycles have been used off-road for nearly a century (Havlick 2002).1 However, the growth in popularity of OHV use is primarily due to the introduction of all-terrain vehicles (ATVs), which began gaining popularity after being introduced in 1983, and ATV riding has become one of the fastest growing outdoor recreation activities in the country.2 Between 1982 and 2001, OHV use increased by more than 100 percent, and by 2004 roughly 24 percent of people 16 years old and older (more than 50 million people) reported that they participated in OHV recreation (Cordell et al. 2005).
The rapid growth in the use of OHVs suggests that substantial economic benefits are generated by OHV recreation. Between 1993 and 2003, the number of OHVs in the United States grew from less than 3 million vehicles to over 8 million vehicles (Cordell et al. 2005). Although national data on expenditures related to OHV use are not generally available, a recent study in Wyoming showed that OHV visitors to that state each spent more than $900 on their most recent trip for travel-related expenses, providing substantial revenues for service providers (Foulke et al. 2008). Another study, undertaken in Utah (Jakus, Keith, and Liu 2008), found that although OHVrelated expenditures are a small part of regional economies-never exceeding about 1.5 percent of employment, income, or value added-a significant number of jobs and millions of dollars of output can be added to rural economies from OHV recreation.
A second measure of the economic benefits of OHV recreation is the net economic benefit received by participants in this recreational activity. The net economic benefit of recreation can be measured by consumer surplus, which is the difference between the total economic benefits received by participants and their costs associated with participating in an activity.Afew studies have been conducted to evaluate consumer surplus associated with OHV recreation, using the travel cost method. Bergstrom and Cordell (1991) reported a daily consumer surplus value of $15.06 per person based on a national zonal travel cost model (roughly $21.60 in 2005 dollars). Bowker, Miles, and Randall (1997) estimated consumer surplus to range between $12 and $66 for a feebased recreation area in Florida ($14.60 to $80.32 in 2005 dollars). Loomis (2006) estimated a consumer surplus value of $29 for the Little Snake River Resource Area in Colorado. Englin, Holmes, and Niell (2006) estimated a demand system for four OHV sites in North Carolina. Their estimates of consumer surplus varied widely depending upon the recreation site, the functional form of demand functions, and the restrictions placed on the demand system. For example, consumer surplus varied from $25.51 to $131.58 across sites in the best-fitting demand system. It should be recognized that no effort was made in Englin, Holmes, and Niell (2006) to control for single day/single purpose trips, so the reported values may not be directly comparable to other studies.
Consumer surplus can also be estimated by willingness to pay in contingent valuation (CV) studies. Using a CV study of OHV users in Arizona, Silberman andAndereck (2006) reported a consumer surplus value of $54 to $96 per trip. …