Diving Demand and Economic Impact for Public Resources Bill Huth and Ash Morgan University of West Florida and Appalachian State University Jackson Blue Spring Basin Working Group, Marianna, FL 2010

JB, Blue Spring Park, and the Mill Pond

Economics 101 Public Good (vs. Private Good): A good that is non-rivaled and non-excludable. Your consumption doesn’t reduce mine and we can consume it at will, nothing in place to prevent consumption. (eg. national defense, a navigable water way, a public park, a lighthouse, a natural or artificial reef, etc.). Markets fail here. Public Good (vs. Private Good): A good that is non-rivaled and non-excludable. Your consumption doesn’t reduce mine and we can consume it at will, nothing in place to prevent consumption. (eg. national defense, a navigable water way, a public park, a lighthouse, a natural or artificial reef, etc.). Markets fail here. Common Property Resource: A good that is not private but has issues with respect to either rivalry or excludability (quasi public goods). Still market failure.

Economics 102 Consumer Surplus: The benefit to consumers from paying a price less than what they were willing to pay (also termed consumer value). It is rare that anyone pays their WTP. This is what we measure here…the difference between what you were WTP and what you actually pay. Consumer Surplus: The benefit to consumers from paying a price less than what they were willing to pay (also termed consumer value). It is rare that anyone pays their WTP. This is what we measure here…the difference between what you were WTP and what you actually pay. Example: Someone (a seller) is asking $200k for a house, you (a buyer)are willing to pay $175k but offer $150k and the seller accepts your offer, you get a $25k Consumer Surplus. Example: Someone (a seller) is asking $200k for a house, you (a buyer)are willing to pay $175k but offer $150k and the seller accepts your offer, you get a $25k Consumer Surplus.

Another Example $300 surplus if you by today assuming you were willing to pay $1295

Economic Impact Direct impact is the expenditure injection. Direct impact is the expenditure injection. Indirect and induced impacts are multiples of the initial expenditure. Indirect and induced impacts are multiples of the initial expenditure. Total impact is the sum of direct, indirect, and induced. Total impact is the sum of direct, indirect, and induced. Models used to measure economic impact: Models used to measure economic impact: Implan Implan RIMS (U.S. BEA) RIMS (U.S. BEA) REMI REMI

Florida Springs Florida has one of the largest concentrations of fresh water springs on the planet Florida has one of the largest concentrations of fresh water springs on the planet Over 700 known natural springs Over 700 known natural springs 33 First Magnitude Springs (>100 cu. ft. per s.) 33 First Magnitude Springs (>100 cu. ft. per s.) Jackson County Blue Spring Park Jackson County Blue Spring Park

JB Spring Vent

Jackson Blue Survey Map

GA Blind Cave Salamander (Haideotriton wallacei)

Motivating Literature Bonn, M. and Bell F. (2003). Economic Impact of Selected Florida Springs on Surrounding Local Areas. Florida Department of Environmental Protection, Springs Initiative Task Force. ($17m annual Visitor Spending for a “typical spring.”) Bonn, M. and Bell F. (2003). Economic Impact of Selected Florida Springs on Surrounding Local Areas. Florida Department of Environmental Protection, Springs Initiative Task Force. ($17m annual Visitor Spending for a “typical spring.”) Morgan, A.O., Massey, M., and Huth, W.L. (2009). Demand for Diving on Large Ship Artificial Reefs. Marine Resource Economics. (Travel cost model to measure the diving demand for the USS Oriskany sunk off Pensacola in 2007) Morgan, A.O., Massey, M., and Huth, W.L. (2009). Demand for Diving on Large Ship Artificial Reefs. Marine Resource Economics. (Travel cost model to measure the diving demand for the USS Oriskany sunk off Pensacola in 2007) Morgan, A. O., and Huth, W.L. (Forthcoming). Using Revealed and Stated Preference Data to Estimate the Scope and Access Benefits Associated with Cave Diving. Resource and Energy Economics. (Jackson Blue Spring) Morgan, A. O., and Huth, W.L. (Forthcoming). Using Revealed and Stated Preference Data to Estimate the Scope and Access Benefits Associated with Cave Diving. Resource and Energy Economics. (Jackson Blue Spring) Huth, W.L., and Morgan, A.O. (Under Review). Measuring the Willingness to Pay for Fresh Water Cave Diving. Journal of Environmental Management. (Wakulla Spring) Huth, W.L., and Morgan, A.O. (Under Review). Measuring the Willingness to Pay for Fresh Water Cave Diving. Journal of Environmental Management. (Wakulla Spring)

Research Objectives Estimate diving demand and, where possible, economic impact for Florida springs Measure value to divers from new cave dive sites and improving access to existing sites Bundling public goods impact on value Measure demand and willingness to pay for diving related public goods Provide state park policy information Measure scope effects associated with public good demand

Delicate Formations

Swimming Through Them

Survey Design Traditional mail survey using information from the Jackson County Sheriff’s Office cave diver registration forms (500+) Traditional mail survey using information from the Jackson County Sheriff’s Office cave diver registration forms (500+) Asked both revealed (past) and stated (future) preference diving behavior questions Asked both revealed (past) and stated (future) preference diving behavior questions Asked diver expenditure questions for economic impact measurement Asked diver expenditure questions for economic impact measurement Above items were pilot tested at the 2008 NSS/CDS workshop that was held in Marianna Above items were pilot tested at the 2008 NSS/CDS workshop that was held in Marianna

Thank you for taking part in the survey. There are a total of 32 questions in two parts. It should take no more than 15 minutes to complete the entire survey. Please enter your answers in the spaces provided and return the survey in the enclosed postage paid envelope. Thanks again and results will be shared. Part 1: Merritt’s Mill Pond Survey Please answer each of the following questions. The questions are designed to derive an understanding of the socio-economic background of visitors that travel to the area to dive at Merritt’s Mill Pond, and to gather information regarding the length of trip and all related expenditures incurred. All answers are strictly confidential and the accuracy of the study depends upon your answering all the questions. No questions will be asked regarding your identity and no personal information will be shared. Background Information Q.1.In what year were you born? ANSWER_____________________________ Q.2. What is the zip code of your primary residence? ANSWER_____________________________ Survey Text Excerpts

Merritt’s Mill Pond-specific Diving-related Questions Q.13. How many day trips have you taken to dive at Merritt’s Mill Pond over the past 12 months? Q.13. How many day trips have you taken to dive at Merritt’s Mill Pond over the past 12 months? Q.14 How many overnight trips have you taken to dive at Merritt’s Mill Pond over the past 12 months? Q.14 How many overnight trips have you taken to dive at Merritt’s Mill Pond over the past 12 months? Q.26. What was your approximate diving-related spending during your most recent stay in the area for each of the following categories? Q.26. What was your approximate diving-related spending during your most recent stay in the area for each of the following categories?

Diver plus Kit

Finally, we would liken you to think about two different hypothetical scenarios. Q.29. Suppose there was another newly discovered cave near Jackson Blue that was roughly the same size as Jackson Blue. Based on the number of trips you stated you would take in Q.28, would the number of trips you expect to take to dive at Marianna in the next 12 months change? Please circle one.YesNo If yes, how many more trips would you take over the next year to dive at Marianna? ANSWER_____

Q.30. Suppose the hypothetical scenario posed in Q.29. didn’t happen, but instead it was possible to access Twin cave from the shore, based on the number of trips you stated you would take in Q.28, would the number of trips you expect to take to dive at Marianna in the next 12 months change? Please circle one. YesNo If yes, how many more trips would you take over the next year to dive at Marianna? Answer_______ Answer_______

The Travel Cost Model (TCM) X tc X B A X0X0 tc X 0 ‘choke price’ A = CS: $1.4m B = CE $? B*Multiplier=EI $? Demand = WTP Trips Travel Cost

Travel Cost Number of Trips Depends on: Travel Cost Number of Trips Depends on: Travel cost = monetary plus opportunity costs Travel cost = monetary plus opportunity costs Equipment-intensive recreational activity Equipment-intensive recreational activity Costs Included: Costs Included: Access fees Access fees Breathing gas Breathing gas Equipment rental Equipment rental Other diving opportunities (Substitue, ie. GSO) Other diving opportunities (Substitue, ie. GSO)

Estimation Information Travel Cost: A Stacked model Travel Cost: A Stacked model Negative binomial Negative binomial Test for hypothetical bias Test for hypothetical bias Isolate impact of second system and improved access on trips Isolate impact of second system and improved access on trips Consumer surplus implications Consumer surplus implications Contingent Valuation via a standard logit model with mle Contingent Valuation via a standard logit model with mle

Estimation TCM Estimation: two-stage analysis TCM Estimation: two-stage analysis Revealed preference Revealed preference Ask respondents about actual trips taken Ask respondents about actual trips taken Stated preference Stated preference Ask respondents about expected trips in next dive season Ask respondents about expected trips in next dive season Plus with the addition of another cave system Plus with the addition of another cave system Plus with the addition of land access to Twin Cave Plus with the addition of land access to Twin Cave WTP Contingent Valuation Estimation WTP Contingent Valuation Estimation

TCM Survey Descriptive Statistics n=186 Variable Mean Std. Dev Actual trips (08-09) Expected trips (09-10) Exp. trips new cave/twin 9.15 / /10.59 Travel cost (JB) $647 $614 Age (years) Income $99,590 $43,260 Travel cost (Substitute) $668 $626 Male (dummy) 0.87

Jackson Blue TCM Negative Binomial MLE/TCM Estimation VariableCoefficientp-value Constant TC_JB TC_Sub Age Male Income SP_dummy NewCave Twin

JB Consumer Surplus Estimates Without New Cave Without New Cave With New Cave With Twin Access Predicted Trips Avg. Annual Value per Diver $1, Total Annual Value* $1,401,650$1,557,760$1,470,540 * Based on 1,000 cave divers

Thank You, Questions?