The direct and indirect estimation of recreational benefits for Reelfoot Lake

The sedimentation and nonpoint source pollution of Reelfoot Lake has been a problem of major concern for Tennessee and federal agencies for the last decade. In fact, an application for a Rural Clean Water Program grant (RCWP) was submitted to the Soil Conservation Service, United States Department of Agriculture in July, 1979. The major objective of the RCWP was to effectively manage erosion and improve the water quality of Reelfoot Lake. To effectively manage such a resource, policymakers must have reliable estimates of the value of that resource. However, values for such a resource are not directly observable in the marketplace. The primary objective of this study was to use the travel cost method, a nonmarket valuation technique, to generate estimates of the value of the recreational experience for visitors to Reelfoot Lake. A maximum likelihood estimation procedure was used to generate a demand function for recreation and, subsequently, consumer surplus estimates. Results from the model indicate that travel cost, travel time, income and education are significant predictors of visitation at Reelfoot Lake. A variable was also included to capture the effect substitute sites have on visitation at Reelfoot Lake. This variable was not statistically significant. A secondary objective of this study was to use the contingent valuation method, another nonmarket valuation technique, to estimate the economic value of recreational experiences at Reelfoot Lake. A tobit procedure for a censored sample was used to estimate the contingent valuation model. The significant variables in this model were annual number of visits and income. Variables reflecting substitute sites and education were not statistically significant. Finally, an illustration of how the consumer surplus estimates from the travel cost model could be used was suggested. This illustra-tion involved comparison of the recreational benefits potentially lost due to soil erosion with the costs for erosion control in the drainage area surrounding the lake.