I'm currently suffering the ill effects of a visit to Dale Hollow Lake on the Kentucky/Tennessee border this past weekend with two college buddies. We rented a cabin ("Pie in the Sky") for two nights and a boat from East Port Marina at the southern tip of the lake for two days. We spent about $600 and caught six fish. A simplistic way of valuing those fish is to divide $600 by 6, but that would be wrong.
Counting spending as economic value is what is done in economic impact analysis. While $600 is a nice addition to the local economy, that money would be spent somewhere else if 3 college buddies don't go fishing. If I had stayed home last weekend I could have spent the money on a nice dinner and a show one night and ... er, a nice dinner and show the next. By going away I hurt my own local economy. Spending and the resulting economic impacts are simply transfers from one region to another and not reflective of location-specific economic benefits.
The value of those 6 fish is the consumer surplus they generate, the value over and above the money spent to get there. In 14 hours of fishing I caught one little bluegill (picture above right). If someone would have asked me how much (a) further I would be willing to ride in the boat and (b) more I'd be willing to pay in extra gas costs to find a nice fishing hole in order to catch one nice sized bass (largemouth, smallmouth or white), considering my budget constraints and substitutes,I'd have said about $42. The $42 is the value of the additional fish.
