Environmental Economics

Short pants

Jim Roumasset comments on my Adam Smith picture:

Looks cold. Valentina Zharkova suggests that the cold summer in Great Britain may be a harbinger of her forecasted return of the (1645-1715) Maunder Minimum (low solar activity), a Granger cause of the Little Ice Age. Since Granger causation is not actual causation, we are left with solar physicist Phil Goode’s summary: "There are large poorly understood contributors to the Earth's temperature changes independent of greenhouse gasses."

I don't know if climate change is real or not. But if 90%+ scientists believe it is real then I feel like it is my job to do the appropriate sort of environmental economics (i.e., discuss incentive-based policy and suggest it should be implemented).

Plus, it was warmer later in the week. Here I am hiking up Salisbury Crags:

 

My Memorial Day weekend post (via RFF)

Margaret Walls:

As Memorial Day approaches and the National Park Service’s 100th anniversary draws near, I’ve been looking back at a pair of 2009 reports on America’s “great outdoors.” An RFF report that I coauthored reviewed the status of public lands, demand for outdoor recreation, and conservation funding trends. The study was in support of the Outdoor Resources Review Group, a 17-member bipartisan commission comprising conservation, public lands, and parks experts. US Senators Lamar Alexander (R-TN) and Jeff Bingaman (D-NM) were honorary co-chairs, and the commission was created by two long-time elder statesmen in the field, noted environmental lawyer Henry Diamond and Conservation Fund Chair Emeritus Patrick Noonan. The commission released its own report (published by RFF) with a set of recommendations, many of which formed the basis for President Obama’s America’s Great Outdoors initiative, launched in April 2010.

Although the two reports are now seven years old, many of the findings still resonate. Here’s a brief summary—some food for thought as we approach the summer outdoor recreation season. ...

What’s happened in the seven years since these reports were published? The recession, which was just hitting the US economy as the reports were completed, had a devastating effect on state and local government budgets. In many states, the first agencies to see cuts were parks and natural resources agencies. State parks saw huge budget cuts and many of them have not fully recovered. The same is true of the federal land management agencies. The National Park Service’s deferred maintenance backlog has ballooned to nearly $12 billion. The state conservation programs funded by dedicated revenue sources were hit hard and legislatures in many states diverted what money there was to other programs. Some of those programs are starting to recover but some of the diversions have remained in place. The LWCF [Land and Water Conservation Fund] Act came up for reauthorization in October 2015 and, after much debate, was renewed for only three years. While the LWCF maintains some bipartisan support in Congress, a minority group of conservative lawmakers wants to stop funding land acquisitions altogether and sell off federal lands to the states. These disputes continue, leaving the LWCF—and support for land conservation more broadly—in limbo.

All of this means we’re a long way from adopting the primary recommendation put forward by the Outdoor Resources Review Group in the commission’s report: Establishing a new, independent trust operating outside of the confines of the congressional appropriations process, with $3.2 billion of dedicated annual LWCF funding (an amount equal to the $900 million authorized in the 1970s adjusted for inflation) serving as base support.

Both of these reports stand the test of time. The RFF report and the numerous background studies that RFF researchers undertook or oversaw are a treasure trove of information about our country’s outdoor resources. If you’re interested in learning more, all of these publications can be found on the RFF project page.

via www.rff.org

More on user fees at national parks

Margaret Walls (emphasis added):

The parks have been blessed, and cursed, with an overwhelming number of visitors in recent years—a record 307 million in 2015. After many years in which visitation stayed relatively constant, many parks have seen increases of 20 to 25 percent over the past 10 years. ...

This growth in popularity has led to overcrowding, especially during the peak summer season. ... 

The Park Service is making some gentle suggestions to travelers to alleviate the problems. It is encouraging people to come to the parks during winter months or eschew the most popular parks and visit some of the lesser-known ones instead. It is also considering more Draconian long-term measures, such as daily limits on the number of visitors and establishing a reservation system for entry. 

But there is a more efficient approach that the Park Service should be seriously considering: changes in the pricing structure. ...

I’ve made the case before that caution should be exercised when employing user fees to finance public goods such as parks. But that’s because user fees ration use. When one person’s visit to a park doesn’t appreciably diminish the experience for others, the fee to use the park should be zero. That doesn’t apply when the public good starts to experience congestion problems, and that’s what’s happening in some of our national parks. Rather than just suggesting that people visit during the winter and go to alternative, less-popular sites, the Park Service should incentivize such behavior through a differentiated fee structure based on season and location. ...

Equity and accessibility are important issues, but an entrance fee is a tiny fraction of the overall cost of visiting a national park, most of which are located far from centers of population. For example, a family of four traveling from Chicago to the Grand Canyon is likely to incur costs of between $1,500 (driving) and $3,000 or more (flying) for a week’s vacation. The $30 entrance fee is a drop in the travel expense bucket. What’s more, the experience itself is diminished if it is spent jostling with crowds on trails and in restaurants and parking lots or if the overcrowding leads to degradation of the resource, which has happened in some parks.

Overcrowding is not the only problem the parks are facing that could be helped out by a shift in the fee structure. The parks are in dire need of a cash infusion. The Park Service’s deferred maintenance backlog sits at $12 billion and includes serious problems with critical water and sewer systems, roads and bridges, and visitor centers, lodges, and other buildings. ...

Figuring out an efficient and fair fee structure will not be easy. It requires detailed data on visitation, for starters, and analysis to shed light on price elasticities of demand for different groups of visitors at different locations. It may also require some experimentation. But to preserve our national parks for the next 100 years, it is necessary. 

via www.rff.org

My guess is that there would be much less resistance to an increase in user fees at National Parks if the fee structure is differentiated. Increase fees when demand is high and reduce them when demand is low. 

The Property and Environment Research Center is great and all but ...

Reed Watson:

Today’s myth: As taxpaying citizens, we should not pay to visit our national parks.

Fact: Our national parks are chronically underfunded and visitor fees provide critical, though currently insufficient, funding for park operations and maintenance.

We Americans fancy ourselves a nation of conservationists. We claim ecologically sensitive and culturally significant places are worth protecting for future generations. We celebrate the creation of the national park system as “America’s best idea.” Yet we oppose paying to maintain the national parks we claim to cherish so deeply.

Whether that opposition is rooted in the belief that public parks should be free or that, by paying our taxes, we have already paid our fair share, the result is the same: our national parks have become a crowded and crumbling mess.

As evidence, consider the National Park Service’s $12 billion deferred maintenance backlog. That is $12 billion in crumbling roads, leaking water systems, and dilapidated trails that should have been maintained or repaired, but weren’t because the Park Service lacked funding.

To put that number in perspective, consider that the Park Service’s annual budget is approximately $3 billion. With similar finances, a household with annual income of $100,000 would have $400,000 in unfunded home repairs. Yikes!

If protecting treasured places as national parks was America’s best idea, we have failed to make that idea a reality.

Visitor fees offer the National Park Service an opportunity to climb out of the deferred maintenance hole. Visitor fees align the incentives of park managers with the desires of park visitors for fun and safe experiences, and they provide park managers with a funding source not subject to whimsical congressional appropriations.

Currently, visitor fees make up less than 10 percent of the Park Service’s annual budget. This number is hardly surprising given how cheap most fees are: a seven-day pass into Yellowstone National Park is a paltry $30; day passes to the Cape Cod National Seashore are $3; and nearly two-thirds of all national park properties charge nothing at all.

Park managers, not Congress nor the Park Service, should be allowed to set visitor fees. Congestion pricing—charging more during the busiest seasons—would allow park managers to capture much needed revenue for deferred maintenance projects, while simultaneously addressing the congestion that sours so many visitor experiences. Moreover, technological innovations make recreational fee collection a breeze, while a voucher program would ensure visitation is not limited to the rich.

This week is National Park Week and today is tax day, but those taxes will not save our parks for the future. Sadly, the National Park Service is celebrating its centennial by offering “free” admission into every park. Park visitors should realize that their taxes are not paying the full cost of park maintenance.

On alternating Mondays, PERC’s executive director, Reed Watson, will bust a widely-held environmental myth using research by PERC scholars.

via www.perc.org

This is great stuff but, considering the last sentence, I'm not sure if PERC scholars discovered the efficiency of user fees ... or if user fees are a widely-held environmental myth. 

New working paper: "A Benefit-Cost Analysis of the Middle Fork Greenway Trail"

Recently posted at RePEc:

A Benefit-Cost Analysis of the Middle Fork Greenway Trail

John C. Whitehead, John Lehman and Melissa Weddell

No 16-01, Working Papers from Department of Economics, Appalachian State University

Abstract: The Town of Boone, NC Greenway Trail is a 3.84 mile long paved trail with additional unpaved sections that attract many types of users including walkers, joggers, and cyclists. The proposed Middle Fork New River extension would add 6.5 miles to the total paved mileage. In order to estimate recreation benefits of the extension we use revealed and stated preference data to estimate the change in value of current visits and change in visits with the additional mileage. The total opportunity cost of the project includes land acquisition, construction, operation and maintenance costs. Considering only recreation benefits the Middle Fork Greenway Trail passes a benefit-cost test. The net present value is estimated to be $2.78 million. This conclusion does not change after considering a number of partial sensitivity analyses.

The primary contribution of this paper is to illustrate how multiple stated preference questions can be used to augment a small sample of revealed preference data (without significant cost variation) to the extent that a demand curve can be estimated. This is one of the lesser known benefits of joint estimation of revealed and stated preference data. Also, it jumps through the hoops of a number of textbook steps in a benefit-cost analysis.

Field research

I hiked the Crabtree Falls loop with the (following Tim's nomenclature) youngest daughter of environmental economics (ydee) on Friday. The Falls were very crowded but if you actually do the 1.7 miles of the 2.5 mile loop (instead of heading back the way you came), you are all alone. My western NC waterfalls book actually suggests avoiding the loop (what?). The first video is Crabtree Falls and the second is a smaller waterfall ("lesser crabtree falls") that you miss if you go back the way you came.

"Albemarle–Pamlico Sounds revealed and stated preference data"

Is now available at the new journal Data in Brief (DIB):

Data Article

Albemarle–Pamlico Sounds revealed and stated preference data

John C. Whitehead

doi:10.1016/j.dib.2015.01.006

Under a Creative Commons license

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Abstract

In this article we describe the contingent valuation and behavior methods scenario developed in the 1995 Albemarle–Pamlico Sounds Survey. The survey elicits revealed and stated preference recreation behavior which are used to estimate the value of water quality improvements [4] and [8]. The survey elicits willingness to pay data which are used to conduct a split-sample scope test [7]. The data are used to jointly estimate revealed and stated preference recreation data and willingness to pay data [2] and [6]. The data has been, and can continue to be, used to investigate econometric specification [3], bid design and other nonmarket valuation issues. The data have been used as illustrations and examples in three books that develop nonmarket valuation methods [1], [5] and [9]. Data are supplied with this article.

via www.sciencedirect.com

These are the data that Haab, Huang and Whitehead, and others (since we like to share), used for several papers. It was online for years, I received an email inviting submission to DIB (an Elsevier, not a predatory, journal) and so I submitted it. It was reviewed, revised and accepted for publication. 

Here is a side note that only I may find interesting. Desvousges, Mathews and Train (2012) classified the scope effects paper that used these data as a "pass" (Whitehead, Haab and Huang 1998). In other words, it passed all scope tests that were published. That is true but we did our best to show that it didn't. Here is the working paper that we submitted to the Southern Economic Journal (Download submitted paper). It shows "mixed" evidence and we did a little meta-analysis on our own results to try to determine when the data passed the test and when it didn't. One referee thought the sensitivity analysis was "nonsense," the editor agreed and so we dropped it for the sake of publication (we also dropped the data appendix which is the raw material for the DIB article). In contrast, Whitehead and Cherry (2007) is classified as "mixed" because the sensitivity analysis was actually published. We could have chosen to try to publish only the best (or worst, I suppose) results, but that isn't very interesting (or honest). This illustrates that the pass, fail, mixed classification in Desvousges, Mathews and Train (2012) is a bit superficial and/or subject to a sort of publication bias. 

Whatever happened to user fees?

From The Hill's Overnight Energy and Environment email:

Sen. Lisa Murkowski (R-Alaska) and the rest of the Energy and Natural Resources Committee will get a chance Tuesday to challenge Interior Secretary Sally Jewell on her department's budget request for fiscal year 2016. 

Jewell will be the sole witness at the hearing on Interior's budget. The Obama administration is asking for $13.2 billion, an 8 percent hike from the current funding. It includes items like reducing the payments the states get for offshore drilling and new money for the National Park Service to prepare for its centennial next year.

Here is what PERC has to say about additional funding for the national parks:

Last year, America’s national parks received more visits than ever before, according to new data released by the National Park Service. A record-setting 292.8 million people visited national parks in 2014, breaking the earlier park attendance record set back in 1987.

But a lot has changed since 1987. Population has increased considerably, and so have the number of parks. So how do the new visitation numbers compare once we consider these other factors?

The chart above shows national park visitation as a share of the overall U.S. population. Since 1987, U.S. population has increased by approximately 75 million people. Measured on a per capita basis, national park visitation is about 20 percent less than it was in 1987. As a share of the population, park visitation has gradually declined almost ever since.

This decline is even more pronounced once we consider the growth of the National Park System. Since 1980, more than 70 national park units have been added to the National Park System. Yet these additional parks do not seem to be attracting more overall visits per capita.

As the National Park Service prepares to celebrate its centennial in 2016, there is much emphasis being placed on its ability to attract people to parks – especially millennials. Park visitors can play an important role in funding parks in their next century and helping to address the agency’s $12 billion maintenance backlog. But these data suggest that the National Park Service still has much work to do.

via perc.org

Raising user fees at popular parks would raise revenue and allocate scarce space those who are most willing (and able) to pay for park visits. To answer my own question above, the goal of equity got in the way. At some point, the National Park Service decided that everyone should get a chance to visit the most popular parks. Access is rationed by lottery and queuing. And then taxpayers are asked to fund the system.

Picture of the Day: Desert Clouds

The sun shines about 350 days a year in the Sonoran Desert.  What do you do when the clouds come?  You go above the clouds in San Jacinto State Park. 

Where I was this weekend

Highly recommended:

In North Carolina’s northwest corner, seven mountain and foothill counties share far more natural beauty and cultural treasures than anyone could ever explore in one lifetime.

You know the mountains are cool and lovely, and you know they’re out there – somewhere. But until you start looking, you can’t imagine what you’ll find. ...

21. Alleghany County

Doughton Park, Blue Ridge Parkway

The parkway can get busy on the weekends around Asheville, Boone and Blowing Rock, but many North Carolinians never make it as far north as 7,000-acre Doughton Park, where the mountain landscape opens up to reveal less forest and more rolling meadows. The North Carolina Birding Trail invites birders to hike with their binoculars, and it points to the special appeal of a spot called Mahogany Rock at the north end of Doughton near Milepost 234. It’s a great place to monitor the migrating streams of hawks, falcons, merlins, eagles and other birds of prey each fall. The National Park Service also has preserved, on its original location, the 1885 Brinegar Cabin that was home to a family of subsistence farmers. If you’re lucky, when you duck inside the cabin door, you’ll meet Jackie Sloop, an interpretive park ranger who grew up in nearby Caldwell County. As she spins wool to be woven with linen into a sturdy fabric called linsey-woolsey, Sloop talks of the challenges faced by Martin and Caroline Brinegar until the National Park Service acquired their cabin for the parkway in 1937. Doughton Park lost major amenities several years ago with the closing of the Bluffs Lodge hotel, a gift shop and restaurant. Luckily, there’s a good restaurant and motel about 3 miles away on N.C. 18 near Laurel Springs, just off the parkway. Freeborne’s Eatery and Lodge has a laid-back vibe that appeals equally to traveling bikers and local families out for Sunday dinner. 

via www.charlotteobserver.com

The cabin was awesome.