Measuring Environmental Benefit of a Recreation Site: An Economic Estimate of Sodere Recration Area
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Date
1998-05
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A.A.U
Abstract
In this study, an attempt was made to attach quantitative estimates to the on-site recreational
benefit of Soldered Recreation area so as to demonstrate how the respective authorities can
extract revenue out of the excess benefits to improve qualities and expand the types and
varieties of their services. Furthermore, welfare effects of two of the major drawbacks of
recreational qualities on the site were estimated. In doing so, the study applied two standard
procedures in Environmental Economics, i.e. Travel cost and contingent Valuation methods,
using primary data collected from a survey of 232 visitors at Sodere Recreation Area.
The Travel Cost Method used the amount of money and time people spend getting to the site
to derive the demand function for the site, which in turn was used to calculate recreational
benefits associated with the site. On the other hand, the contingent Valuation method used
hypothetical elicitation techniques to evaluate people's Willingness-to-Pay (WTP) in
exchange for access to an improved recreational qualities, which in turn was used to estimate
the welfare effects of the existing problems on the site.
Like other similar studies, travel costs, visitor's income, mode of transport, and experience on
other substitute sites were identified as major determinants of visits to the site. On the other
hand, visitor's income, visitor's attitude towards the problems, and visitor's position and
responsibility in the household were found to be important determinants of the WTP
responses.
Using Maximum Likelihood estimators of truncated models, the annual on-site recreational
benefit of the site was estimated to be Birr 9,824,094.80 (US $1,403,442.10) per year, in
which the site authorities collect only 9 percent of this sum, i. e. an average of Birr 856,680
(US $122,382) per year, from gate fees. This shows that much can be done to generate
revenue for the support of quality improvement and expansion projects at the site. On the
other hand, using the same models, the welfare effects of congestion and malaria problems
were valued as Birr 1.37 (US $0.20) and Birr 4. 39(US $0.63) per visit respectively, showing
the relative depth and seriousness 'of malaria problems on the site.
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Keywords
Economic estimate, Measuring environmental benefit, Sodere Recration Area