Water flowing in streams has value for various types
of recreationists and is essential for fish and wildlife. Since water demands
for offstream uses in the arid west have been steadily increasing, increasing
instream flows to enhance the recreational experience might be in conflict with
established withdrawals for uses such as agriculture, industries, and
households.
It is the intent of this study to contribute to an
economic assessment of the tradeoff between maintaining instream flow for river
recreation use and offstream uses; that is, to develop and apply a method to
measure costs and benefits of water used for recreation on a river.
Since market prices are not observable for instream
flows, the estimation economic value of instream flow would present well known
difficulties. The household production function theory was used to build the
theoretical model to measure economic value of instream flow.
It was assumed that recreationists were applying the
same technology to produce a recreational commodity and other commodities. In
order to estimate economic value of water used in the river, it was assumed that
individuals were combining goods, services, and time as input to produce
recreational services. Based on this procedure, empirical estimates of multisite
demands were derived. A representative sample of 500 recreationists at three
river sites were interviewed during the summer of 1982, to estimate empirical
demand equation for recreational activities. Moreover, the corresponding compensated variation of consumer, from alteration of
instream flow, were quantified.
To compute the cost of maintaining instream flow, a
general stochastic mathematical programming model was developed. Using a
mathematical programming model, three specific strategies for maintaining
instream flows under two conditions of water rights transferability were
compared. The first strategy was a deterministic model of expected instream
flow. The second is a minimum-flow strategy and the third is a critical flow
strategy. All three strategies are examined to decide the least cost in terms of
expected agricultural output foregone to maintain the desired level of expected
instream flow.
Policy implication are discussed with emphasis on
application of the information to water management decisions.
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