Valuing Complex Natural Resource Systems
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Valuing Complex Natural Resource Systems

The Case of the Lagoon of Venice

  • The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Anna Alberini, Paolo Rosato and Margherita Turvani

In complex natural resource systems, modifications or disruptions tend to affect many and diverse components of the ecological system, settlements and groups of people. This book uses the Lagoon of Venice – a unique natural resource, wildlife habitat, centre of cultural heritage and recreational site – as an example of one such system that has been heavily affected by human activities, including the harvesting of natural resources and industrial production. The contributors explore the Lagoon’s potential for regeneration, examining public policies currently under consideration. The aim of these policies is to restore island coastlines and marshes, fish stocks, habitat and environmental quality, defend morphology and landscape through the strict control of fishing practices, and to protect the islands from high tides.
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Chapter 2: Recreational Demand, Travel Cost Method and Flow Fixed Costs

Edi Defrancesco and Paolo Rosato

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08/05/2006 17.39 - Valuing Complex Natural Resource Systems – chap. 2 – p. 23 2. Recreational Demand, Travel Cost Method and Flow Fixed Costs Edi Defrancesco and Paolo Rosato 2.1 INTRODUCTION The Travel Cost Method (TCM) is one of the most frequently used approaches to estimating the use values of recreational sites. The TCM was initially suggested by Hotelling (1949) and subsequently developed by Clawson (1959) in order to estimate the benefits from recreation at natural sites. The method is based on the premise that the recreational benefits at a specific site can be derived from the demand function that relates observed users’ behaviour (i.e., the number of trips to the site) to the cost of a visit. One of the most important issues in the TCM is the choice of the costs to be taken into account. The literature usually suggests considering direct variable costs and the opportunity cost of time spent travelling to and at the site. However, some authors (Walsh, 1986, p. 275) have underscored the importance of studying the effect of fixed costs (equipment, license fees, and so on) on the long-run price elasticity of demand. The first aim of this chapter is to discuss the role played by a category of fixed costs that we term annual flow fixed costs, that is annual fixed expenses related to the recreational activity, on the consumer decision-making process under different time horizons. These considerations are important when, as is often the case, a recreational user incurs substantial fixed costs directly...

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