MEASURING MARINE RECREATION BENEFITS OF WATER-QUALITY IMPROVEMENTS BY THE NESTED RANDOM UTILITY MODEL

This paper discusses and evaluates three issues to which the analyst has not paid much attention when describing recreational site choices and implementing the nested random utility model (RUM) for recreation benefit measurement: (1) the effects of party composition on recreational decisions; (2) the implications of estimating a nested RUM on the functional structure of the underlying indirect utility function; and (3) the variation in benefit estimates across quality improvement scenarios. A three-level nested RUM is estimated and the benefits of water quality improvements are measured for marine recreational fishing in the Albemarle-Pamlico Estuary of North Carolina.