Personal Benefits - Use Values for Gros Morne National Park

Gros Morne National Park falls under a federal-provincial agreement restricting the types of development activities allowed within its boundaries. These uses, managed by the park staff, consist of recreation, tourism services, and some hunting and gathering activities. In general, individuals demonstrate their willingness to pay for the recreational services at Gros Morne National Park by the expenses that were incurred visiting the park. For a visitor to Gros Morne National Park this would include the cost of travel to the site and entrance or other relevant fees. Since these expenditures are discretionary, it reveals that the individual, in his or her own assessment, expects to receive benefits that are at least as large as the associated expenses. However, someone who will never visit Gros Morne National Park but derives benefits from knowing that it is a World Heritage Site has no obvious way of revealing his or her willingness to pay to maintain the park. In addition, to get a true measure of the personal use benefits, consumer surplus must be included. These surplus

values cal-mot be observed directly through any one individual's action but can be inferred by considering the information revealed by the travel costs associated with ail individuals or through contingent-valuation/stated-preference surveys.

5.1.1 Direct Use Values

Direct consumptive use is allowed through the limited harvest of timber and snaring snowshoe hares on designated blocks of land, as well as fishing. In 1996, 198 permits were issued for timber cutting which resulted in a total of 529 cords of wood being harvested.' This had a per annum value of approximately $40,000.19 To date, there are no available statistics on the number of hares and fishes caught; however, this statistical deficiency is expected to be remedied by park staff These direct use activities may conflict with other uses and passive uses of the park. If there are tradeoffs required between competing uses, the inclusion of timber harvest as an opportunity cost is warranted if the alternative use is permitted in lieu of the timber harvest.2° If there is no conflict, then the harvesting activities permitted within the park will provide personal benefits. Caution must be taken in the contemporaneous inclusion of conflicting use and passive use values as benefits. As such, it is not appropriate to look at one category of benefits without putting it into context with the overall benefits of the park.

Direct non-consumptive uses include recreational opportunities and tourism services that

18 Both the level of harvest and the number of permits issues in 1996 was clown significantly from previous years. For example, an average of 348.6 permits per annum were issued from 1991 to 1995 with an associated harvest of 1,476.2 cords per annum.

19 This estimate is based on a value of $75 per cord of wood from commercial sales in Newfoundland. The $75 per cord estimate was provided by officiais of provincial forestry.

20 On the other hand, if timber harvest is permitted, then the foregone benefits associated with these competing uses will represent an opportunity cost to the timber harvest that ought to be considered in calculating the net benefits of the timber harvest.

abound in Gros Morne National Park. The park is open year-round and offers activities such as hiking, boating, cross-country skiing, kayaking and swimming. Tourism services include campground, and boat and road tours. Here there will be potential overlap and double counting if each recreational use was evaluated independently for inclusion in the personal benefits category.

As an illustration, suppose that a head count of individuals participating in each activity was taken.

Further suppose that the benefit transfer approach' was employed to estimate the benefits of each activity. In this situation, an overestimation of the true benefits occurs to the extent that some individuals were involved in multi-purpose trips. Also, benefit transfer may lead to over- or under-estimates of the true benefits if the original survey of users is not representative of the users of the site which is currently under study. To determine the indirect personal use benefits of Gros Morne National Park, a combination of revealed- and stated-preference surveys would provide the most complete and accurate information. An example of estimating the indirect use benefits for individuals is the recent contingent-valuation study perfouned for wilderness canoeing experiences in Ontario.'

5.1.2 Indirect Use Values

As explained above, these indirect use values involve benefits derived from activities or deliberations that occur away from the park. This would include the pleasure that people receive from looking at art and photography featuring aspects of Gros Morne National Park. It would also encompass benefits derived from reading about the park or watching television shows or movies that feature key components of the park.

21 Benefit transfer refers to the use of similar studies (ie., using estimates of consumer surplus from hiking in another national park) to provide an estimation of the monetary value of the item under consideration in the current study.

22 It was determined that the mean willingness to pay per person per trip was $66.40 in 1993 (Rollins et al. 1995).

By their very nature, it is extremely difficult to obtain information on the extent of these types of activities. Moreover, the problem of defining these benefits in dollar equivalents is even more difficult. On technique that might prove useful in this regard is contingent-valuation/stated preference surveys of a represented sample of Canadian households. In carrying out these surveys one would have to be very careful to distinguish between these indirect benefits and the option and existence values discussed below.

5.1.3 Future Use Values

As a starting point, it seems reasonable to assume that the current use values found for Gros Morne National Park are representative of the benefits that future generations will receive from the continued existence of the protected area. Of course, these monetary estimates will have to be adjusted for the time value of money and population changes to make them comparable to the benefits and costs occurring at the present time. To determine the present value of benefits received at future points in time, a social discount rate is required. The social discount rate represents society's rate of time preference and is required to compare future benefits to current benefits. While there is no consensus on a single social discount rate, Burgess (1981) and Jenkins (1981) offer suggestions on estimating such a value for Canada. Their work indicates that a real discount rate between 7% and 10% may be appropriate for Canada.

5.1.4 Option Values

The benefit to Canadians of preserving the option of potential future visits to Gros Morne National Park can be determined through contingent-valuation/stated-preference surveys of a representative sample of Canadian households. Stephens et al. (1991) found passive use values through stated preference surveys for several different species of wildlife, including Bald Eagles, Wild Turkeys and Atlantic Aalmon. They demonstrated that option value tends to be a small portion

of the passive use value.23

5.1.5 Existence Values

The benefits to Canadians of knowing that Gros Morne National Park is a protected area and a World Heritage Site can also be determined using contingent-valuation/stated-preference surveys.

Stephens et al. (1991) found substantial existence value for different species of wildlife. Using stated preference surveys, the annual mean willingness to pay per person in 1991 was $22.28, $13.70 and $9.16 for the Bald Eagle, Wild Turkey and Atlantic Salmon respectively.24 An example of existence value estimation is provided by Condon and Adamowicz (1995) for the Newfoundland Pine Marten. The annual mean willingness-to-pay per person in 1991 was $28.38 which compares favourably with other willingness to pay estimates (Condon and Adamowicz 1995:7). After adjusting for inflation and extending to the population of Canada over 20 years of age, the benefits in 1996 of the Fine Marten were $673,447,680.25 This may overestimate or underestimate the benefits to Canada to the extent that the Newfoundland sample is not representative of the country as a whole. It is more likely to be an overestimate as the willingness to pay for the existence of wildlife tends to increase with specific knowledge of the species and, presumably, Newfoundlanders have a better appreciation for or knowledge about the Pine Marten.26

For the purpose of protecting Canadian Heritage, Parks Canada has set the goal of

23 When asked to attribute their total willingness to pay to option and existence values, respondents only assigned 15 percent of these benefits to their own potential future use (Stephens et al. 1991).

24 Converted from sus in the survey using the 1991 exchange rate of 1.1555 $CDN/$US.

25 Projected population 21,957,863 from Cansim matrix 6367; 8 percent inflation from 1991 to 1996.

26 See, for example, Kirchhoff et al. (1997).

establishing a national park in each of Canada's 39 natural regions. Each natural region is distinguished by unique physiography, vegetation, wildlife, and environmental conditions.' Recently, a survey was completed to measure the willingness to pay for the completion of this national parks system in Canada. Preliminary results indicate that Canadians perceive substantial benefits from completing the national parks system. Moreover, these perceived benefits do not seem to be linked solely to their desire or intention to visit these sites in the future (Rollins and Lyke 1997).

5.1.6 Bequest Values

Again, the value of leaving a protected area such as Gros Morne National Park to future generations will have to be determined using contingent-valuation/stated-preference surveys. A caveat that ought to be added is: it is unclear the degree to which non-use values overlap when individuals state their willingness to pay for protected areas.

In general, non-use values represent non-marketed benefits. As such, contingent-valuation or stated-preference surveys are required to elicit this information. Presumably, it will be a relatively straightforward task to develop a single stated-preference survey to incorporate all of the non-use value categories.