Nonmarket economic valuation of an urban recreation park.

IntroductionWhile choices between different public policy alternatives may be most appropriately made in the political arena, economic valuations can contribute to such decisions by giving guidance on the economic costs and benefits of allocation options. The economic value of public goods can be broadly categorised into market and nonmarket components. Market economic values are determined by the exchange of goods and services in organised markets through the price mechanism. Price is thus an indicator of relative value, though where markets are distorted, adjustments need to be made to yield so-called shadow prices. Market price, and to a lesser extent shadow price, are relatively easily determined. However, the major economic values of many public goods such as recreation resources and protected natural areas are typically not directly captured through any price mechanism. Generally entrance fees to such resources are zero, or do not cover the full cost of providing the resource. Despite this, their economic value can be considerable in that people are willing to give up scarce resources, including time and money, both to use such areas and ensure they continue to be available. These nonmarket economic values are most commonly classified into use and nonuse components (Freeman, 1993). Use values are the benefits which accrue to visitors who use an area's facilities and enjoy its amenities. This category of value is likely to be the most significant nonmarket value of major urban recreation sites. There may also be vicarious use benefits which accrue to individuals who derive enjoyment from the park indirectly through the media (Randall & Stoll, 1983). Option value (Bishop, 1982; Weisbrod, 1964) is a future use value which can arise from the desire of an individual to retain the option to undertake future visits to a site which possesses certain known desirable qualities. However, more recent work has shown that option value is not a separate component of value, but merely the difference between an ex ante option price and an ex post consumer surplus (Smith, 1987). Nonuse value has often been divided into existence and bequest value. Bequest value arises when individuals value an area not because they want to use it themselves, but because they want to reserve that right for future generations. Existence value is the benefit received by those who derive satisfaction from knowing that the site is preserved in a certain condition irrespective of use or potential use by the individual or others (Brookshire, Eubanks & Randall, 1983; Krutilla, 1967; Walsh, Loomis & Gillman, 1984). However, the motivations underlying any nonuse value need not be defined when total value is being estimated (Freeman, 1993). In this paper we avoid any subdivision of nonuse value and simply consider that any value placed on the resource by nonusers must be nonuse value. Of course users may also have a nonuse value over and above their use value for the resource.In this study we estimated the nonmarket economic benefits associated with a major urban recreation resource, Centennial Park in Sydney, using the travel cost (TC) and contingent valuation (CV) methods. Centennial Park is situated five kilometres south east of central Sydney and consists of 220 hectares of parkland ranging from sculptured gardens and ornamental wetlands to sports fields and more natural areas. The land occupied by Centennial Park is vested in the Centennial Park & Moore Park Trust through the Centennial Park Trust Act. Centennial Park is a park of regional significance to the people of Sydney because it is at the heart of a large city, is surrounded by high density housing and has great historical significance (Mortimer & Grimwade, 1991). There were over three million visits to the park in 1992 (CPMPT, 1992), with visitors undertaking activities such as horse riding, cycling, jogging, bird watching, picnicking and walking. There is no entrance fee for use of the park. …