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STUDY TITLE: An Economic Assessment of the Marine Sport Fisheries in Lower Cook Inlet 

REPORT TITLE: An Economic Assessment of the Sport Fisheries for Halibut, and Chinook and Coho 

Salmon in Lower and Central Cook Inlet 

CONTRACT NUMBER: 14-35-001-30661; TASK ORDER (TO): 14196 

SPONSORING OCS REGION: Alaska 

APPLICABLE PLANNING AREA: Cook Inlet 

FISCAL YEARS OF PROJECT FUNDING: 1997–2000 

COMPLETION DATE OF REPORT: April 2001 

COST: FY 1997: $25,149, FY 1998: $57,818, FY 1999: $28,909, FY 2000: $28,909; 

CUMULATIVE PROJECT COST: $140,785 

PROJECT MANAGER: Mark Herrmann 

AFFILIATION: University of Alaska Fairbanks 

ADDRESS: Department of Economics, University of Alaska Fairbanks, Fairbanks, AK 99775-6080 

PRINCIPAL INVESTIGATORS*: Keith R. Criddle, Mark Herrmann, S. Todd Lee, Charles Hamel, 

Hans T. Geier, Joshua A. Greenberg, Carol E. Lewis 

KEY WORDS: economics, sportfishing, impact analysis 

BACKGROUND: 

The Cook Inlet Planning Area includes and abuts productive commercial, subsistence, and sportfishing 

grounds. Outer continental shelf minerals exploration, development and production activities could affect 

the productivity of these fisheries, the quality of recreation opportunities, and the demand for tourism 

related services. The marine sport fisheries of Cook Inlet are the focus of a large and growing recreation 

based economic sector. Sportfishing provides non-monetary benefits to participants and monetary 

benefits to tourism related businesses. 

OBJECTIVES: 

The objectives of this study were to develop integrated predictive models of the influence of sportfishing 

trip attributes (catch, catch size, cost) on participation rates, consumer surplus, and the regional economic 

impact of marine sportfishing on the Kenai Peninsula economy. 

DESCRIPTION: 

The probability that a typical sport fisher would take a halibut or salmon sportfishing trip in lower Cook 

Inlet is modeled as a random utility function of the expected trip cost and catch (species, size, number). 

The model allows for declining marginal utility as well as the interactions between salmon and halibut 

catches. The model is used to predict changes in participation given changes in expected catch that may 

result from changes in biomass (abundance) or changes in catch limits. The estimated probability of 

taking a trip is transformed into a prediction of changes in total sportfishing effort measured in fishing 

days. These changes in sportfishing effort simulate the response of sport fishers to changes in expected 

catches and are used to predict changes to the net benefits of sportfishing as well as regional economic 

impacts. 
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Net benefits to sport fishers are measured by compensating variations, the amount of money that could 

be added to the price of the trip until the sport fisher would be indifferent to taking the trip. Changes in 

sport fishing effort also affect regional economies by altering primary and secondary expenditure patterns. 

In contrast to net benefits, which are a measure of economic efficiency, impact analysis is a measure of 

the distribution of economic activity. The Cook Inlet Region Marine Sportfishing Economic Assessment 

simulation model was developed to allow users to estimate the economic impact of lower Cook Inlet 

sportfishing for halibut and salmon under varying conditions of stock abundance and harvest limitations. 

SIGNIFICANT CONCLUSIONS: 

The estimated participation rate model coefficients support a positive relationship between the number 

and size of fish caught, a negative relationship with trip costs, imply that recreational fishers experience 

decreasing marginal utility, and suggest that catches of each species are substitutes for catches of the 

others. While these results are expected from economic theory, substitution effects and declining 

marginal utility have rarely been found in empirical studies based on observed trips. Because our analysis 

was based on a carefully selected set of hypothetical trips, we avoided problems with collinearity and 

limited variability in the exogenous variables. The implication of these statistically significant nonlinearities 

is that the marginal reductions in participation, compensating variation (consumer surplus), and regional 

economic activity are increased when catch is reduced to an increasingly large degree. While the 

difference between linear and nonlinear models may be inconsequential for events that result in small 

decreases in participation, linear models will grossly underestimate the adverse consequences of events 

that lead to large declines in sportfishing. 

STUDY RESULTS: 

The total compensating variation (measure of consumer surplus) gained by lower Cook Inlet halibut and 

salmon sport fishers in 1997 is estimated to be $19.2 million, distributed among residents of the Kenai 

Peninsula Borough ($3.9 million), other Alaskans ($5.0 million), and other U.S. residents ($10.3 million). 

Reductions in expected catch reduce the compensating variation in two ways. First, the marginal sport 

fisher will drop out of the fishery as the expected benefits (in terms of catch) decrease, thereby decreasing 

the total net benefits of sportfishing. Second, the net benefit of taking a trip is also reduced for those who 

continue to participate because the trip produces less net benefit when the catch rate declines. Changes 

in sport fishing effort also alter expenditure patterns, affecting the distribution of economic activity. 

We examined 10% and 20% increases and 10%, 20%, and 30% decreases from the baseline (1997) 

mean catch per fishing trip. These scenarios reflect changes in expected harvests that might result from 

natural stock dynamic processes, changes in allocation shares between commercial, subsistence, and 

sport fishers, changes in catch limits, or economic, regulatory, and behavioral responses to environmental 

damage that might result from minerals exploration, development, production, or transportation activities. 

% Change 

in Catch 

% Change in 

Participation 

Change in Mean 

Total CV ($) 

Change in Output 

(Sales) ($) 

Change in Personal 

Income ($) 

Change in 

Employment (Jobs)

–30% –31.30% –12,456,593 –10,062,164 –4,245,863 –292 

–20% –21.16% –8,655,683 –5,819,726 –2,456,990 –168 

–10% –8.01% –4,380,445 –2,483,646 –1,049,021 –72 

0% 0.0% 0 0 0 0 

+10% 5.85% 4,172,245 1,771,687 748,812 51 

+20% 9.97% 7,914,571 2,989,775 1,263,986 86 

The results indicate, for example, that a 10% catch decrease reduces compensating variation by $4.4 

million, a 23% reduction in net benefits to sport fishers. The regional impacts include a $2.5 million 

decrease of direct, indirect, and induced output expenditures in the Kenai Peninsula region, a decrease of 

$1.0 million in personal expenditures and a loss of 72 jobs. In all cases the impacts exhibit, the higher the 

catch rates the smaller the marginal change in impact. The software program developed for this study can 

be used to explore the economic consequences of a variety of changes in sportfishing trip attributes. 
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STUDY PRODUCTS: 

Publications 

Criddle, K.R., J.A. Greenberg, H. Geier, C. Hamel, M. Herrmann, S.T. Lee and C.E. Lewis. 1998. An 

economic assessment of the marine sport fisheries in lower Cook Inlet, p. 5–12. In University of Alaska 

Coastal Marine Institute Annual Report No. 4. OCS Study MMS 98–0062, University of Alaska 

Fairbanks. 

Hamel, C. 2001. Economic impact of marine recreational fisheries on the Kenai Peninsula Borough. 

Master’s thesis, University of Alaska Fairbanks. In preparation. 

Hamel, C., M. Herrmann, S.T. Lee and K.R. Criddle. 2001. $FISH: An economic assessment of Lower 

Cook Inlet sport fisheries. Software program and manual. 

Herrmann, M., S.T. Lee, C. Hamel, K.R. Criddle, H.T. Geier, J.A. Greenberg and C.E. Lewis. 2001. An 

economic assessment of the sport fisheries for halibut, and chinook and coho salmon in lower and 

central Cook Inlet. Final Report. OCS Study MMS 2000-062, University of Alaska Coastal Marine 

Institute, University of Alaska Fairbanks, 135 p.

Herrmann, M., S.T. Lee, C. Hamel, K.R. Criddle, J.A. Greenberg, H. Geier and C. Lewis. 2000. An 

economic assessment of the marine sport fisheries in lower Cook Inlet, p. 9–40. In University of Alaska 

Coastal Marine Institute Annual Report No. 6. OCS Study MMS 2000-046, University of Alaska 

Fairbanks. 

NPFMC. 1999. Public review draft environmental assessment, regulatory impact review, initial regulatory 

flexibility analysis for a regulatory amendment to implement management measures under a guideline 

harvest level and/or moratorium for halibut in areas 2C And 3A: Chapter 4.0 – Economic tools and 

analytical framework. NPFMC, Anchorage. 

NPFMC. 2000. Draft environmental assessment, regulatory impact review, initial regulatory flexibility 

analysis for a regulatory amendment to implement management measures under a guideline harvest 

level and/or moratorium for halibut in areas 2C And 3A: Chapter 4.0 – Economic tools and analytical 

framework. NPFMC, Anchorage. 

Working papers 

Hamel, C., M. Herrmann, T.S. Lee, K.R. Criddle and H. Geier. Linking sportfishing trip attributes, 

participation decisions, and regional economic impacts in Lower and Central Cook Inlet, Alaska. 

Working paper, University of Alaska Fairbanks. Submitted to The Annuals of Regional Science. 

Herrmann, M., K.R. Criddle and C. Hamel. An economic evaluation of the demand for marine sport 

fisheries in the Lower Cook Inlet. Working Paper. Being prepared for Marine Resource Economics. 

Herrmann, M., T.S. Lee, K.R. Criddle and C. Hamel. Results of a survey of participants in the Lower and 

Central Cook Inlet halibut and salmon sport fishery. Working paper, University of Alaska Fairbanks. 

Alaska Fisheries Research Bulletin (under review). 

Lee, T.S. M. Herrmann, K. Criddle and Charles Hamel. The effect of fishery attributes on participation 

rates and economic welfare. Working paper, National Marine Fisheries Service. Being prepared for 

Journal of Agriculture and Resource Economics. 

Presentations 

Hamel, C., M. Herrmann, S.T. Lee, K.R. Criddle and Hans Geier. 2000. Linking sportfishing trip 

attributes, participation decisions, and regional economic impacts in Lower and Central Cook Inlet, 

Alaska. Presentation at the 2000 Alaska Chapter American Fisheries Society Meeting, Fairbanks, 13–

16 November 2000. 
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Hamel, C., M. Herrmann, T.S. Lee, C. Hamel and K.R. Criddle. 2000. An economic discussion of the 

marine sport fisheries in Lower Cook Inlet. Presented at the tenth meeting of the International Institute 

of Fisheries Economics and Trade, Corvallis, Oregon, 10–24 July 2000. 

Herrmann, M., K.R. Criddle, S.T. Lee and Charles Hamel. 2000. An economic evaluation of the demand 

for marine sport fisheries in the Lower Cook Inlet. Presentation at the 2000 Alaska Chapter American 

Fisheries Society Meeting, Fairbanks, 13–16 November 2000. 

Herrmann, M., S.T. Lee, K.R. Criddle and C. Hamel. 2000. Results of a survey of participants in the 

Lower and Central Cook Inlet halibut and salmon sport fishery. Presentation at the 2000 Alaska 

Chapter American Fisheries Society Meeting, Fairbanks, 13–16 November 2000. 

Herrmann, M., S.T. Lee, C. Hamel, K.R. Criddle, H. Geier, J. Greenberg and C. Lewis. 1998. An 

economic assessment of the sport fisheries for halibut, and chinook and coho salmon in lower Cook 

Inlet. University of Alaska Coastal Marine Institute Annual Research Review, February 1998, Fairbanks. 

Herrmann, M., S.T. Lee, C. Hamel, K.R. Criddle, H. Geier, J. Greenberg and C. Lewis. 1999. An 

economic assessment of the marine sport fisheries, p. 41 (abstract). In Proceedings Seventh MMS 

Information Transfer Meeting. Alaska OCS Region, Minerals Management Service, January 1999, 

Anchorage. (http://www.mms.gov/Alaska/ess/itm/itm99/itm.htm) 

Herrmann, M., S.T. Lee, C. Hamel, K.R. Criddle, H. Geier, J. Greenberg and C. Lewis. 1999. An 

economic assessment of the sport fisheries for halibut, and chinook and coho salmon in lower Cook 

Inlet. CMI University of Alaska Coastal Marine Institute Annual Research Review, February 1999, 

Fairbanks. 

Herrmann, M., S.T. Lee, C. Hamel, K.R. Criddle, H. Geier, J. Greenberg and C. Lewis. 2000. An 

economic assessment of the sport fisheries for halibut, and chinook and coho salmon in lower Cook 

Inlet. University of Alaska Coastal Marine Institute Annual Research Review, March 2000, Fairbanks. 

Lee, S.T., M. Herrmann, K.R. Criddle and C. Hamel. 2000. The effect of fishery attributes on 

participation rates: the Kenai Peninsula marine sport fishery. Western Agricultural Economics 

Association, Vancouver, Canada. 

Lee, S.T. 1999. Evaluating the benefits of recreational fisheries. Fisheries Centre, University of British 

Columbia, Vancouver, Canada. 

Lee, S.T. 2000. Evaluating the benefits of recreational fisheries. National Marine Fisheries Service 

Socioeconomic Workshop, La Jolla, CA. 

Lee, S.T., M. Herrmann, K.R. Criddle and C. Hamel. 2000. The effect of fishery attributes on 

participation rates: The Kenai Peninsula marine sport fishery. Western Agricultural Economics 

Association, Vancouver, Canada. 

Lee T.S., M. Herrmann, K.R. Criddle and C. Hamel. 2000. Modeling the economic effect of fishery 

attributes on participation rates: The Kenai Peninsula marine sport fishery. Presentation at the 2000 

Alaska Chapter American Fisheries Society Meeting, Fairbanks, 13–16 November 2000. 

*P.I.’s affiliation may be different than that listed for Project Manager(s). 
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Study Area Map 

Detail of Study Area