Chalk Point Lost Recreational Use Valuation Report Appendix I

were made at this point. These weekly averages smooth over daily fluctuations and make
the overall trends easier to see. Use in 2000 briefly rose above use in 1999 immediately
following the delayed opening of the sites, and again over the weekends of June 24th and
the 4th of July. With these exceptions, use was lower in 2000 compared to 1999, up until
early August.

The Average Daily Pattern of Use

As mentioned above, the historical data from Golden Beach were also used to determine
the average pattern of use throughout the day at the five sites. See Figure I-2, below. This
calculation required that the data be normalized, so that the line showing total use at all
sites is centered about one on the vertical axis. This graph is based on 1999 data only,

since disruption from the oil spill might create unusual patterns in the 2000 data.

Figure 1-2
Normalized Hourly Level of Use At Five Golden Beach Sites

|| [+ Benson's
> | Long Point
Small Beach
yoo Trent Hall
~~ Main Beach
|-e—Total

Normalized Level of Use

0.00

600 7:00 800 9:00 0 11:00 12:00 1:00 2:00 3:00 4:00 5:00 600 7: 8,00
AM AM AM AM AM AM PM PM PM PM) PM) PM PM PM PM

‘Source: Golden Beach Data, Table $-2.

To better understand how this graph was created, an example will illustrate. For the site
called “Long Point” and the time slot 11 a.m. to 12 p.m. (marked “11:00 AM” in the
graph), some daily logs throughout 1999 had car counts recorded and some didn’t. To

build the “Long Point” graph above, all available car counts for the 11 a.m. time slot


CHALK POINT LOST USE DAMAGE ASSESSMENT

Table 3E

DAMAGE ASSESSMENT MODEL: AUGUST 2000

Appendix It

1999 2000
Golden Impact Weather Golden
Beach Zone Adjusted Baseline Beach Actual Loss Per Diminished
Date Index Trips Index Trips Index Trips Trip Value
(1) (2) (3) (4) (5) (6) (7) (8) (9)
8/1 5.4 718 43 569 3.0 400 $0.32 $127
8/2 27 366 43 569 44 581 $0.31 $179
8/3 4.4 587 25 332 27 356 $0.30 $106
8/4 45 606 25 332 2.6 343 $0.29 $99
8/5 15.6 2,084 15.6 2,084 12.2 1,623 $0.28 $455
8/6 10.9 1,449 9.2 1,222 14.0 1,867 $0.27 $508
8/7 47 625 2.5 332 1.9 248 $0.26 $65
8/8 29 382 43 569 24 320 $0.26 $82
8/9 3.8 509 25 332 1.7 222 $0.25 $55
8/10 5.1 684 43 569 18 240 $0.24 $58
8/11 2.3 307 2.5 332 27 362 $0.23 $84
8/12 8.4 1,119 9.2 1,222 17.5 2,334 $0.23 $528
8/13 14.1 1,875 9.2 1,222 3.8 507 $0.22 $111
8/14 3.8 511 25 332 0.8 107 $0.21 $23
8/15 3.3 436 25 332 48 640 $0.21 $132
8/16 1.9 252 43 569 5.3 711 $0.20 $142
8/17 48 637 43 569 6.3 845 $0.19 $164
8/18 49 654 25 332 2.0 267 $0.19 $50
8/19 8.5 1,128 15.6 2,084 11.3 1,512 $0.18 $276
8/20 17.8 2,380 15.6 2,084 15.6 2,075 $0.18 $367
8/21 24 280 43 569 3.4 457 $0.17 $78
8/22 40 534 43 569 3.8 507 $0.17 $84
8/23 0.8 100 25 332 26 347 $0.16 $56
8/24 23 311 25 332 40 534 $0.16 $83
8/25 45 600 25 332 3.9 514 $0.15 $78
8/26 17.2 2,288 9.2 1,222 14.1 1,886 $0.15 $277
8/27 17.4 2,318 9.2 1,222 10.9 1,451 $0.14 $207
8/28 0.5 67 25 332 0.9 114 $0.14 $16
8/29 1.3 176 25 332 23 300 $0.13 $40
8/30 1.9 253 25 332 1.2 156 $0.13 $20
8/31 24 286 25 332 5.0 667 $0.13 $84
Total 24,524 21,897 22,493 $4,635
Calculation of Damages

(1) Lost Trips 584

(2) Value of Each Trip Lost $ 27

(3) Total Value of Lost Trips $ 15,764

(4) Reduction in Value of Actual Trips $ 4,635

(5) Total Damages $ 20,399

W-11


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix It
Table 3C
DAMAGE ASSESSMENT MODEL: JUNE 2000
1999 2000
Golden Impact Weather Golden
Beach Zone Adjusted Baseline Beach Actual Loss Per Diminished
Date Index Trips Index Trips Index Trips Trip Value
(1) (2) (3) (4) (5) (6) (7) (8) (9)
6/1 3.3 445 28 368 3.9 517 $2.08 $1,074
6/2 14 187 28 368 3.3 445 $2.01 $896
6/3 12.3 1,646 17.1 2,277 12.7 1,700 $1.95 $3,321
6/4 16.7 2,223 ATA 2,277 10.6 1,420 $1.89 $2,690
6/5 5.5 734 47 632 0.9 114 $1.84 $210
6/6 3.1 411 28 368 1.0 133 $1.78 $238
6/7 41 551 47 632 21 286 $1.73 $494
6/8 28 373 2.8 368 3.2 427 $1.67 $715
6/9 5.6 752 47 632 29 385 $1.62 $626
6/10 13.1 1,751 174A 2,277 18.6 2,475 $1.57 $3,898
6/14 11.8 1,577 17.4 2,277 14.3 1,909 $1.53 $2,915
6N2 3.2 427 28 368 0.4 50 $1.48 $74
6/3 5.3 710 28 368 07 89 $1.44 $128
6/14 2.9 387 28 368 21 286 $1.39 $398
6/5 2.0 267 2.76 368 3.8 511 $1.35 $690
6/16 3.0 400 4,74 632 1.6 217 $1.31 $284
6N7 11.2 1,498 10.01 1,335 11.2 1,497 $1.27 $1,900
68 11.2 1,498 10.01 1,335 12.9 1,727 $1.23 $2,125
69 44 152 2.76 368 14 152 $1.19 $182
6/20 42 554 4.74 632 5.3 705 $1.16 $816
6/21 5.2 697 4.74 632 3.4 450 $1.12 $505
6/22 65 873 2.76 368 47 629 $1.09 $684
6/23 49 655 4.74 632 5.0 672 $1.06 $709
6/24 15.7 2,090 17.1 2,277 16.4 2,184 $1.02 $2,235
6/25 23.3 3,104 17.1 2,277 31.7 4,233 $0.99 $4,199
6/26 26 350 2.76 368 3.6 476 $0.96 $458
6/27 2.0 273 2.76 368 3.1 417 $0.93 $389
6/28 3.3 440 2.76 368 1.2 160 $0.90 $145
6/29 44 587 2.76 368 37 490 $0.88 $430
6/30 78 1,043 474 632 67 889 $0.85 $756
Total 26,653 26,542 25,644 $34,182
Calculation of Damages

(1) Lost Trips 897

(2) Value of Each Trip Lost $ 27

(3) Total Value of Lost Trips $ 24,231

(4) Reduction in Value of Actual Trips $ 34,182

(5) Total Damages $ 58,413


CHALK POINT LOST USE DAMAGE ASSESSMENT

Table 5
THE LENGTH OF A RECREATIONAL TRIP.
Length Of Length Of
Observation Trip Observation Trip
1 45 27 3.5
2 5.0 28 45
3 2.0 29 na
4 1.5 30 1.5
5 4.3 31 45
6 6.0 32 1.3
7 5.0 33 1.8
8 6.0 34 3.2
9 6.0 35 4.2
10 3.0 36 6.0
11 3.0 37 7.0
12 25 38 5.0
13 na 39 3.0
14 45 40 6.5
15 na a4 3.5
16 na 42 28
17 5.0 43 5.0
18 na 44 6.0
19 8.0 45 1.0
20 25 46 5.0
21 6.5 47 na
22 75 48 na
23 45 49 12.5
24 5.5 50 3.5
25 7.0 51 75
26 5.0 52 3.0
Average 4.59
Median 4.50

Notes

Average and median trip length are calculated based on responses to 52
surveys administered throughout the impact zone in late August and early

September, 2000.

N- 16

Appendix II


Chalk Point Lost Use Valuation Report

IV. Conclusion

As in any such assessment, decisions and assumptions must be made in the course of
analysis that affect the study results. Some of the assumptions made here may lead to a
conservative damage assessment. For example, no damages are calculated for
recreational activity that might typically have occurred from April 7, the date of the spill,
through April 15, when data first becomes available for this analysis. Recreational
activity before 6 a.m. and after 9 p.m. is also ignored. These conservative assumptions
may be balanced by other factors that could lead to a higher estimate of damages. For
example, the Golden Beach sites on which these calculations are based are located in
areas more heavily affected than some other areas in the spill zone and changes in use at
Golden Beach may overstate losses at other locations. The authors of this study believe,
however, that the estimate of damage herein results from a reasonable integration of the
relevant data and will assist the Trustees in obtaining appropriate compensation for

recreational-use losses and in carrying out restoration planning.

-12-


Chalk Point Lost Recreational Use Valuation Report Appendix III

(Bot+B1)+B2= 3.48+10.66+(-5.85) = 8.29. The model predicts use on a foul-weather

weekend day that is 58.67% of use on a non-foul weekend day during the 1999 season.

The above effects of weather on recreational activity were used to project the weather-
adjusted baseline for the 2000 season. First, the average daily 1999 Golden Beach index
was calculated for weekend days and weekdays, respectively, in each month, April
through September. Calculating separate averages for non-foul and foul-weather days
required solving the equations below. Separate equations were solved for weekdays and

weekend days in each month.

Average 1999 weekday Golden Beach use =

(Non-Foul Weekdays) (x) + Foul Weekdays (0.5833x)
Total Weekdays

Average 1999 weekend Golden Beach use =

(Non-Foul Weekend Days) (y) + Foul Weekend Days (0.5867y)
Total Weekend Days

Solving for x and y gives the average monthly Golden Beach use in 1999 on non-foul
weekdays and weekend days, respectively. Calculating 0.5833x and 0.5867y yields the
average monthly Golden Beach use in 1999 on foul-weather weekdays and weekend
days. Each day in the 2000 season was also designated as foul or non-foul based on the
same criteria as were used for 1999, as described above. In each month, the 2000
weather-adjusted baseline on each non-foul day was projected as x for weekdays, and y

for weekend days. The 2000 weather-adjusted baseline on each foul-weather day was

I-3


Chalk Point Lost Recreational Use Valuation Report Appendix II

Appendix III: Meteorological Data and Adjustments for Weather

A basic assumption of the human use damage assessment was that the level of use at
Golden Beach during 1999 would be the same as use during 2000 but for two influences:
the oil spill and differences in weather between the two years. To isolate the effect of the
spill, an adjustment was made to 1999 use data to account for weather differences
between 1999 and 2000. This “weather adjusted” 1999 use served as the baseline use in
2000 but for the spill. This appendix describes the weather adjustment procedures.

Meteorological data were collected from the National Climatic Data Center. The data
included hourly measurements of wind speed and hourly observations of the following
weather conditions: clear, rain, drizzle, fog, or hazy. Observations from 6:00 AM to 9:00
PM were included, corresponding to the observation periods of the Golden Beach
visitation data. Wind speed was averaged over the observation period each day. The
weather conditions were converted into percentages of each weather category that
occurred during a given day. Through this transformation, the weather on any given day
was characterized by average wind speed and the proportion of the day that was clear,

rainy, foggy, etc.

To determine the influence of different weather conditions on recreational use in the area,
daily recreational use in 1999 was modeled as a function of weekend or weekday days
(holidays were considered weekend days), and whether the day was a "foul-weather day".
A "foul-weather day" was defined as a day on which any of the following occurred: 1)
average wind speed was greater than 12 knots; 2) rain was recorded for greater than 5%
of the day; or, 3) fog was recorded for greater than 20% of the day. These thresholds
used in defining foul-weather days were determined through graphical inspection of the
weather variables and recreational use data. The graphs were examined to find levels of

different weather conditions for which recreational activity was significantly reduced.

Mm-1


Chalk Point Lost Recreational Use Valuation Report Appendix IV

despite the limited geographic area affected. Moreover, trips involving backyard access
or use of locally known sites may offer convenience and familiarity not matched by
recreational sites farther down the river or on neighboring water bodies. On the other
hand, more unique and infrequently enjoyed experiences tend to be more highly valued.
Furthermore, recreators who drove some distance likely had substitute sites available.

The exact mix of those with good and those with few substitute sites is unknown.

A discussion of relevant values for fishing, boating, backyard use and general shoreline
use is presented below. Unless otherwise noted, all values are converted to CPI-adjusted
current (2000) dollars. The studies and articles referenced are listed at the end of the

appendix.

Recreational Fishing

The value of a fishing trip varies depending on the quality of the resource, the types of
fish available and proximity of alternative sites. Identifying past studies that value a
resource substantially similar to the Patuxent River would be difficult. Most studies
examine either freshwater or saltwater fishing, or in the case of an estuary like
Chesapeake Bay, studies typically focus on a particular targeted species. The Patuxent
River is not readily comparable to freshwater or ocean fishing and the recreational
anglers there do not appear to target any single species of fish. Furthermore, existing
studies often involve recreational sites with different types of substitutes and distances to

population centers, etc.

Accordingly, it makes sense in this case to consider a range of values that capture a
general fishing experience. A comprehensive study of marine recreational fishing values
(Freeman, 1993) examines previous studies and concludes that they range from $10 to
$100 in 1991 dollars. Those values would be about 30 percent higher in today’s dollars.
That range includes a study of Chesapeake striped bass fishing (Norton, 1983) with a
value of $87 per trip in current dollars. While striped bass fishing takes place on the

Patuxent, it is not clear that the average fishing trip in our study area involves targeting of

Iv-2


Chalk Point Lost Recreational Use Valuation Report Appendix IV

Additional Studies Considered

Many other studies were reviewed for this report and were rejected for a variety of
reasons. Some studies that valued beach recreation, such as Bell and Leeworthy (1986)
and Parsons et al. (1999), considered expansive coastal sites that were not comparable to
the smaller local sites on the Patuxent. Several good studies of recreational fishing were
not considered relevant because they either focused on a particular species, e.g. salmon in
Morey et al. (1993). An alternative to the meta-analysis approach used in Walsh et al. for
assessing generalized recreational values is presented in Bergstrom and Cordell (1991).
This multi-site nationwide travel cost model has the advantage that a consistent
methodology is used for all activities studied. The Walsh study, though, offers the
benefits of diversification and incorporates a far greater sum total of research and

analysis.

Conclusions

It is reasonable to choose $35 as a value for recreational fishing and boating in the spill
impact zone. Given the comparable values and considerable overlap in fishing and
boating activities, a combined figure makes sense for these uses. In Walsh et al. the
median value for motorized boating is $40 per day, and the median value for cold water
fishing is $44 per day. The former figure may be somewhat high due to the types of sites
valued in the studies. And while the Patuxent is host to various anadromous fish, on-site
observations indicated that most visitors were not targeting the highly valued species that
are typically the focus of anadromous fishing studies, like striped bass. Thus the figure
for general cold water fishing, which includes anadromous fishing along with other
lower-valued river fishing, is probably most appropriate. Some fishing on the Patuxent
likely is valued somewhat less than this. Choosing the median rather than average value

and the lower of the boating and fishing figures results in a conservative $35 estimate.

IV-6


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Chalk Point Lost Recreational Use Valuation Report Appendix I

The average value of a recreational trip on the Patuxent River was estimated to be $27.
This figure is based on the benefit-transfer method, whereby an appropriate value is
selected from previous economic studies valuing similar recreational resources. Refer to

Appendix IV for details of this analysis.

To determine the appropriate weather adjustment, meteorological data for the Patuxent
River area were collected for 1999 and 2000 from the National Climatic Data Center and
regressed against the Golden Beach index. According to the results, foul weather in 2000
led to a decline in activity compared to 1999 for the months of April, May, June and
August. Thus somewhat less activity would be expected for most of the 2000 summer
season even without the effects of the spill. Comparatively good weather in July 2000 led
to an increase in projected baseline activity, however. Details of the weather adjustments

are presented in Appendix III.

Figure 1-4
Total Impact Zone Baseline and Actual Trips
2000

4500 4

4,000

3,500

3,000

Impact Zone Trips

GF PE LPK HSE ELH TEL OEP EH PSK HP SL
Source: Golden Beach Data, Helicopter Baseline -—Actual
Overflights, Weather Data, Table S-1.

Figure I-4 shows both the 2000 weather-adjusted baseline and estimated actual 2000

recreational activity. It is assumed that any divergence between these is due to the spill.

As illustrated by the divergence of the two plotted lines, a decline in activity due to the

1-9


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix I

Table 3E
DAMAGE ASSESSMENT MODEL: AUGUST 2000

Notes (Columns)

(1) Dates refer specifically to 2000 figures. Figures for 1999 are shifted by two days so
that weekends and weekdays match with 2000. Thus the first line contains figures
for August 3, 1999 and August 1, 2000. The pupose of presenting 1999 figures is
solely to construct baseline estimates of use for 2000.

(2) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland.

(3) Column (2) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(4) Data for 1999 is adjusted for differences in weather to create a prediction of
2000 baseline use. Details of the weather adjustment are presented in Appendix III.

(5) Column (4) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(6) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland.

(7) Column (6) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(8) The loss per trip is determined according to specifications in Table 2.

(9) Column (7) x Column (8)

Notes (Calculation of Damages)

(1) The total through August 5 in Column (5) minus the same total in Column (7).

As described in the report, damages from lost trips are determined to end August 5.
(2) This figure is based on data from the relevant economics literature. See Appendix IV.
(3) Row (1) x Row (2)
(4) Total diminished value of actual trips, from the total in Column (9).
(5) Row (3) + Row (4)

-12


Chalk Point Lost Use Valuation Report

In addition, recreational losses include the diminished value of trips taken to the spill
impact zone during the months following the incident. An estimated 112,359 visits were
made to the affected area from April through September 2000. The loss for each
diminished trip represented a portion of the trip’s total value soon after the spill and
declined over the course of the season. The total diminished value of trips taken is

estimated to be $110,489.

The values shown include losses for all types of recreational activities observed in the
spill impact zone. The total monetary value of damages is estimated to be $453,499
through September 30, 2000. Damages are assumed to be zero from that point on.

I. Description of the Oil Spill Incident and Affected Area’

On April 7, 2000, a break in the pipeline that supplies oil to the Potomac Electric Power
Company (Pepco) Chalk Point Generating Station released an estimated 126,000 gallons
of oil into Swanson Creek Marsh on the Patuxent River in Maryland. At the time of
release, the pipeline was owned by Pepco and operated by ST Services. They are the two
responsible parties (RP) identified in this case.

Booms to contain the oil were placed at the mouth of Swanson Creek, but a storm on the
night of April 8 blew oil over the booms and into the Patuxent River and its tributaries.
The U.S. Environmental Protection Agency initiated vigorous response efforts to contain
the spill and mitigate the damage. Nevertheless, there was considerable oiling of
shoreline and beaches downstream of the plant. An advisory against boating was in effect
from April 8 to April 24 from Eagle Harbor to Broomes Island, a distance of roughly 15

miles.

Shortly after being notified of the spill, representatives from the National Oceanic and
Atmospheric Administration, the U.S. Fish and Wildlife Service, the Maryland


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix I
Table 3B
DAMAGE ASSESSMENT MODEL: MAY 2000
1999 2000
Golden Impact Weather Golden
Beach Zone Adjusted Baseline Beach Actual Loss Per Diminished
Date Index Trips Index Trips Index Trips Trip Value
(1) (2) (3) (4) (5) (6) (7) (8) (9)
5/1 15 200 24 317 0.6 80 $5.40 $432
5/2 1.5 200 1.4 185 1.0 133 $5.24 $698
5/3 1.4 193 24 317 2.0 267 $5.08 $1,354
5/4 0.9 119 24 317 1.2 160 $4.92 $788
5/5 0.9 119 24 317 1.2 160 $4.77 $764
5/6 48 643 15.0 2,007 9.8 1,303 $4.63 $6,031
5/7 11.5 1,534 15.0 2,007 9.1 1,215 $4.49 $5,453
5/8 21 279 24 317 3.9 519 $4.35 $2,260
5/9 2.0 267 24 317 3.9 519 $4.22 $2,191
5/10 26 347 14 185 0.4 57 $4.09 $234
5/11 0.1 13 24 317 14 187 $3.97 $741
5/12 0.1 13 24 317 0.7 89 $3.85 $342
5/13 3.1 420 15.0 2,007 9.3 1,234 $3.73 $4,604
5/14 8.4 1,125 15.0 2,007 9.7 1,287 $3.62 $4,657
5/15 18 241 2.38 317 0.9 114 $3.51 $401
5/16 28 375 1.39 185 23 311 $3.40 $1,059
SAT 27 357 1.39 185 2.2 293 $3.30 $968
5/18 5.3 708 1.39 185 5.4 715 $3.20 $2,286
5/19 27 360 1.39 185 0.3 44 $3.10 $138
5/20 12.7 1,690 8.82 1,177 29 383 $3.01 $1,153
5/21 14.4 1,914 8.82 1,177 8.1 1,082 $2.92 $3,154
5/22 0.5 67 1.39 185 04 53 $2.83 $151
5/23 03 44 2.38 317 1.0 133 $2.74 $366
5/24 1.7 227 2.38 317 2.2 293 $2.66 $780
5/25 18 241 1.39 185 3.3 445 $2.58 $1,146
5/26 3.4 413 2.38 317 45 603 $2.50 $1,506
5/27 19.3 2,571 8.82 1,177 11.9 1,582 $2.42 $3,834
5/28 22.3 2,975, 8.82 4,177 8.0 1,067 $2.35 $2,508
5/29 20.3 2,703 8.82 1,177 24 317 $2.28 $722
5/30 24 316 1.39 185 0.9 117 $2.21 $258
5/31 2.2 291 2.38 317 3.3 434 $2.14 $929
Total 20,964 19,699 15,196, $51,909
Calculation of Damages

(1) Lost Trips 4,503

(2) Value of Each Trip Lost $ 27

(3) Total Value of Lost Trips $ 121,574

(4) Reduction in Value of Actual Trips $ 51,909

(5) Total Damages $ 173,483


Chalk Point Lost Recreational Use Valuation Report Appendix I

were combined and compared to the combined Long Point car counts for each of the
other 14 time slots. To make the information comparable across days, each car count was
normalized: it was divided by the level-of-use index for that day. All the available
normalized car counts for Long Point at 11 a.m. were then averaged together. The
average was weighted by the daily index, so that busier days had greater influence on the

results than days of light use.

The same weighted average was calculated for each time slot at Long Point, and each
time slot for each of the four remaining sites. These site-specific averages for each time

slot were then added together to get the “total” line shown in the graph.

Recreational Trips Per Peak User Observed

As discussed above, the purpose of establishing the daily pattern of use is to calculate the
whole day’s activity based on helicopter observations that provide a snapshot of
recreational activity in the spill zone recorded during hours of peak use. To perform this

calculation, an estimate of recreational trips per peak user was employed.

The graph in Figure I-2 was converted into a bar chart showing the hourly level of use as
a percentage of peak use at Golden Beach. This is provided in Figure I-3, using the graph
of total use at all five sites. Peak use appears to occur from 11 a.m. to 5 p.m. The average
peak use over that time period represents “‘100-percent” use in the bar chart. Use in the
remaining time slots was divided by the average peak use to arrive at the percentages

shown. These calculations are also presented in Table 4 of Appendix II.

It was assumed that this pattern of use was relatively consistent from day to day and
throughout the region. Thus the total number of recreational person-hours spent at sites in
the spill impact zone on a given day was estimated by observing the number of peak

users. Each additional person observed during peak hours would imply that additional


Chalk Point Lost Recreational Use Valuation Report Appendix I

Icxso) = An indicator variable that equals one if a count X;,, was performed for site s and

hour A on day t, otherwise zero

Total Damages
The total number of lost trips N is multiplied by the value per trip V to calculate total

damages. The value per trip is discussed in Appendix IV.

Total Damages = NV

Total Lost Trips
The total number of lost trips N is the difference between the expected number of trips in

2000 that would have occurred absent the oil spill and the actual number of trips taken in
2000. The number of trips in 2000 absent the oil spill is estimated based on the level of
recreational activity in 1999 adjusted for differences in weather between 1999 and 2000.
The details of the weather adjustment are given in Appendix III.

N = Qi999 Weather Adjusted — Q2000 Actual

Total Trips
The quantity of trips Q throughout the impact zone for the entire 2000 season is

estimated using the level-of-use index L and a multiplier M that relates the index to total

trips throughout the impact zone.

Q=2L.L.M

The Golden Beach Level-of-Use Index

The level-of-use index L is constructed from the car counts X,,, at Golden Beach. By
taking the average of the available car counts at a given site throughout the day and

summing across sites, the total average use throughout the day is calculated.


Chalk Point Lost Recreational Use Valuation Report Appendix I

Total Impact Zone Trips

Five overflights were conducted in the spill impact zone during peak hours and the
number of people engaged in recreational activities was recorded. These recreational
counts are presented in Table 6 of Appendix II. Each of the five peak-user counts was
multiplied by the number of trips per peak user as determined above. Thus the total
number of impact zone trips was estimated for the five days when overflights were
conducted. These estimates include activity at Golden Beach observed during the
overflights. The Golden Beach car counts were not used to directly estimate trips at
Golden Beach. Rather, the index is a separate calculation, allowing the overflight counts

for the entire impact zone to be extended throughout the season.

To perform this extrapolation, the estimates of impact zone trips were compared to the
Golden Beach index (also shown in Table 6 of Appendix II) and a multiplier was
calculated: On average, there were 133 trips throughout the impact zone for every index
unit recorded at Golden Beach. Using this approach, records at Golden Beach can be
extrapolated to describe recreational activity in the entire impact zone. Results for the
months of April through September are presented in Tables 3A through 3F of Appendix
I.

The Total Value of Lost Trips

The 1999 recreational use figures were adjusted for differences in weather between 1999
and 2000. This weather-adjusted 1999 use was used as an estimate of the baseline level
of use in 2000. The difference between baseline and actual use represents lost trips due
to the oil spill. Lost trips were then multiplied by a value per trip to arrive at the value of
lost trips.


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix II

Table 3B
DAMAGE ASSESSMENT MODEL: MAY 2000

Notes (Columns)

(1) Dates refer specifically to 2000 figures. Figures for 1999 are shifted by two days so
that weekends and weekdays match with 2000. Thus the first line contains figures
for May 3, 1999 and May 1, 2000. The pupose of presenting 1999 figures is
solely to construct baseline estimates of use for 2000.

(2) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland. Records for Row 5/1 were missing in 1999. The figure from Row 5/2 is
substituted. Likewise for 1999, 5/5 replaces 5/4 and 5/12 replaces 5/11.

For 2000, 5/5 replaces 5/4 and 5/9 replaces 5/8.

(3) Column (2) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(4) Data for 1999 is adjusted for differences in weather to create a prediction of
2000 baseline use. Details of the weather adjustment are presented in Appendix Ill.

(5) Column (4) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(6) The Golden Beach index of recreational use is the average number of cars.
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland.

(7) Column (6) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(8) The loss per trip is determined according to specifications in Table 2.

(9) Column (7) x Column (8)

Notes (Calculation of Damages)

(1) The total in Column (5) minus the total in Column (7).

(2) This figure is based on data from the relevant economics literature. See Appendix IV.
(3) Row (1) x Row (2)

(4) Total diminished value of actual trips, from the total in Column (9).

(5) Row (3) + Row (4)

n-6


Chalk Point Lost Recreational Use Valuation Report Appendix I

Table 2: Golden Beach Data For July 17, 1999, Allocated to Hourly Intervals

Long Small Trent Main
Start Finish _ Benson's _ Point Beach Hall Beach Total
6:00 AM to 7:00 AM na na na na na na
7:00 AM to 8:00 AM 8 0 1 1 0 10
8:00 AM to 9:00 AM 8 2 1 4 0 12
9:00 AM to 10:00 AM na na na na na na
10:00 AM to 11:00 AM 9 2 0 4 0 12
11:00 AM to 12:00 PM na 20 na na na na
12:00PM to 1:00PM 7 na 1 i) 1 na
1:00PM to 2:00 PM 6 na 0 0 2 na
2:00PM to 3:00 PM na 10 na na na na
3:00PM to 4:00 PM 10 na 0 0 1 na
4:00PM to 5:00 PM 11 na i) 0 0 na
5:00 PM to 6:00 PM na 7 na na na na
6:00 PM to 7:00 PM na na na na na na
7:00 PM to 8:00 PM 5 na 0 0 0) na
8:00 PM to 9:00 PM 3 na i} 0 0) na

The data from Golden Beach were used in the damage assessment model in two ways.
First, the daily level of activity, as indicated by the total number of cars recorded parked
at the five sites, was captured in a daily index of use intensity. This index formed the
basis of calculations comparing 1999 and 2000 recreational use. Second, the typical
pattern of use throughout the day was determined. This refers to the relative level of use
at each hour throughout the day. This was estimated by combining the use pattern for all
days in 1999 into a single average hourly pattern. Using this result, a reasonable estimate
of total daily use was made based on a snapshot of activity recorded at a particular time

on a particular day.

These two calculations using Golden Beach data were combined with user counts from
helicopter overflights to estimate use throughout the impact zone. The overflight user
counts provided a snapshot of activity that can be expanded into an estimate of total daily
use based on the Golden Beach pattern of use throughout the day. By comparing these
estimates of total daily use to the Golden Beach index for days when overflights were
taken, a multiplier was calculated allowing the Golden Beach data to be extrapolated to
the entire impact zone throughout 1999 and 2000.


Chalk Point Lost Recreational Use Valuation Report Appendix IV

immediate region (for example those seeking the recreational experience valued at $87 in
the Norton study) have numerous other alternative destinations. The appropriate figure

for our purposes is probably lower.

Recreational Boating

Recreational boating is a broad use category encompassing a variety of specific activities
including boat-based fishing, water skiing and general cruising. Boat-based fishing is
usually valued more highly than shore-based fishing. For example, Freeman cites a study
that finds per-trip values for boat-based fishing that are four times higher than values for
shore-based fishing at the same location. (The range is $53 to $93 for fishing by private

boat, as opposed to $13 to $21 for fishing from shore at sites in southern California.)

Generally, boat trips are valued more highly than other types of water-based recreation.
This makes sense, since difficulties of travel and boating access limits the available
substitutes compared to general shore use. However, those who trailer a boat do have
available the option of driving to a boat-launch ramp outside the spill zone. The
proportion of those boat trips taken on the Patuxent involving trailered boats versus those
from private docks or marinas in the spill zone is not known. Note that the purchase price
of the boat places a lower bound on the consumer surplus of recreational trips over time,
since the purchaser expects to gain at least as much value from his trips as he lost in

purchasing the boat.

The Walsh study finds that the average value per day for general motorized boating is
$49.09 and the median value is $39.93. This is lower than many of the fishing-day values
presented above, but considerably higher than figures for general shoreline recreation
discussed below. The helicopter overflight counts of recreational activity performed for
this damage assessment indicate that about half of the trips taken to the spill impact zone

were for boat-based recreation.

Iv-4


Chalk Point Lost Use Valuation Report

Additional information that was not directly used in the current analysis nonetheless
supports the conclusions drawn. For example, informal discussions with marina operators
on the Patuxent River indicated that there was concern by boaters about the effects of the
spill and that activity was lower than usual following the spill. None of these operators
were able to provide specific records useful for this analysis. Managers of local parks not
affected by the Patuxent River spill indicated that foul weather had caused a modest
decline in recreational use during the spring. These anecdotal impressions were in
accordance with the meteorological information incorporated into the lost-use

calculations.
Recreational Trips Lost Due to the Spill

The calculation of lost recreational trips is based on a comparison of activity at Golden
Beach between 1999 and 2000. Adjustments are made for differences in weather and the
results are extrapolated to the entire recreational use impact zone using data from
helicopter overflights. The size of the relevant impact zone was assumed to stretch from
Potts point, just north of the Chalk Point power plant, to Broomes Island. This delineation
was based on the area of impact of oil on shorelines, the area of clean up activity, and

responses to the on-site survey. See Figure 1.

The data from Golden Beach show the level of daily activity at five community
recreational sites. To extrapolate from Golden Beach to the entire spill impact zone, it is
important to assume that the pattern of recreational activity there is typical of the larger
region. Based on information from site visits, the on-site surveys, and overflights, this
assumption would seem to be warranted. Most recreation trips in the impact zone appear
to be taken by residents of the local area, as is the case at Golden Beach. Furthermore, the
Golden Beach sites include beaches, picnic areas, boat ramps, piers and mooring buoys.
These types of facilities are representative of the facilities and activities observed

throughout the spill impact zone.


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix I

Table 3A
DAMAGE ASSESSMENT MODEL: APRIL 2000

1999 2000
Golden Impact Weather Golden
Beach Zone Adjusted Baseline Beach Actual Loss Per Diminished
Date Index. Trips Index Trips Index Trips Trip Value
(1) (2) (3) (4) (5) (6) (7) (8) (9)
4 na na na na na na na na
Al2 na na na na na na na na
AI3 na na na na na na na na
4l4 na na na na na na na na
45 na na na na na na na na
4I6 na na na na na na na na
47 na na na na na na na na
418 na na na na na na na na
419 na na na na na na na na
4110 na na na na na na na na
4ii1 na na na na na na na na
412 na na na na na na na na
4113 na na na na na na na na
44 na na na na na na na na
415 3.91 521 1.79 239 0.0 0.0 0.0 0.0
4/16 3.50 467 1.79 239 0.0 0.0 0.0 0.0
47 0.88 117 0.55 74 0.0 0.0 0.0 0.0
4/18 0.50 67 0.55, 74 0.0 0.0 0.0 0.0
419 0.50 67 0.55 74 0.0 0.0 0.0 0.0
4/20 4.13 150 0.94 126 0.0 0.0 0.0 0.0
4/21 0.89 119 0.55 74 0.0 0.0 0.0 0.0
4/22 1.00 133 3.05 407 0.0 0.0 0.0 0.0
4/23 1.82 243 1.79 239 0.0 0.0 0.0 0.0
4124 1.33 178 0.55 74 0.0 0.0 0.0 0.0
4125 1.13 150 0.55 74 0.0 0.0 0.0 0.0
4/26 0.10 13 0.94 126 0.0 0.0 0.0 0.0
4/27 0.83 411 0.55 74 0.0 0.0 0.0 0.0
4/28 0.20 27 0.94 126 0.0 0.0 0.0 0.0
4/29 2.00 267 3.05 407 0.0 0.0 0.0 0.0
4/30 2.31 308 3.05 407 0.0 0.0 0.0 0.0
Total 2,937 2,832 0.0 0.0

Calculation of Damages

(1) Lost Trips. 2,832
(2) Value of Each Trip Lost $ 27
(3) Total Value of Lost Trips $ 76,458
(4) Reduction in Value of Actual Trips $ 0
(5) Total Damages $ 76,458

H-3


Chalk Point Lost Use Valuation Report

Appendix II: Spreadsheet Calculations

Tables 1 — 6: Damage Model Tables
Tables S-1 to S-2: Supporting Tables to Text


Chalk Point Lost Use Valuation Report

for the appendices, which include the relevant mathematical tables and the calculation of

damages.

In order to determine economic damages it is necessary to compare the level of
recreational activity had the spill not occurred with the activity that actually occurred
subsequent to the spill. In gathering the appropriate information, it was decided that a
phased approach would be used, whereby initial investigations would determine the
extent of the research effort required. One possibility for obtaining the necessary
information was to undertake primary data collection using sample survey methods.
Following the initial investigations, it was judged that such an approach involved a level
of effort and cost disproportionate to the expected amount of damages in this case.
Representatives of the Trustees and the responsible parties made this judgment based on
visits to the site and the characteristics of the spill and the affected zone. It was
determined that existing data sources, augmented by limited primary data collection,

were sufficient to adequately assess recreational damages from the spill.

The most appropriate source of data available that allowed the comparison of baseline
and actual use levels was a set of records kept for a group of community recreational sites
in Golden Beach, Maryland. It was a major assumption of the analysis that the level of
decline in activity observed in Golden Beach is representative of the decline in activity in
the area as a whole. Additionally, the absolute level of activity at Golden Beach needed
to be extrapolated to the absolute level of activity in the entire area impacted by the spill.
To accomplish this, helicopter overflights were conducted that allowed us to compare
activity in the entire spill impact zone to the level of activity at Golden Beach. The

location of Golden beach is shown in Figure 1.


Chalk Point Lost Use Valuation Report

Department of the Environment, and the Maryland Department of Natural Resources
cooperatively initiated preliminary assessment activities. These four organizations
comprise the natural resource Trustees overseeing the case. The Trustees determined that
sufficient evidence of injury existed to proceed with the natural resource damage

assessment, including the evaluation of losses related to recreational use of the river.

Land use in the area affected by the spill consists primarily of a mixture of private
residences abutting the river, open agricultural land and forested uplands. The private
homes along the river typically have lawns reaching down to the shore and often have a
wooden pier extending into the water. The width of the river varies from about half a
mile to two miles. Creeks join the river at several points in the affected area, the largest
being Battle Creek, with waters suitable for motorized boating extending inland a little

over two miles from the main channel of the Patuxent.

There are five marinas located in the spill zone. Two are approximately 1.5 miles south
of the Chalk Point facility, another is located midway down the spill zone on the western
shore of the Patuxent, and two are on Broomes Island at the southern end of the spill
zone. Greenwell State Park, on the western shore of the Patuxent just south of Broomes
Island, offers a variety of shoreline amenities including a beach and picnic area. There are
several restaurants with outdoor seating directly on the water. Aside from the state park,
there are limited sites for shoreline use with designated public access. Several sandy
shoreline sites are accessible by boat or by small roads The shoreline community of
Golden Beach maintains several recreational facilities open only to community residents.
Most people using the Patuxent River are engaged in recreational activities like fishing,

swimming, boating or picnicking.

Ml. Damage Assessment Methods and Results

This section presents an overview of the study and analysis undertaken for this report,

leading to a determination of lost-use damages. Details of the damage model are reserved


Chalk Point Lost Recreational Use Valuation Report Appendix I

The Golden Beach Level-of-Use Index

The Golden Beach index used in the damage model represents the relative daily level of
activity over time. It is based on the average number of cars parked at the five sites
throughout a given day. The car counts were not recorded at regular times each day, nor
were they recorded the same number of times at different sites on a given day. They are
based on a series of snapshots of use rather than a record of the total number of cars
coming and going. To create a consistent index of use, the average number of cars
recorded at all sites from 6 a.m. to 9 p.m. was calculated for each day. This was
accomplished by taking the average of the car counts on a given day for each of the five
sites, then adding the five averages together. Thus, an index figure of 10 could mean
there were 2 cars at each of the five sites all day long, or 20 cars at one site for half the

day, and so on.

Figure I-1
Recreational Use At Golden Beach

7-Day Moving Average
1999 - 2000

100

60

Level Of Use Index

49

CHP ELK S FE KK VEL EOP EMS LHS SL

‘Source: Golden Beach Data, Table $-1. 4999 —2000

Figure I-1 shows recreational use at Golden Beach in 1999 and 2000 using this level-of-

use index in a seven-day (forward-looking) moving average. No weather adjustments


Chalk Point Lost Use Valuation Report

Overview of the Data

Trustee and RP representatives conducted a series of site visits to the Patuxent River to
investigate the location of recreational sites and the types of recreational activities
potentially affected by the spill. In addition, they gathered information from a variety of
sources regarding the level of recreational use on the river over time, historical weather
patterns, and the monetary value of the types of recreation observed. What follows is a

description of the data directly relied upon for the lost-use damage assessment.

e Recreational use data — Historical data were compiled showing the level of use in
1999 and 2000 at five recreational sites in Golden Beach, Maryland, a residential
community on the west shore of the spill zone. The data are based on daily records
kept by the Beach Management Corporation, a private organization that maintains the
sites and began keeping a daily log of recreational activity at the start of the 1999
season. :

¢ On-site surveys — Trustee and RP representatives conducted an informal survey of
people using the Patuxent River on two weekends in late summer 2000. Respondents
described their visits to the river that season and whether their knowledge of the oil
spill had affected their recreational choices. The survey was informal in that it relied
on convenience sampling rather than a statistically rigorous probability sample.

e Impact-zone overflights — Five helicopter overflights were conducted to record
current recreational use in the spill impact zone. These overflights resulted in a count
of the total number of people using the shoreline and open water at a given time
during the hours of peak use.

© Meteorological data — Records showing temperature, rainfall, cloud cover and other
weather variables that could affect recreational use were retrieved from the National
Climatic Data Center. The monitoring station for the relevant NCDC data is at the
Patuxent River Naval Air Station on the west shore of the river.

e Economic studies on the value of recreation — Previous studies that place a value

on recreation were drawn from the economics literature.


Chalk Point Lost Recreational Use Valuation Report Appendix I

spill was generally observed from mid-April through early August. Following August 5,
baseline and actual use fluctuate up and down but are roughly similar. August 5 was used
as the end date for lost trips due to the spill. The difference between baseline and actual
figures for 2000 amounted to 12,704 trips. Multiplied by the value of each trip, the total
damages from lost trips amounts to $343,010.

The Diminished Value of Actual Trips

Based on responses to the on-site survey, experience with other damage assessments, and
existing economics literature, it was determined that some recreational trips taken to the
impact zone were diminished in value due to the spill. Survey respondents indicated that
their knowledge of the spill detracted from their enjoyment of the visit. For example,
some parents did not let their children swim in the water, though the family participated
in other shoreline activities. Effects such as these appeared to decrease throughout the
summer, with most people interviewed in late August saying their use had returned to
normal by that time. The diminished value of actual trips occurs in addition to losses

from trips that were not taken because of the spill.

To calculate this component of recreational damages, the loss per trip was estimated for
each day based on an assumed exponential decline throughout the 2000 season. Losses
were assumed to begin May 1, when Golden Beach reopened after the spill, and to
continue through September. Losses in August and September were assumed to be small,
based on the limited effects still present at the time of the surveys. For each day, the loss
per trip was multiplied by the number of trips taken. The loss per trip was estimated to be
20 percent of the full value of a trip starting May 1. This figure is based on a previous
study assessing losses due to diminished trips following the American Trader oil spill
(Hanemann, 1997). Based on several site visits throughout the summer and a reasonable
interpretation of the on-site survey, the loss per trip is set to decline to 5 percent of full
value by June 15. The exponential expression AeTM determines, for each day ¢, the values

for loss per trip throughout the season.

' This calculation requires solving two equations with two unknowns: $27 x 0.2 = Ae®® and

I-10


Chalk Point Lost Use Valuation Report

CHALK POINT OIL SPILL:
LOST RECREATIONAL USE VALUATION REPORT

March 2001

Prepared for the
Chalk Point Trustee Council

Prepared by:

Heath Byrd
Eric English
Doug Lipton
Norman Meade
Ted Tomasi


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix Il

Table S-1
ADDITIONAL SUPPORTING DATA
LEVEL-OF-USE INDEX AND LOSS PER TRIP, SEVEN-DAY MOVING AVERAGE, 1999-2000
2000 Season
Reduction In Value
Estimated Recreational Activity. Of Trips Taken
1989 2000 Tost-Value
Golden Impact Index: 7-Day ‘Golden impact Index: 7-Day Daily 7-Day
Beach Zone Moving Beach Zone Moving Loss Per TotalLost_ Moving
Date Index Trips Average Index Trips Average Trip Value___ Average
(1) (2) (3) 4) (5) (6) 7”) (8) (9) (10)
4s 3.9 521 16 - 0 0 $0.00 $0 $0
46 3.5 467 4.2 - 0 0 $0.00 $0 $0
4n7 09 117 1.0 - 0 0 $0.00 $0 $0
4g 0s 67 1.0 - 0 0 $0.00 $0 $0
4ng 05 67 14 - 0 0 $0.00 $0 $0
4120 1 150 14 - 0 C) $0.00 $0 $0
42 0.9 119 1.0 - 0 0 $0.00 $0 $0
422 1.0 133 0.9 - 0 0) $0.00 $0 $0
4/23 18 243 11 : Cy) ) $0.00 $0 $0
4124 13 178 14 - 0 oO $0.00 $0 $0
4125 1A 150 1.2 - 0 0 $0.00 $0 $0
4/26 0.4 13 1.2 - 0 0 $0.00 $0 $0
4127 08 411 14 - ) ) $0.00 $0 $0
4128 02 27 14 - ) 0 $0.00 $0 $0
4/29 2.0 267 15 - 0 0 $0.00 $0 $0
4130 23 308 19 - 0 0 $0.00 $0 $0
5M 15 200 3.2 06 80 3.6 $5.40 $432 $2,217
5/2 15 200 33 1.0 133 4.0 $5.24 $698 $2,478
5/3 14 193 34 20 267 44 $5.08 $1,354 $2,692
5/4 09 119 35 1.2 160 42 $4.92 $788 $2,532
5/5 09 119 34 1.2 160 42 $4.77 $764 $2,525
5/6 48 643 33 98 1,303 42 $4.63 $6,031 $2,485
57 115 1,534 34 94 1,215 44 $4.49 $5,453 $2,261
5/8 24 279 26 39 519 42 $4.35 $2,260 $2,147
5/9 2.0 267 26 39 519 37 $4.22 $2,191 $1,881
5/10 28 347 27 0.4 57 35 $4.09 $234 $1,720
St 0.1 13 27 14 187 38 $3.97 $741 $1,825
52 04 13 3.5 07 89 43 $3.85 $342 $2,045
5/13 34 420 38 9.3 1,234 43 $3.73 $4,604 $2,016
5/14 84 4,125 5.2 97 1,287 34 $3.62 $4,657 $1,523
5/15 18 241 6.0 0.9 114 3.2 $3.51 $401 $1,308
5/16 28 375 5.9 23 311 3.4 $3.40 $1,059 $1,273
5/7 27 357 55 22 293 29 $3.30 $968 $1,174
5/18 53 708 54 5.4 115 2.9 $3.20 $2,286 $1,147
5/19 27 360 49 0.3 44 26 $3.10 $138 $984
5/20 127 1,690 49 29 383 3.2 $3.01 $1,153 $1,180
5/24 14.4 1,914 5.9 8.4 1,082 45 $292 $3,154 $1,563
5/22 05 67 7.0 0.4 53 45 $2.83, $151 $1,470
5/23 0.3 44 98 1.0 133 48 $2.74 $366 $1,552
5/24 17 227 10.1 22 293 47 $2.66 $780 $1,536
5/25 1.8 241 10.2 3.3 485 49 $258 $1,146 $1,558
5/26 34 413 10.4 45 603 5.0 $250 $1,506 $1,547
5/27 19.3, 2,571 10.2 11.9 1,582 48 $242 $3,834 $1,480
5/28 22.3 2,975 9.2 8.0 1,067 49 $2.35 $2,508 $1,387
5/29 20.3 2,703, 84 24 317 5.3 $2.28 $722 $1,413
5/30 24 316 6.3 0.9 117 5.1 $2.21 $258 $1,340
5131 22 291 64 33 434 5.4 $2.14 $929 $1,337
6 33 445 66 39 517 49 $2.08 $1,074 $1,275
62 14 187 6.6 3.3 445 48 $2.01 $896 $1,223
6/3 12.3 1,646 72 12.7 1,700 48 $1.95 $3,321 $1,185
6/4 16.7 2,223 73 10.6 4,420 5.6 $1.89 $2,690 $1,267
6/5 55 734 6.6 09 114 61 $1.84 $210 $1,299
66 34 a 63 1.0 133 64 $1.78 $238 $1,280
67 a4 551 6.6 24 286 6.0 $1.73 $494 $1,264
6/8 28 373 64 32 427 6.0 $1.67 $715 $1,250
6/9 5.6 752 63 29 385 6.4 $1.62 $626 $1,247
6/10 13.4 1,751 59 18.6 2,475 5.9 $1.57 $3,898 $1,198
et 11.8 4,577 5.6 14.3 4,909 49 $1.53 $2,915 $913

u-18


Chalk Point Lost Use Valuation Report

number of lost trips is estimated. For example, baseline trips for 2000 were estimated to
be 2,832 in April, 19,699 in May, and so on. Actual trips were estimated at 0 in April and
15,196 in May, resulting in an estimate of lost trips equal to 2,832 and 4,503 for those
two months, respectively. The total for April through September is 12,704 lost trips.

The Value of a Recreational Trip

Economists value recreational trips using the concept of consumer surplus. Consumer
surplus is the difference between what a person would be willing to pay for a good and
the actual cost of the good. The additional amount a visitor would be willing to pay to use
the Patuxent River beyond any expenses actually incurred represents the consumer

surplus, or economic value, for a given trip.

Over the past 30 years, numerous published studies have sought to determine the
appropriate consumer-surplus value for recreational activities in various settings. It is
common practice in resource damage assessments to rely on previous estimates of value
when a relatively costly, site-specific valuation study does not appear warranted given the
likely magnitude of damages. This reliance on previous value estimates is known as the
benefit-transfer method, and the details of how it is used in this study appear in Appendix
Iv.

The economics literature shows that the value of a recreation trip depends on the context
of the experience. The quality and features of the site, its proximity to population
centers, the availability of substitute sites, as well as technical details of the valuation
method itself all affect the value of a trip. Based on a review of the recreation valuation
literature, as well as knowledge of recreation use in the spill zone, it was determined that
$27 was an appropriate estimate of the average value of a recreational trip to the Patuxent

River.

The $27 figure represents an average value for the combination of recreational activities

that were observed in the impact zone, such as fishing, boating, swimming, backyard use,

-10-


Chalk Point Lost Use Valuation Report

The area of impact for the purposes of assessing damages, referred to here as the “spill
impact zone,” was assumed to include portions of the river and adjoining shoreline
beyond the area where oil was actually observed. The physical impacts of the oil varied
within this zone and some portions of shoreline within this zone were not physically
impacted by oil. Assumptions about the geographic extent of the area of impact were
supported by on-site surveys. Concerns over the potential for finding oil at a given site or
the possible presence of oil even where it is not visible apparently deterred some visitors.
One respondent using the river upstream of the spill site at Eagle Harbor indicated that
his use of the river had been affected by the spill. Other respondents using sites at Battle
Creek and Broomes Island, which are south of the area where oil came ashore, expressed
similar concerns. It is likely that respondents’ use was most affected near the Chalk Point

facility and the effect declined as the area of use moved farther away.

Based on the pattern of responses, as well as other factors discussed earlier, the spill
impact zone for lost recreational-use damages includes the area from just south of Eagle
Harbor at Potts Point in the north to Greenwell State Park and Peterson’s Point in the
south. This represents a region of about 17 miles in length, somewhat larger than the
actual area of closure following the spill. It should be noted that this delineates the area of
use, not the origin of recreational users. Anyone who might potentially visit sites in the

impact zone is counted in the study regardless of where they may live.

Overflight data were used to extrapolate activity at Golden Beach to the entire impact
zone. Recreation throughout the impact zone was counted visually and recorded on
videotape from a helicopter. By combining the overflight counts with data from Golden
Beach, daily use throughout the impact zone was estimated for the 1999 and 2000

recreation season. Details of this estimation procedure are described in Appendix I.

Had the spill not occurred, it was assumed that the pattern of use in 2000 would be
similar to use in 1999, but for the effects of weather. By adjusting 1999 figures for
differences in weather as described in Appendix III, a baseline level of expected use in

2000 is estimated. By comparing this baseline to an estimate of actual use in 2000, the


Chalk Point Lost Recreational Use Valuation Report Appendix IV

this valued species. Another study with relevant geographic coverage is McConnell and

Strand (1994) which arrives at a value of about $30 for a Maryland fishing trip.

A published paper by Walsh (Walsh et al. 1992) synthesized data from a variety of
previous studies and determines average and median values for a selection of recreational
activities. The values are reported on a per day basis, reflecting a variety of underlying
calculations. Sometimes a value for a trip is divided by the number of days per trip, other
times an annual value is divided by the number of days of participation per year. For our
purposes, a day is equivalent to a trip since most of the trips to the spill impact zone were

day trips. The Walsh study includes the fishing values shown in the table below.!

~ $71.92

Salt Water Fishing $112.75 $82.98

The spill impact zone on the Patuxent River includes numerous individual fishing sites.
Closing any one of the sites might result in a small loss per trip, but taken together, the
sites comprise a more valuable composite resource. Opportunities to fish elsewhere in the
region are available, but the extra travel time or a lack of familiarity with a new site

might provide deterrence for some.

However, a figure at the high end of the range of estimates would probably overvalue a
trip to the Patuxent River. The on-site survey performed for this assessment indicates that
most use in the spill impact zone was local in nature. If people are not traveling great
distances to reach these particular Patuxent River sites, then the resource is probably

considered comparable to the rest of Chesapeake Bay. Therefore, those from outside the

| The distinction between cold water and warm water fishing is not clearly defined in the Walsh paper and
the terms, though commonly used, are somewhat vague. In the Walsh analysis, cold water fishing includes
angling for anadromous fish. Typically, cold water fishing includes trout, salmon and striped bass, among
other species. Warm water fishing includes bass, panfish, catfish, pickerel and other species.

IV-3


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix II

Table 3F
DAMAGE ASSESSMENT MODEL: SEPTEMBER 2000

Notes (Columns)

(1) Dates refer specifically to 2000 figures. Figures for 1999 are shifted by two days so
that weekends and weekdays match with 2000. Thus the first line contains figures
for September 3, 1999 and September 1, 2000. The pupose of presenting 1999
figures is solely to construct baseline estimates of use for 2000.

(2) The Golden Beach index of recreational use is the average number of cars.
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland. Records for Row 9/14 were missing in 1999. The figure from Row 9/15 is
substituted. Likewise for 2000, 9/25 and 9/26 were both missing, and were replaced
with the figure for 9/27.

(3) Column (2) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(4) Data for 1999 is adjusted for differences in weather to create a prediction of
2000 baseline use. Details of the weather adjustment are presented in Appendix III.

(5) Column (4) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(6) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland.

(7) Column (6) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(8) The loss per trip is determined according to specifications in Table 2.

(9) Column (7) x Column (8)

Notes (Calculation of Damages)

(1) Damages due to lost trips were determined to end in August, so no lost trips are
calculated for September.

(2) This figure is based on data from the relevant economics literature. See Appendix IV.

(3) Row (1) x Row (2)

(4) Total diminished value of actual trips, from the total in Column (9).

(5) Row (3) + Row (4)

W-14


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix II

Table 2
TABLE OF VARIABLE INPUTS

Variable Description Data Input

(1) The Value of a Recreational Trip $27

(2) Diminished Value of Trips Taken After the Spill

Start of Season 5/1/00 20.0%|
Mid-June 6/15/00 5.0%|
Change Over Time Exponential Decay|

Notes

(1) This is the value of a trip to the Patuxent River, including the range of
activities observed in the spill impact zone: fishing, swimming, backyard
use, etc. Based on the benefit-transfer method. See Appendix 4.

(2) Trips taken to the impact zone were diminished in value due to the spill.
The amount of lost value per actual trip was 20 percent of the full value of
a trip on 5/1/00, and so on. For details, see the explanation of damage
assessment methods in the text of this appendix.


CHALK POINT LOST USE DAMAGE ASSESSMENT

Table S-1
ADDITIONAL SUPPORTING DATA

LEVEL-OF-USE INDEX AND LOSS PER TRIP, SEVEN-DAY MOVING AVERAGE, 1999-2000

Appendix I!

2000 Season
Reduction In Value
Estimated Recreational Activity Of Trips Taken
1999, 2000 Tost-Value
Golden Impact Index: 7-Day Golden impact Index: 7-Day Daily 7-Day
Beach Zone Moving Beach Zone Moving Loss Per Total Lost Moving
Date Index Trips Average Index Trips Average Trip Value___ Average
(4) (2) (3) (4) (5) (6) (7) (8) (9) (10)
6/12 32 427 5.6 04 50 47 $1.48 $74 $800
613 53 710 53 07 89 48 $1.44 $128 $815
eta 29 387 5.4 24 286 55 $1.39 $398 $014
65 2.0 267 54 38 511 56 $1.35 $690 $929
66 3.0 400 6.4 1.6 217 58 $1.31 $284 $928
6/17 112 1,498 6.3 112 1,497 6.2 $1.27 $1,900 $989
Cary 112 1,498 70 12.9 1,727 7.0 $1.23 $2,125 $1,037
619 14 152 87 1 152 97 $1.19 $182 $1,333
6/20 42 554 8.9 5.3 705 10.0 $1.16 $816 $1,372
6/24 52 697 8.6 34 450 97 $1.12 $505 $1,311
6/22 65 873 8.3 AT 629 9.4 $1.09 $684 $1,260
6/23 49 655 8.0 5.0 672 9.2 $1.08 $709 $1,223
6/24 15.7 2,090 8.4 16.4 2,184 95 $1.02 $2,235 $1,230
6/25 23.3 3,104 96 31.7 4,233, 9.3 $0.99 $4,199 $1,147
6/26 26 360 92 36 476 8.6 $0.96 $458 $962
6/27 20 273 10.3 34 47 97 $0.93 $389 $1,060
6/28 3.3 440 10.4 1.2 160 11.4 $0.90 $145, $1,219
6/29 44 587 10.7 37 490 11.6 $0.88 $430 $1,229
6/30 78 4,043 10.7 67 889 12.0 $0.85, $756 $1,259
7m 24.1 3,210 10.1 15.0 2,001 11.9 $0.82 $1,650 $1,233
112 20.2 2,691 84 273 3,639 147 $0.80 $2,910 $1,168
73 10.4 1,389 87 11.0 1,467 10.2 $0.78 $1,138 $959
14 24 325 7.6 15.0 2,001 8.9 $0.75 $1,504 $816
15 57 762 76 23 300 74 $0.73 $219 $631
716 40 530 74 67 896 72 $0.71 $633 $629
m 40 530 74 6.3 838 68 $0.69 $575, $582
718 12.4 4,653 75 13.5 1,803 6.3 $0.66 $1,198 $531
719 217 2,896 79 16.8 2,245 52 $0.64 $1,447 $422
710 3.0 400 774 16 217 44 $0.62 $135 $321
7m 28 371 74 26 343 49 $0.61 $208 $352
72 20 267 74 26 350 5.2 $0.59 $206 $364
73 6.2 830 73 4.0 534 48 $0.57 $304 $338
m4 43 570 69 3.0 400 49 $0.55 $221 $331
75 15.4 2,053 67 6.1 810 5.1 $0.54 $434 $338
76 16.1 2,144 62 10.6 1,418 6.6 $0.52 $737 $413
TNT 3.2 427 6.6 53 700 74 $0.50 $353 $438
718 45 504 67 45 600 68 $0.49 $293, $394
79 17 222 6.2 04 87 63 $0.47 $27 $363
7120 29 387 65 42 556 64 $0.46 $265 $366
7/21 35 467 67 45 600 62 $0.45, $267 $350
7122 11.3 1,503 7.4 167 2,223 5.9 $0.43 $960 $328
7123 19.5 2,599 77 16.2 2,167 54 $0.42 $907 $275
7124 3.6 480 65 08 11 46 $0.41 $45 $215
7/25 1.2 160 66 15 200 46 $0.39 $79 $216
7126 33 440 72 1.0 133 48 $0.38 $51 $223
127 47 622 74 28 378 53 $0.37 $140 $241
7/28 5.9 785 7A 24 317 5.3 $0.36 $114 $236
7129 15.7 2,092 69 128 1,701 53 $0.35 $592 $234
7/30 14.3 1,502 69 10.8 1,441 5.2 $0.34 $486 $215
731 40 534 68 14 152 57 $0.33, $50 $218
Bit 54 718 6.9 3.0 400 58 $0.32 $127 $220
8/2 27 366 65 44 581 57 $0.31 $179 $214
8/3 44 587 67 27 356 53 $0.30 $106 $196
8/4 45 6068 68 26 343 5.2 $0.29 $99 $189
8/5 15.6 2,084 65 12.2 1,623 5.2 $0.28 $455 $187
8/6 10.9 1,449 5.4 14.0 1,867 6.0 $0.27 $508 $197
8/7 47 625 5.9 19 248 45 $0.26 $65 $140
8/8 29 382 58 24 320 44 $0.26 $82 $134

n-419


CHALK POINT LOST USE DAMAGE ASSESSMENT

Table 1
SUMMARY OF RESULTS
(1) Value of Lost Trips
‘Total Impact Zone User Trips Lost (2000)
April 2,832)
May 4,503)
June 897
July 3,888)
August 584
September 0
Total 12,704
Value of Lost Trips
April $ 76,458
May $ 121,574
June $ 24,231
July $ 104,983
August $ 15,764
September $ 0
Total $343,010
(2), Lost Value of Actual Trips
Total Impact Zone Actual Trips Taken
April t)
May 15,196
June 25,644
July 30,598
August 22,493
September 18,427
Total 112,359
Reduction in Value of Actual Trips
April $ (0)
May $ 51,909
June $ 34,182
July $ 18,138
August $ 4,635
September $ 1,625
Total $110,489
(3) Total Lost Recreational Use $ 453,499

Notes

(1) This category of damages represents losses from a decline in

recreational activity due to the spill.

(2) This category of damages represents the reduction in value of
trips taken to the spill impact zone in the months following the

spill.

(3) This is the estimate of total lost-use damages, calculated as

the sum of damages in (1) and (2).

Appendix It


Chalk Point Lost Use Valuation Report

Figure 1: Lost Human Use Assessment Area

CHALK POINT OIL SPILL

LOST HUMAN USE
ASSESSMENT AREA



Chalk Point Lost Recreational Use Valuation Report Appendix I

Figure 1-3
Recreational Use And Hours Per Peak User

120.0%

100.0%

80.0%

60.0%

Normalized Recreational Use

40.0%

6:00 7:00 8:00 9:00 10:00 11:00 12:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00
AM AM AM AM AM AM PM PM PM PM PM PM PM PM PM

‘Source: Golden Beach Data, Table 4,

recreation occurred throughout the day. For example, if there are 100 people on the
beach from noon to 1 p.m., we inferred that there were 93 people from 6 p.m. to 7 p.m.,
and so on. Those 93 people represent 93 hours of recreational use. On average, the total
daily recreational use would amount to 12 hours per peak user, or the total area of the

bars shown in the chart.

Typically, recreation is valued not by the hour but by the trip. To convert hours to trips,
the average length of a recreational trip was determined. This was done using an informal
survey of people recreating on the Patuxent River, which generally accorded with
recreational literature estimates of the duration of a recreational outing. The survey was
conducted over a period of a few days in late August and early September and responses
were gathered from 52 people selected by convenience sampling. The results of the
survey are presented in Table 5 of Appendix II. The average length of a trip was 4.6
hours. Thus, on average, there are 12 / 4.6 = 2.6 trips taken for each peak user observed

in the spill zone, including Golden Beach.

1-7


Chalk Point Lost Recreational Use Valuation Report Appendix IV

Appendix IV: Valuing Recreation and the Benefit-Transfer Method

Accepted economic theory holds that the value of recreational activity at a given site is
measured by the recreator’s consumer surplus. This is the additional amount a visitor to a
site would be willing to pay for access to the site, beyond any actual costs such as boat
launch fees or travel expenses. The value of recreation varies depending on the type of
recreational activity involved, the type and quality of the facilities and resources, the
availability of substitute sites with similar recreational opportunities, and the

characteristics and preferences of the site visitors.

When valuing trips at a particular site, it is common for economists to rely on previous
estimates of value for trips to similar recreational sites when a costly on-site study is
unwarranted. The process of applying a value for a given site from within the range of
value estimates available in the economics literature is called the benefit-transfer method.
It is the purpose of this technical appendix to present evidence regarding the relevant
types of recreational use and to explain the basis for the choice of the value of a typical

Patuxent River trip used in this assessment.

The value ultimately used in this study represents a combination of the activities
observed in the spill impact zone. As discussed previously, activities occurring in the
spill impact zone include fishing, boating, backyard recreation and general public
shoreline use such as sunbathing, swimming and picnicking. The length of the affected
area, roughly from Eagle Harbor to Greenwell State Park, is about 17 miles. This
includes an additional two miles beyond the actual April closure zone and is based on a

reasonable upper-bound assessment of the extent of impact apparent in on-site surveys.

As noted previously, the majority of recreational use in the affected area is by local
residents. In the survey, the average distance traveled to get to the site was about 25
miles. But some use was from within walking distance in one’s own neighborhood. This
has several implications. On the one hand, the local nature of recreational trips makes it

less likely that trips not taken in the impact zone were instead taken to substitute sites

Iv-1


Chalk Point Lost Recreational Use Valuation Report Appendix IV

REFERENCES

Bell, F.W. and V.R. Leeworthy, An Economic Analysis of the Importance of Saltwater
Beaches in Florida, 1986.

Freeman, A. M. The Benefits of Water Quality Improvements for Marine Recreation:: A
Review of the Empirical Evidence, 1995.

Hanemann, M. Final Conclusions of Professor Michael Hanemann Regarding Lost
Recreational Damages Resulting From the American Trader Oil Spill, 1997.

McConnell, K.E. and LE. Strand, The Economic Value of Mid and South Atlantic
Sportfishing, 1994.

Morey, E.R., R.D. Rowe and M. Watson, A Repeated Nested-Logit Model of Atlantic
Salmon Fishing, 1993.

Parsons, G.R., D.M. Massey and T. Tomasi. Familiar and Favorite sites ina Random
Utility Model of Beach Recreation, 1999.

Norton, V., T. Smith and I. E. Strand, eds. Stripers, The Economic Value of the Atlantic
Coast Commercial and Recreational Striped Bass Fisheries, 1983.

Walsh, R. G., D. M. Johnson and J. R. McKean. Benefit Transfer of Outdoor Recreation
Demand Studies, 1968-1988, 1992.


CHALK POINT LOST USE DAMAGE ASSESSMENT

Table 3D

DAMAGE ASSESSMENT MODEL: JULY 2000

Appendix ti

1999 2000
Golden Impact Weather Golden
Beach Zone Adjusted Baseline Beach Actual Loss Per — Diminished
Date Index Trips Index Trips Index. Trips Trip Value
(1) (2) (3) (4) (5) (6) (7) (8) (9)
7M 24.1 3,210 20.1 2,677 15.0 2,001 $0.82 $1,650
72 20.2 2,691 20.1 2,677 27.3 3,639 $0.80 $2,910
7/3 10.4 1,389 12.3 1,645, 11.0 1,467 $0.78 $1,138
7/4 24 325 11.8 1,570 15.0 2,001 $0.75 $1,504
75 57 762 46 613 2.3 300 $0.73 $219
7/6 40 530 46 613 67 896 $0.71 $633
77 4.0 530 27 358 6.3 838 $0.69 $575
718 12.4 1,653 20.1 2,677 13.5 1,803 $0.66 $1,198
7/9 21.7 2,896 20.1 2,677 16.8 2,245 $0.64 $1,447
70 3.0 400 27 358 16 217 $0.62 $135,
7/14 28 371 27 358 26 343 $0.61 $208
7TH2 2.0 267 46 613 2.6 350 $0.59 $206
7N3 6.2 830 46 613 4.0 534 $0.57 $304
74 43 570 27 358 3.0 400 $0.55 $221
7N5 15.4 2,053 41.77 1,570 6.1 810 $0.54 $434
76 16.1 2,144 41.77 1,570 10.6 1,418 $0.52 $737
TNT 3.2 427 2.68 358 5.3 700 $0.50 $353
78 45 594 2.68 358 45 600 $0.49 $293
79 17 222 2.68 358 0.4 57 $0.47 $27
7/20 29 387 2.68 358 42 556 $0.46 $255
7/21 3.5 467 2.68 358 45 600 $0.45 $267
7/22 11.3 1,503 20.07 2,677 16.7 2,223 $0.43 $960
7123 19.5 2,599 20.07 2,677 16.2 2,167 $0.42 $907
7/24 3.6 480 2.68 358 0.8 111 $0.41 $45
7/25 1.2 160 2.68 358 1.5 200 $0.39 $79
7/26 3.3 440 2.68 358 1.0 133 $0.38 $51
727 47 622 2.68 358 28 378 $0.37 $140
7/28 5.9 785 2.68 358 24 317 $0.36 $114
7129 15.7 2,092 20.07 2,677 12.8 1,701 $0.35 $592
7130 11.3 1,502 11.77 1,570 10.8 1,441 $0.34 $486
7134 4.0 534 2.68 358. 44 152 $0.33 $50
Total 33,435, 34,487 30,598 $18,138
Calculation of Damages

(1) Lost Trips 3,888

(2) Value of Each Trip Lost $ 27

(3) Total Value of Lost Trips $ 104,983

(4) Reduction in Value of Actual Trips $ 18,138

(5) Total Damages $ 123,121


CHALK POINT LOST USE DAMAGE ASSESSMENT

Table 3D
DAMAGE ASSESSMENT MODEL: JULY 2000

Notes (Columns)

(1) Dates refer specifically to 2000 figures. Figures for 1999 are shifted by two days so
that weekends and weekdays match with 2000. Thus the first line contains figures
for July 3, 1999 and July 1, 2000. The pupose of presenting 1999 figures is solely to
construct baseline estimates of use for 2000. Note that July 3, 2000 was a Monday,
but was part of a holiday weekend. It was therefore treated as a combination of a
weekend and weekday, with the baseline calculated as an average of the weekend
and weekday baselines.

(2) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland. Records for Row 7/7 were missing in 1999. The figure from Row 7/6 is
substituted.

(3) Column (2) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(4) Data for 1999 is adjusted for differences in weather to predict
2000 baseline use. Details of the weather adjustment are presented in Appendix Ill.

(5) Column (4) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(6) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland.

(7) Column (6) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(8) The loss per trip is determined according to specifications in Table 2.

(9) Column (7) x Column (8)

Notes (Calculation of Damages)

(1) The total in Column (5) minus the total in Column (7).

(2) This figure is based on data from the relevant economics literature. See Appendix IV.

(3) Row (1) x Row (2)
(4) Total diminished value of actual trips, from the total in Column (9).
(5) Row (3) + Row (4)

-10

Appendix II


Chalk Point Lost Recreational Use Valuation Report Appendix II

After defining a foul-weather day, the following model was estimated using linear

regression analysis:
1999 Golden Beach Index = By + B;* Weekend + B)*Foul Weekend + B3*Foul Weekday
The variables on the right-hand side are all binary dummy variables identifying the type

of day. The results are summarized in the table below.

Weather Regression Results

N= 169 Mean of 1999 Golden Beach Index = 5.48
Parameter OLS Estimate S.E. t-ratio p-value
Constant 3.48 0.43 8.18 0.00
Weekend 10.66 0.73 14.56 0.00
Foul Weekend ~5.85 0.97 -6.05 0.00
Foul Weekday -1.45 0.61 -2.38 0.02
F = 103.15 Adjusted R? = 0.65
p=0.00

Using this model, the estimated average effect of foul weather on recreational use at
Golden Beach from April 15 to September 30 1999 can be calculated for weekdays and
weekend days. The Golden Beach index on a non-foul weekday is Bo, which is estimated
to be 3.48. The index on a foul-weather weekday = Bot+P3 = 3.48+(-1.45) = 2.03. Thus,
the model predicts use on a foul-weather weekday that is 58.33% of a non-foul weekday
during the 1999 season. Similarly, the index on a non-foul weekend day = Bot B; =
3.48+10.66 = 14.14. The Golden Beach index on a foul-weather weekend day =

I-2



Chalk Point Lost Recreational Use Valuation Report Appendix I

Ly = Ls (Lh Xsnt/ Zh Toxooy )

The Helicopter Multiplier
The multiplier M is the average number of trips per index unit L for the five days when

helicopter overflights were conducted. The number of trips is estimated using the count

of peak users C multiplied by the estimated number of trips per peak user T.

M= >: (C,T/L,) /5, for the five days t when overflights were conducted

Trips Per Peak User
The number of trips 7 per peak user is estimated based on the typical pattern of use

represented in the Golden Beach data. First, the number of hours H per peak user is
calculated. It is the sum of relative (normalized) use U throughout the day divided by the

average normalized peak use.

H= Xn Un/ Upeak

The discussion of the calculation of U is postponed for the moment. To see that the above
equation is true, it helps to realize that Upeak / Upeak is one, corresponding to one person
observed during a given peak hour, which in turn represents one hour of recreational use.
The sum of Uh / Upeak for all h during the seven peak hours represents seven hours of
recreational use, and so on. If 100 people were observed during a given peak hour, on
average one would expect that 100 people were present for the entire span of seven peak
hours, representing 700 hours of recreational use. Adding up Un / Upeak for all 15 hours
contained in the daily Golden Beach data results in 12 hours of use for each peak user

observed.

To find the number of trips T per peak user, we need the average number of hours A per

trip, calculated using on-site surveys.

T=H/A,


Chalk Point Lost Use Valuation Report

Appendix IV: Valuing Recreation and the Benefit Transfer Method


Chalk Point Lost Use Valuation Report

I Executive Summary

This report presents the data and methods leading to a calculation of lost recreational-use
damages due to the Chalk Point oil spill. The term “lost-use damages” refers in this case
to the decline in value of recreational uses associated with a resource that has been
affected by the spill. The presence of oil in the Patuxent River following the Chalk Point
incident affected swimming, fishing, boating, backyard use and other activities.
Determining the nature and extent of these effects and the value of the resulting losses is

the purpose of the analysis contained herein.

Calculation of damages due to lost recreational use is part of the Natural Resource
Damage Assessment (NRDA) process. Ecological damages, such as harm to wildlife or
habitats, will also be included in the public NRDA claim and are described in other case
documents. Commercial losses and spill-related out-of-pocket expenses to area residents
are not part of the public claim. Total estimated lost recreational-use damages and the

two sub-categories that comprise total damages are presented in the table below.

j Total Value of Lost Trips ; ; -_ ~ $343,010

Diminished Value of ‘Actual Trips ; $110,489

An estimated 12,704 recreational trips were lost due to the spill. These lost trips reflect
the fact that some people who typically use the Patuxent River for recreation made fewer
visits in the 2000 season (April through September) due to concerns about the spill. The
total value of the lost trips is estimated to be $343,010. Data used in this analysis
indicate that these losses began immediately after the spill in April and continued through

early August.


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix Il

Table 6
CALCULATION OF IMPACT ZONE MULTIPLIER
Based On Golden Beach Car Counts and Overflight Peak Recreation Counts

Impact Zone
Overflight Estimated Multiplier:
Date Of Impact Zone Trips Per Peak Impact Zone Golden Beach Trips/
Overflight Total Count__ User Counted Total Trips _Index Of Use Index Unit

2) (2) (3) (4) (6) (6)

08/12/00 816 2.61 2,128 17.5 122

08/19/00 682 2.61 4,777 11.3 157

09/09/00 561 2.61 1,462 414 131

09/10/00 675 2.61 1,759 13.1 134

09/13/00 108 2.61 282 2.4 116

Total 2,841 2.61 7,407 55.53 133
Notes:

(1) Overflights were conducted on four weekend days and one weekday.

(2) The total number of recreators were counted throughout the impact zone
during hours of peak use.

(3) See Table 6 entitled "Trips Per Peak User Observed." This figure is based on the typical
level of use throughout the day (using Golden Beach data) and the typical length of a
recreational trip (using surveys conducted throughout the impact zone). Given a
snapshot of recreational use recorded sometime during peak hours (11 a.m. to 5 p.m.),
an estimated 2.66 recreational trips occurred for each peak user observed.

(4) Calculation: Row (2) x Row (3)

(5) See Table 5 entitled "Summary of Damage Assessment: June - September 2000."

(6) Calculation: Row (4) / Row (5).

N-17


CHALK POINT LOST USE DAMAGE ASSESSMENT

Table 4
TRIPS PER PEAK USER OBSERVED
Normalized
Hourly Level Average Peak Use As
Time Of Use Use % Of Peak
(1) (2) (3) (4)

0.32 26.1%
0.64 51.9%
0.73 59.0%
0.83 66.6%
0.98 78.8%
1.38 1.24 100.0%
4.17 1.24 100.0%
1.10 1.24 100.0%
1.47 1.24 100.0%
1.14 1.24 100.0%
1.12 1.24 100.0%
1.30 1.24 100.0%
1.16 93.2%
0.91 73.5%
0.58 46.9%

(1) Total Person-Hours 12.0

(2) Average Trip Length 46

(3) Trips Per Peak User Observed Peak 2.61

Notes (Columns)

(1) The row "6:00 AM" refers to the time period 6 a.m. to 7 a.m., and so on. Records prior to
6 a.m. and after 9 p.m. were only sporadically maintained and were therefore not includd
in this analysis.

(2) These unitless figures represent the relative intensity of use throughout the day based on
data from Golden Beach.

(3) Hours of peak use are judged to be 11 a.m. to 5 p.m., based on visual inspection of the
numbers in Column (1) and Figure 2 entitled "Normalized Hourly Level Of Use At Five
Golden Beach Sites." The average of the peak-use figures in Column (1) is calculated
to be 1.24.

(4) The intensity of use for a given time period is represented as a percentage of peak use.

Notes (Rows)

(1) Given the pattern of use represented in Column (3), it can be estimated that there are
typically 12 user-hours of recreational activity associated with each person observed
during peak hours. This is simply the total of Column (3) expressed in units rather than
percentages.

(2) See Table 7 entitled "The Length of a Recreational Trip."

(3) Calculation: Row (1) / Row (2)

Given the estimated hours of recreational use per peak user and the average
hours per trip, recreational trips per peak user can be calculated.

-15

Appendix I


Chalk Point Lost Use Valuation Report

Appendix I: Damage Assessment Data and Methods


Chalk Point Lost Recreational Use Valuation Report Appendix III

0.5833x for weekdays, and 0.5867y for weekend days. The calculated weather-adjusted
baselines for each month are presented in Tables 3A through 3F in Appendix 1.


Chalk Point Lost Recreational Use Valuation Report Appendix IV

General Shoreline Use

Many areas in the spill impact zone are frequented by visitors engaged in a variety of
recreation activities, including sunbathing, swimming, wildlife viewing, etc. These types
of general shoreline use were evaluated by the Department of the Interior in developing
its regulations for Type A damage assessment (which includes the benefit transfer
method). DOI examined seven valuation studies, and recommended that a generic day of

beach recreation in the United States be valued at about $15 per trip.

The 1992 Walsh study also included results for three types of shoreline activity observed

in the Patuxent River spill impact zone. These values are presented below.

Picnicking

Residential Backyard Use

A significant portion of the activity observed during the helicopter overflights consisted
of residential backyard use. These uses included cookouts, sunbathing, swimming and
other activities, much like the general shoreline use category above. Backyard use may
provide additional value compared to public recreation sites. The values obtained in
studies of beach use and picnicking incorporate downward adjustments to the degree that
substitute destinations are available. Familiarity and proximity are important attributes
for a viable substitute site, and in this regard backyards are significantly more desirable
than most available alternatives. Alternatively, backyard use tends to be frequent and
non-unique compared to some of the experiences valued in the economics literature,

which typically involve non-negligible travel away from home.

Iv-5


Chalk Point Lost Recreational Use Valuation Report

Appendix I

the Golden Beach sites in 2000 between April 15 and May 1 (when data collection began

in 2000).

As an example of the Golden Beach recreational use data, the data for July 17, 1999 are

presented in Tables 1 and 2, below. Table 1 shows the data as recorded by officials at

Golden Beach. Table 2 is a restatement of the same data, allocated to the appropriate

hourly interval. These are the hourly counts referred to in the text. For example, the 8

a.m. count for the “Benson’s” site at Golden Beach is 8 cars.

Table 1: The Golden Beach Data For July 17, 1999

Finish Long Small Trent Main
Time Benson's _ Point Beach Hall Beach
5:40 AM 4 0 0 0 0
7:44 AM 8 0 1 1 0
8:55 AM 8 2 1 1 1)
10:22 AM 9 2 0 1 0
11:47 AM 6 8 0 0 1
12:00 PM Na 20 na na na
12:20 PM 7 na 1 0 1
1:45 PM 6 na 0 0 2
3:00 PM Na 10 na na na
3:10 PM 10 na 0 0 1
4:35 PM 11 na 0 0 0
6:00 PM 8 na 0 0 0
6:00 PM Na 7 na na na
7:30 PM 5 na 1) 0 0
9:00 PM 3 na 0 0 0

1-2


Chalk Point Lost Use Valuation Report

TABLE OF CONTENTS

I. Executive SUMMary ..........ccsscccecceeecsecceecenceeerscescnseeesnceeeessesnenees 2

Il. Description of the Spill Incident ....

Ill. Damage Assessment Methods and Results ...........cssececesesescreseeseseeeess 4

Overview of the Data
Recreational Trips Lost Due to the Spill
The Value of a Recreational Trip ..
Recreational Trips Diminished Due to the Spill .

Total Damages: The Total Value of Lost Trips and the Diminished
Value of Actual Trips ..........:sccceeccseceesceescereceeevcensenevceeeeeeoe 11

eeceee

TV. Conclusion ...........ssccceseesceccneeeccecnceceeenececeessscaseseesneeceseeasscsenses 11

Appendix I: Damage Assessment Data and Methods .............ssssssesseeeeseeeeee I-1

Appendix II: Spreadsheet Calculations
Tables 1 - 6: Damage Model Tables ..
Tables S-1 to S-2: Supporting Tables to Text .

Appendix III: Meteorological Data and Adjustments for Weather ............... W-1

Appendix IV: Valuing Recreation and the Benefit-Transfer Method ............. Iv-1


CHALK POINT LOST USE DAMAGE ASSESSMENT

Table 3C
DAMAGE ASSESSMENT MODEL: JUNE 2000

Notes (Columns)

(1) Dates refer specifically to 2000 figures. Figures for 1999 are shifted by two days so
that weekends and weekdays match with 2000. Thus the first line contains figures
for June 3, 1999 and June 1, 2000. The pupose of presenting 1999 figures is
solely to construct baseline estimates of use for 2000.

(2) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland. Records for Row 6/18 were missing in 1999. The figure from Row 6/17 is
substituted.

(3) Column (2) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(4) Data for 1999 is adjusted for differences in weather to create a prediction of
2000 baseline use. Details of the weather adjustment are presented in Appendix III.

(5) Column (4) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(6) The Golden Beach index of recreational use is the average number of cars.
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland.

(7) Column (6) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(8) The loss per trip is determined according to specifications in Table 2.

(9) Column (7) x Column (8)

Notes (Calculation of Damages)

(1) The total in Column (5) minus the total in Column (7). The result is negative 531, so
there were no lost trips in June.

(2) This figure is based on data from the relevant economics literature. See Appendix IV.

(3) Row (1) x Row (2)

(4) Total diminished value of actual trips, from the total in Column (9).

(5) Row (3) + Row (4)

N-8

Appendix fl


Chalk Point Lost Recreational Use Valuation Report Appendix I

The daily calculation of losses is presented in Tables 3A through 3F of Appendix II. The
loss per trip declines from $5.40 at the beginning of May to $1.35 in mid-June and to
$0.06 by the end of September. The total diminished value by the end of September
equals $110,489.

The Damage Model Presented in Equations

Variable Definitions

Q =Total quantity of trips in a given season

N = Total lost recreational trips for the 2000 season

V = Value of a recreational trip

T = Trips per peak user observed

A= Average length of a trip

H = Hours of recreation per peak user observed

M = Multiplier based on helicopter overflights, relating Golden Beach activity to trips
throughout the spill impact zone

C, = Count of recreational users throughout the spill impact zone on a given day f
(observed by helicopter overflight)

L, = Level-of-Use Index for Golden Beach for day t

Uns = Use at Golden Beach for a given hour h at a given site s. Ujs is normalized by the
daily level-of-use index L,, so that Uj; represents a measure of hourly use relative
to use throughout the day, consistent across all days.

Un = &sUns= Use at all five Golden Beach sites combined for hour h

Uneak = ZhUn/ 7 for h = 11a.m. to 5 p.m., the seven hourly periods of peak use at Golden

beach

Xsn = Count of cars parked at Golden Beach for site s, hour / and day t

$27 x 0.05 = Ae**), where 45 is the number of days from May | to June 15. The results are A = $5.40
and b = 0.03, so that the loss per trip at any given time is 5.4¢°°TM,

1-11


Chalk Point Lost Use Valuation Report

NOTE TO READER

A sum of money equal to the monetary estimate of the value of lost recreational use
contained in this report shall be spent on one or more restoration projects (including
projects that can lead to the rehabilitation, replacement, or acquisition of equivalent
natural resources and/or services) to make the environment and public whole for the loss.
In compliance with the Natural Resource Damage Regulations implementing the Oil
Pollution Act, 15 C.F.R. Part 990, the Trustees will identify a reasonable range of
restoration alternatives to compensate for the lost recreational use, evaluate and select the
preferred alternative(s) and include them in the draft restoration plan. The draft
restoration plan will be provided to the public for comment once all of the injuries from
the Chalk Point oil spill have been quantified and all of the preferred restoration projects

have been selected and scaled appropriately.


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix I

Table S-1
ADDITIONAL SUPPORTING DATA
LEVEL-OF-USE INDEX AND LOSS PER TRIP, SEVEN-DAY MOVING AVERAGE, 1999-2000
2000 Season
Reduction In Value
Estimated Recreational Activity Of Trips Taken
4999 2000 Lost-Value
Golden Impact Index: 7-Day Golden Impact Index: 7-Day Daily 7-Day
Beach Zone Moving Beach Zone Moving Loss Per TotalLost_ Moving
Date Index Trips Average Index Trips. Average Trip Value__ Average
(4) (2) (3) (4) 6) (6) a”) (8) (9) (10)

8/9 38 509 58 17 222 Aq $0.25, $55 $142
8/10 5.1 684 5.6 18 240 5.2 $0.24 $58 $154
att 23 307 55 27 362 59 $0.23, $84 $169
12 84 4119 5.9 175 2,334 58 $0.23 $528 $164
8/13 14.4 4,875 5.9 38 507 49 $0.22 $111 $128
14 38 511 64 08 107 66 $0.21 $23 $165
8/15 3.3 436 6.2 48 640 7.0 $0.21 $132 $173
816 1.9 252 6.3 5.3 TM 68 $0.20 $142 $166
8/17 48 637 6.1 63 845 64 $0.19 $164 $154
88 49 654 5.8 2.0 267 64 $0.19 $50 $142
B19 8.5 1,128 5.7 11.3 1,512 64 $0.18 $276 $146
8/20 178 2,380 7.0 15.6 2,075 68 $0.18 $367 $146
8/21 24 280 69 34 457 64 $0.17 $78 $123
8/22 4.0 534 67 38 507 57 $0.17 $84 $114
8/23 0.8 100 63 26 347 55 $0.16 $56 $108
8/24 23 311 64 40 534 53 $0.16 $83 $103
8/25 45 600 64 3.9 514 54 $0.15 $78 $103
8/26 17.2 2,288 6.3 14.4 1,886 56 $0.15 $277 $103
8/27 17.4 2,318 49 10.9 1,451 54 $0.14 $207 $93
8/28 0s 67 3.0 0.9 114 5.4 $0.14 $16 $86
8/29 13 176 3.9 23 300 6.2 $0.13, $40 $98
8/30 1.9 253 42 12 156 6.2 $0.13, $20 $97
8/31 24 286 42 5.0 667 62 $0.13 $84 $97

on 34 454 44 46 610 6.0 $0.12 $74 $91

912 15 1,000 40 13.3 4,778 57 $0.12 $211 $85

9/3 43 578 45 10.3 1,378 5.4 $0.11 $158 $75

914 7.0 934 58 6.6 880 58 $0.11 $98 $76

9/5 29 381 5.2 23 300 5.0 $0.11 $32 $64

916 24 320 5.3 13 178 5.0 $0.10 $19 $63

on 15 205 5.4 33 434 5.1 $0.10 $44 $64

978 26 347 5.0 26 343 52 $0.10 $34 $63

919 10.8 1,443 47 144 1,486 5.4 $0.10 $142 $61
9/10 13.2 1,761 44 13.4 1,751 48 $0.09 $162 $55
ott 3.4 a7 42 10 133 46 $0.09 $12 $49
92 33 436 43 25 333 5.0 $0.09 $29 $51
9/13 15 200 3.9 24 324 5.0 $0.08 $27 $51
914 05 67 38 35 467 52 $0.08 $38 $51
9s 0.5 67 43 17 222 5.4 $0.08 $18 $50
9/16 a7 1,163 5.0 95 1,270 52 $0.08 $98 $51
97 118 1,575 5.2 11.9 1,585 47 $0.07 $118 $43
98 3.6 480 47 32 427 43 $0.07 $31 $37
99 07 89 44 3.0 400 44 $0.07 $28 $34
9/20 05 67 45 3.3 438 38 $0.07 $30 $32
9/21 43 569 44 3.3 434 3.6 $0.07 $29 $29
9/22 54 680 40 26 343 3.5 $0.06 $22 $28
9/23 10.5 1,396 38 57 756 3.6 $0.06 $47 $29
9/24 83 1,100 25 9.2 1,223 3.2 $0.08 $74 $25
9/25 18 245 14 15 200 18 $0.06 $12 $13
9/26 07 98 0.8 15 200 18 $0.06 $11 $13
9727 02 27 0.9 18 200 2.0 $0.05, $11 $14
9/28 15 200 15 25 333 25 $0.05 $18 $18

Total 935.7 124,810 842.4 112,359 $ 110,489

W-20


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix I

Table 3A
DAMAGE ASSESSMENT MODEL: APRIL 2000

Notes (Columns)

(1) Dates refer specifically to 2000 figures. Figures for 1999 are shifted by two days so
that weekends and weekdays match with 2000. Thus the first line contains figures
for April 17, 1999 and April 15, 2000. The pupose of presenting 1999 figures is
solely to construct baseline estimates of use for 2000.

(2) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland. Records for Row 4/19 were missing in 1999. The figure from Row 4/18 is
substituted.

(3) Column (2) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(4) Data for 1999 is adjusted for differences in weather to create a prediction of
2000 baseline use. Details of the weather adjustment are presented in Appendix III.

(5) Column (4) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(6) The Golden Beach index of recreational use is the average number of cars
throughout the day (6 a.m. to 9 p.m.) at five recreational sites in Golden Beach,
Maryland.

(7) Column (6) multiplied by the 133, the impact zone multiplier (see Table 6). On
average, there were 133 recreational trips per Golden Beach index unit.

(8) The loss per trip is determined according to specifications in Table 2.

(9) Column (7) x Column (8)

Notes (Calculation of Damages)

(1) The total in Column (5) minus the total in Column (7).

(2) This figure is based on data from the relevant economics literature. See Appendix IV.
(3) Row (1) x Row (2)

(4) Total diminished value of actual trips, from the total in Column (9).

(5) Row (3) + Row (4)


CHALK POINT LOST USE DAMAGE ASSESSMENT , Appendix Il

Table 3F
DAMAGE ASSESSMENT MODEL: SEPTEMBER 2000

1999 2000
Golden Impact Weather Golden
Beach Zone Adjusted Baseline Beach Actual Loss Per Diminished
Date Index Trips Index. Trips. Index Trips Trip Value
(1) (2) (3) (4) (5) (6) (7) (8) (9)
9 3.4 454 18 241 46 610 $0.12 $74
9/2 75 1,000 66 874 13.3 1,778 $0.12 $211
9/3 4.3 578 6.6 874 10.3 1,378 $0.11 $158
9/4 7.0 934 66 874 6.6 880 $0.11 $98
9/5 29 381 1.8 241 2.3 300 $0.11 $32
9/6 24 320 18 241 1.3 178 $0.10 $19
9/7 1.6 205 3.1 412 3.3 434 $0.10 $44
9/8 26 347 34 412 26 343 $0.10 $34
9/9 10.8 1,443, 11.2 1,491 41.1 1,486 $0.10 $142
9/10 13.2 1,761 11.2 1,491 13.1 4,751 $0.09 $162
9/11 3.1 417 3.1 412 1.0 133 $0.09 $12
92 3.3 436 3.1 412 25 333, $0.09 $29
93 1.5 200 1.8 241 24 324 $0.08 $27
9/14 0.5 67 18 241 3.5 467 $0.08 $38
915 0.5 67 18 241 17 222 $0.08 $18
9/16 87 1,163 11.2 1,491 9.5 1,270 $0.08 $98
9N7 11.8 1,575 11.2 1,491 11.9 1,585 $0.07 $118
9/18 3.6 480 3.1 412 3.2 427 $0.07 $31
99 07 89 18 241 3.0 400 $0.07 $28
9/20 05 67 3.1 412 3.3 438 $0.07 $30
9/21 43 569 18 241 3.3 434 $0.07 $29
9/22 5.1 680 3.1 412 26 343, $0.06 $22
9/23 10.5 1,396 66 874 5.7 756 $0.06 $47
9/24 8.3 1,100 66 874 9.2 4,223 $0.06 $74
9/25 18 245 18 241 1.5 200 $0.06 $12
9/26 0.7 98 18 241 15 200 $0.06 $11
9/27 0.2 27 3.4 412 1.5 200 $0.05 $11
9/28 15 200 3.1 412 25 333 $0.05 $18
Total 16,297 16,450 18,427 $1,625

Calculation of Damages

(1) Lost Trips 0
(2) Value of Each Trip Lost $ 27
(3) Total Value of Lost Trips $ 0

(4) Reduction in Value of Actual Trips $ 1,625
(5) Total Damages $ 1,625

N-13


Chalk Point Lost Recreational Use Valuation Report Appendix I

which gives us trips per peak user.

Normalized Hourly Use at Golden Beach

The normalized use Uj; for a given hour at a given site is based on the car counts Xsr.
divided by the level-of-use index L,, averaged across all days for which a car count was
available at that hour and site. The average is weighted by the level-of-use index, so that

days of heavier use count more in establishing the typical relative use.

Uns = {021 [Li Xsn/Lt ) Toco) J} / Xt Lt Texooy) = Dt Xsnt) / Dt (Lt [exo)

Summary

Following the calculations from the data to the results, we know the average trip length A
from the on-site surveys, we know the helicopter counts C from the overflights, and we
know X from the data collected at Golden Beach. From X we know L and U. From U we
know H, and therefore 7. From C, T and L we know M. From M and L we know Q, the
total quantity of trips. We know lost trips N by comparing baseline and actual Q for 2000
as described above. Total trips multiplied by the value of a trip gives total damages.


Chalk Point Lost Use Valuation Report

etc. Fishing and boating are typically valued more highly than swimming and backyard
use. This was the case in this study as well, with boating and fishing valued at $35 per
trip compared to $20 per trip for swimming and backyard use. The fishing values reflect a
variety of species targeted on the Patuxent, including croaker and striped bass. The value
for shoreline uses like swimming reflects the fact that many people using the Patuxent
live on the river or close by. They therefore are likely to place a high value on local sites
compared to those who may travel from further locations for the same activity and who
could more easily seek out substitute recreation sites. Further details of this analysis

appear in the appendix.

Recreational Trips Diminished Due to the Spill

For those visitors who continued to use recreational sites in the impact zone following the
spill, the presence of the oil likely detracted from their enjoyment. The diminished value
of trips taken throughout the 2000 season is a component of the estimated spill-related
losses in this assessment. Based on a previous study examining diminished recreational
trips (Hanemann 1997) it was estimated that a trip taken to the spill zone soon after the
closure was lifted in late April would be reduced in value by 20 percent. On the basis of
impressions obtained from responses to the on-site survey, it was assumed that the
amount of the loss per trip would decline to about 5 percent of the full value of a trip by
mid-June and that the losses would fall to zero at the end of September. Details of this

calculation are presented in Appendix 1.

Total Damages: The Total Value of Lost Trips and the Diminished Value of
Actual Trips

By multiplying the estimated number of lost trips by the value of each trip, the value of
lost trips is calculated to be $343,010. The diminished value of trips taken is calculated
on a daily basis because the amount of the loss per trip declines each day throughout the
season. Adding up these daily losses produces a damage figure of $110,489. Based on the

two categories combined, total damages are calculated to be $453,499.

-ll-


Chalk Point Lost Recreational Use Valuation Report Appendix IV

A figure of $20 per trip was chosen for the value of general shoreline use, including
backyard use. Again, the median values in Walsh et al. for camping, picnicking and
swimming are $30, $20 and $29 per day, respectively. The DOI figure for general beach
use is $15 per trip. While $20 is higher than the DOI value, it is the lowest of the three
values reported in Walsh et al. Given the high proportion of backyard use and the
difficulty inherent in defining substitutes for such use, this represents a reasonably

conservative point estimate.

The figures for fishing/boating and general shoreline use should be combined at about 50
percent each, as indicated roughly by the helicopter counts. A resulting value of $27
tepresents a conservative, best estimate for an average recreational trip in the spill impact

zone.

IV-7


CHALK POINT LOST USE DAMAGE ASSESSMENT Appendix tl
Table S-1
ADDITIONAL SUPPORTING DATA
LEVEL-OF-USE INDEX AND LOSS PER TRIP, SEVEN-DAY MOVING AVERAGE, 1999-2000
2000 Season
Reduction In Value
Estimated Recreational Activity Of Trios Taken
71959 2000 Tost-Value
Golden” Impact Index: 7-Day Golden Impact Index: 7-Day Daily 7-Day
Beach Zone Moving Beach Zone Moving Loss Per Total Lost Moving
Date Index Trips Average Index Trips Average Trip Value ___ Average
(1) (2) (3) @) (5) (6) a) (8) (9) (10)

Notes (Columns)

(1) The dates in Column (1) refer specifically to the 2000 figures. In order to compare 1999 with
2000 using matching weekends and weekdays, figures for 2000 are pushed forward by two
days, That is, 4/15 refers to April 15 figures in 2000 and April 17 figures in 1999.

(2) The index of recreational use is the average number of cars throughout the day (6 a.m.
to 9 p.m.) at five recreational sites in the Golden Beach commu

(3) Calculation: Column (2) x Impact Zone Multiplier (see Table 6 entitled "Calculation of
Impact Zone Multiplier"). This extrapolation from recreational activity at Golden Beach to
total activity in the impact zone is based on overflight data.

(4) The 7-day moving average is based on figures for the given date and the six days following it.

(6) The index of recreational use is the average number of cars throughout the day (6 a.m.
to 9 p.m.) at five recreational sites in the Golden Beach community.

(6) Calculation: Column (5) x Impact Zone Multiplier (see Table 6 entitled "Calculation of
Impact Zone Multiplier"). This extrapolation from recreational activity at Golden Beach to
total activity in the impact zone is based on overflight data.

(7) The 7-day moving average is based on figures for the given date and the six days following it.

(8) The loss per trip is determined according to specifications described in the text of this appendix.

(9) Calculation: Column (6) x Column (8).

(10) The 7-day moving average is based on figures for the given date and the six days following it.

W241


Chalk Point Lost Use Valuation Report

Appendix III: Meteorological Data and Adjustments for Weather


Chalk Point Lost Recreational Use Valuation Report Appendix I

Appendix I: Damage Assessment Data and Methods

What follows is a detailed description of the data and methods used to calculate lost
recreational-use damages for the Chalk Point oil spill. The narrative description below is
followed by a set of equations that present the calculations in their entirety. The damage

model itself is presented in a series of numbered tables contained in Appendix II.

The Golden Beach Data

Historical data records were collected showing the level of use in 1999 and 2000 at five
recreational sites in Golden Beach, Maryland, a community on the west shore of the spill
zone. See Figure 1 in the text for the location of golden Beach. These records were found
to be more useful for this analysis than other historical data available, and were deemed
sufficient as a benchmark measure of use throughout the spill zone for several reasons.
First, the five sites encompass a variety of uses such as boating, swimming and
picnicking, much like the variety of activities at recreation sites throughout the spill
impact zone. Second, the data were maintained in a consistent fashion throughout the
years 1999 and 2000, thereby permitting a comparison of recreational use between years.
Third, the records were kept on a daily basis allowing for site-specific analysis of the
effects of weather and a detailed examination of damages over time, including the

determination of the appropriate date to end the period of estimated damages.

The Golden Beach data were maintained by the Beach Management Corporation and
were recorded on documents entitled “Security Daily Log.” These daily logs show the
number of cars parked in lots for each of the five sites, recorded at various times
throughout the day. The records cover the period April 15, 1999 through September 30,
1999 and the period May 1, 2000 through September 30, 2000. According to officials at
Beach Management Corporation, records were not maintained in prior years. Records are
not available for April 2000 because all of the Golden Beach sites were closed due to the
spill. It was assumed that there were zero damages between April 7 and April 15 (when
1999 data collection began). Officials at Golden Beach indicated that there was no use of