National Park Service

U.S. Department of the Interior

Economic Values of National Park System Resources

Within The Lower Colorado River Basin:

A Compilation of Existing Data and Proposal for Future Work

Bruce Peacock, Ph.D.

Environmental Quality Division

1201 Oakridge Drive

Fort Collins, Colorado 80525

June 8, 2009
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ACKNOWLEDGEMENTS

This report was prepared by the National Park Service Environmental Quality Division with 

substantial assistance from Dr. John Duffield, Chris Neher, and Dr. David Patterson of the 

University of Montana (cooperative agreement H1200040001, task J2380050112).
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CONTENTS

1. Introduction _____________________________________________________________ 1

2. Economic Values of National Park System Resources____________________________ 2

2.1 What Economic Values are Important? _________________________________________ 2

2.2 Why Estimate Economic Values? ______________________________________________ 3

2.3 Economic Values in the Lower Colorado River Basin _____________________________ 5

3. Proposal for Estimating Economic Values _____________________________________ 7

4. References _______________________________________________________________ 9
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

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1. Introduction

The Colorado River Steering Committee contacted the Environmental Quality Division 

early in 2005 for assistance in estimating the economic values of National Park System 

resources along the Colorado River. These economic values are needed to better 

understand how water allocation decisions affect the integrity of the resources and values

of National Park System units along the Colorado River. These decisions also affect the

visiting public and surrounding local economies.

In April 2005, the Environmental Quality Division presented a proposal to the Steering 

Committee for producing these estimates. That proposal was structured in the following 

four phases.

• Phase I: Produce a white paper that: 1) summarizes how different operating 

scenarios are determined along the Colorado River, 2) describes the types of 

economic values provided by National Park System resources along the river, and 3) 

presents a recommended approach to estimating relevant economic values of 

National Park System resources along the Colorado River.

• Phase II: Conduct an analysis of existing literature and data relevant to the 

economic values of National Park System resources along the Colorado River, 

synthesize the existing literature and data to present as complete a set of economic

values as possible for National Park System resources along the river, and identify 

data gaps that must be filled using original research techniques.

• Phase III: Conduct original research to fill the data gaps identified in Phase II.

• Phase IV: Integrate the information from Phase II and Phase III to 

comprehensively estimate the economic values provided by National Park System 

resources along the Colorado River, relate estimated economic values to existing 

hydrologic models of the Colorado River system in order to evaluate the impact of 

alternative operating scenarios on National Park System resources, and compare the 

economic values provided by National Park System resources along the river to 

other economic values associated with the Colorado River (e.g., hydropower, water 

storage, irrigation water uses, urban water uses).

Phases I and II of this project have been completed through a Cooperative Ecosystem 

Study Unit task agreement with the University of Montana (Duffield 2006; Duffield, 

Neher, and Patterson 2007). Phase III of this project is currently underway, but funded 

only through the study design stage. This report explains the valuation concepts 

addressed by this project, describes known economic values of National Park System 

resources within the Lower Colorado River Basin, and outlines how the project can be 

completed.
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

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2. Economic Values of National Park System Resources

2.1 What Economic Values are Important?

There are many services provided by National Park System resources along the Colorado 

River. These include cultural, historical, recreational, and ecological services. A 

measure of the significance of these services to the public is their economic value. Like 

the resources they describe, economic values have different dimensions and manifest 

themselves in different ways. These economic values are broadly categorized by 

economists as welfare measures and regional impacts. These are described below.

Welfare measures reflect the wellbeing people derive from resources. These are the 

costs and benefits that constitute a cost-benefit analysis for a regulatory action, for 

example. Welfare measures can be broken down by their association with established 

markets. Market values are associated with resources that are traded in established 

markets. Examples of these values include power revenues from the sale of hydropower 

and the costs paid by farmers for irrigation water. Non-Market values on the other hand 

are not associated with established markets. Examples of non-market values include the 

benefits obtained from scenic views enjoyed at a national park and trout fishing in a 

river.1

Welfare measures can also be broken down by their association with the direct use of 

resources. Direct use values are associated with the immediate, generally on-site use of 

resources by people. The benefits derived from camping, fishing, and wildlife viewing 

are examples of direct use values. Passive use values are independent of these direct 

resource uses. Rather, those values obtain from the knowledge that resources exist, or 

will be preserved, in a given state (i.e., the motives of existence and bequest).

 National Park System units along the Colorado River have many resource uses 

that are not allocated in established markets, and therefore have significant non-market 

values. Like market values, non-market values describe the tradeoffs people make in 

order to enjoy a particular resource or activity.

2

The other broad category of economic values, regional impacts, reflects the level of local

economic activity that is associated with a particular resource use. For example, boaters 

 Passive 

use values are particularly relevant to the management of National Park System resources 

given the mandates of the Organic Act and the Redwood amendment of the General 

Authorities Act. Those mandates establish the fundamental purposes of the National 

Park System as conserving park resources and values, and providing for their enjoyment 

by the public. The conservation of park resources and values directly relates to passive 

use values through the motives of existence and bequest. Passive use values also relate to 

the public enjoyment of park resources and values since the public includes both people 

who directly experience parks and those who appreciate them from afar.

 

1 While entrance fees may be charged at a national park, and anglers incur costs to fish, fees are typically not charged 

for each scenic view observed at a park or for each fish caught while fishing. 2 The dichotomies of market vs. non-market and direct use vs. passive use are not mutually exclusive.
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

3

on a lake purchase gas, stay at hotels, and eat at restaurants. The revenues generated by 

these market transactions reverberate through the economy in a domino effect of 

spending by supporting businesses and households. Such impacts are experienced in the 

form of jobs, sales revenues, and tax revenues. Regional impacts measure fundamentally 

different values than welfare measures. However, they are often the most visible 

indicators of economic value and reflect significant importance by local communities.

All of these economic values (market and non-market values, direct use and passive use 

values, and regional impacts) are important since they describe different dimensions of 

the interaction between National Park System resources and the public. That is, it is 

important to consider all these values in order to fully understand the importance of 

National Park System resources. This importance is described below.

2.2 Why Estimate Economic Values?

The economic values of National Park System resources along the Colorado River should 

be estimated because of their significant implications for resource management. This 

significance is demonstrated in three ways.

First, direct use values demonstrate the linkage between resource quality and local 

economic activity. Visitors are drawn to national parks because of the quality resources 

they offer. This demand is reflected in the direct use values derived by visitors from the 

immediate, generally on-site use of park resources. This demand also generates visitor 

spending in local communities, which yields jobs, sales revenues, and tax revenues. 

Those regional impacts, in turn, influence resource management decisions due to their 

salience with local communities. The key point in this linkage is that the quality of park 

resources directly affects local economic activity through visitor demand. Therefore, 

estimates of direct use values and regional impacts are both indictors of the effectiveness 

of resource management.

Second, passive use values demonstrate the national significance of park resources. 

As noted above, passive use values are particularly relevant to the management of 

National Park System resources. A demonstration of that relevance is provided by an 

earlier study of passive use values in Grand Canyon National Park (Welsh et al. 1995). 

That study was conducted as part of the analysis of operating alternatives for Glen 

Canyon Dam in the 1990s. Relying on that study, a National Academy of Sciences 

analysis compared the economic values associated with three of the dam operation 

alternatives (National Research Council 1996). Specifically, the Academy examined the 

hydropower revenues, direct recreation use values, and passive use values of these 

operating alternatives. This study concluded that national passive use values were as 

much as two orders of magnitude greater than the associated foregone hydropower 

revenues (Table 1). That is, the passive use values swamp the foregone hydropower 

revenues for the alternatives examined, and have tremendous allocative significance in 

management decisions.
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

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Table 1

Annual Economic Values Associated with Alternative Glen Canyon Dam 

Operations (Million Dollars)

-----Passive Use Values-----

Flow Alternative

Foregone 

Hydropower 

Revenues

Direct 

Recreation 

Use Values National

Hydropower 

Marketing 

Area

Moderate Fluctuating

 Flows $36.7 - $54.0 $0.4 $2,286.4 $52.2

Low Fluctuating

 Flows $15.1 - $44.2 $3.7 $3,375.2 $50.5

Seasonally Adjusted

 Steady Flow $88.3 - $123.5 $4.8 $3,442.2 $81.4

Source: National Research Council (1996)

Third, both direct use and passive use values indicate the significance of park 

resources vis-à-vis other resource uses. The total economic value of a resource is the 

sum of its direct use and passive use values. It is this total economic value for National 

Park System resources that is relevant for comparison to other values of resource use 

such as those for hydropower and irrigation. This is primarily due to the two National 

Park System fundamental purposes of resource conservation and public enjoyment. Such 

a comparison is important to establish the relative merit of National Park System 

concerns in Colorado River management decisions as they affect the economic values 

associated with park resources, the visiting public, and surrounding communities. 

Credible estimates of total value would enable park managers to fairly represent their 

resources where such representation has not been previously possible.

The linkages of all economic values to resource quality and resource management are

illustrated below in Figure 1. This figure indicates that resource quality affects visitor 

demand and national significance, which are measured by direct use values and passive 

use values, respectively. Direct use values stimulate regional impacts in the form of jobs, 

sales revenue, and tax revenue. Both direct use and passive use values are relevant in a 

cost-benefit analysis of river management alternatives vis-à-vis other resource uses such 

as hydropower and irrigation. Regional impacts and cost-benefit analysis are both 

relevant inputs to water resource management decisions. The demonstration of these 

linkages and the fair representation of park resources among competing uses are not 

possible without the estimation of all economic values associated with National Park 

System resources.
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

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Figure 1: Linkages between Resource Quality, 

Economic Values, and Resource Management

2.3 Economic Values in the Lower Colorado River Basin

Some estimates of the economic values described above exist for parks in the Lower 

Colorado River Basin. While these estimates do not cover all relevant uses or locations 

and are sometimes dated, they do illustrate the magnitudes of values that can be expected 

for park resources. A compilation of known economic value estimates for the entire 

Colorado River was prepared by Duffield, Neher, and Patterson (2007) during Phase II of 

this project. The economic values included in that compilation for the Lower Colorado 

River Basin are summarized below. In particular, economic values for Grand Canyon 

National Park and Lake Mead National Recreation Area are presented. Those two parks 

have significant visitation, which demonstrates the public demand for these resources 

(Table 2).

The significance of the regional impacts associated with these resources is illustrated in 

Table 3. The annual direct spending reflects spending by visitors only, while the annual 

total spending accounts for visitor spending plus spending by supporting businesses and 

households. The employment figures are numbers of full and part-time jobs.
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

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Table 2

National Park System Resources

In the Lower Colorado River Basin

Park Waters 2008 Recreational Visits

Grand Canyon NP Colorado River 4,425,314

Lake Mead NRA

Colorado River

Lake Mead

Lake Mojave

7,601,863

Source: National Park Service (2009).

Table 3

Regional Impacts of National Park System Resources

In the Lower Colorado River Basin

Park

Annual Direct 

Spending (million $)

Annual Total 

Spending (million $)

Total Employment

(jobs)

Grand Canyon NP 298.43 434.01 7,812

Lake Mead NRA 176.82 232.64 6,052

Source: Duffield, Neher, and Patterson (2007).

Spending figures are millions of 2003 dollars. Employment figures are numbers of full and part-time jobs.

The significance of the direct use values associated with these resources is illustrated in

Table 4. These values reflect the quality of park resources and the value visitors realize 

from their use.

Table 4

Direct Use Values of National Park System Resources

In the Lower Colorado River Basin

Study Description

Estimated Direct Use Values 

($ per trip)

Bishop et al. (1987) Grand Canyon NP float 

boaters $430 - $3,000

Hammer (2001) Grand Canyon NP floaters $157 (private)

$368 (commercial)

Martin (1982) Lake Mead NRA fishing $643 - $887

Duffield & Neher (1999) Grand Canyon NP visitors $142

Source: Duffield, Neher, and Patterson (2007)

Direct use values are in 2005 dollars.

The significance of the passive use values associated with these resources is illustrated in 

Table 5. These values also reflect the quality of park resources. However, these values 

are held by the public in general, regardless of whether they visit a park.
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

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Table 5

Passive Use Values of National Park System Resources

In the Lower Colorado River Basin:

Estimates for Glen Canyon Dam Flow Scenarios

Flow Scenario

National

($ per household)

Western United States

($ per household)

Moderate Fluctuations $17.74 $29.05

Low Fluctuations $26.19 $28.25

Steady Flow $26.91 $38.02

Source: Duffield, Neher, and Patterson (2007)

Passive use values are in 2005 dollars.

Finally, Duffield, Neher, and Patterson (2007) give their opinions as to the adequacy of 

existing economic value estimates for the purpose of describing the significance of park 

resources in a defensible manner. Those opinions are given in Table 6.

Table 6

Is Sufficient Information Available Now to Describe the Significance

of Park Resources In the Lower Colorado River Basin?

Park

Produce Regional 

Impacts?

Produce Direct Use 

Value Estimates?

Produce Passive 

Use Value 

Estimates?

Grand Canyon NP YES DATED DATED

Lake Mead NRA

 Lake Mead NO NO NO

 Lake Mojave YES NO NO

Source: Duffield, Neher, and Patterson (2007).

The information in the tables above suggests that substantial economic values are 

attributable to the management of National Park System resources in the Lower Colorado 

River Basin. Yet, Duffield, Neher, and Patterson (2007) indicate that much of the

information needed to defensibly describe the significance of park resources in that basin

is either dated or unavailable. Therefore, a current valuation effort is recommended to fill 

in these gaps. The section below describes how those gaps can be filled.

3. Proposal for Estimating Economic Values

As noted in the introduction above, Phases I and II of this project have been completed, 

and Phase III has been funded through the study design stage. What remains to finish 

this project is to implement the remaining stages of Phase III and to implement Phase IV. 

It is proposed that original research efforts for this project continue to be focused on the 

major two-reservoir and river corridor system that includes Glen Canyon National 

Recreation Area, Grand Canyon National Park, and Lake Mead National Recreation 
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

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Area. This study area is where most of the hydropower is produced along the Colorado 

River, and where most of the water-related visitor use occurs. This study area is also 

significant in that it marks the location where the allocation of water between the upper 

and lower basin states of the Colorado River occurs. Finally, this area has national and 

international significance which is relevant to non-use values.3

Phase III includes two survey efforts. First, a survey will be conducted to estimate direct 

recreational use values in the study area using a Random Utility Maximization model. 

This approach would require surveying within the study area as well as in other areas that

are major substitutes to it. Major substitutes will likely include Black Canyon of the 

Gunnison National Park, Curecanti National Recreation Area, Dinosaur National 

Monument, Canyonlands National Park, and popular floating sections on the Green, 

Upper Colorado, and San Juan rivers. Surveys will be implemented by a combination of 

mail and phone methods. 

The second survey effort will be conducted to estimate non-use values on a national 

scale. A survey will be conducted to estimate non-use values using Conjoint Analysis. 

This approach is considered state of the art and is indorsed by the National Research 

Council (2005). This survey will be implemented by phone. 

Both survey efforts will involve the use of focus groups in the development of survey 

instruments, and will rely on professional survey research firms. Peer review of survey 

instruments, sampling designs, and reports will be required. Additionally, both survey 

efforts will require information collection review and approval by the Office of 

Management and Budget (OMB). 

 

3 For example, Grand Canyon National Park was designated a World Heritage Site by the United Nations in 1979.
Economic Values of National Park System Resources Within the Lower 

Colorado River Basin: A Compilation of Existing Data and Proposal for 

Future Work

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4. References

Duffield, J. W. “Economic Values of National Park System Resources Within the 

Colorado River Watershed.” Report prepared for the National Park Service, April 

17, 2006.

Duffield, J., C. Neher, and D. Patterson. “Economic Values of National Park System 

Resources Within the Colorado River Watershed: Phase II.” Report prepared for 

the National Park Service, August 2007.

National Park Service. “Statistical Abstract 2008.” Denver, CO: National Park Service 

Social Science Program, Public Use Statistics Office, 2009.

National Research Council. River Resource Management in the Grand Canyon. 

National Academy Press, Washington, DC, 1996.

National Research Council. Valuing Ecosystem Services: Toward Better Environmental 

Decision Making. The National Academies Press, Washington, DC, 2005.

Welsh, M. P., R. C. Bishop, M. L. Phillips, and R. M. Baumgartner. “GCES Nonuse 

Value Study.” Draft final report, prepared by RCG/Hagler Bailly, Inc., Madison, 

WI, 1995.