Measuring stoke

While putting a monetary value on a great day of surfing can be seen as sacrilege to some, it can also provide an important counter weight to decision making that is often based on economic contributions, jobs, etc.

Putting a value of surfing or other non-market activities (beach going, bird watching, etc.) can also be important when seeking compensation for recreation lost when beaches are closed or lost due to impacts from oil spills, water quality impairment, or coastal development.

So how how to you measure the value of a day of surfing?

Since there is typically no market for access to surfing (access is free), resource economists have to estimate these values using other methods.

One approach to capturing this value or "willingness to pay" for a day of surfing is the Travel Cost Method.

The basic premise behind the travel cost method is that visitors who live farther away from a surf spot pay a higher travel cost and take fewer trips than visitors who live closer who can afford to visit more often. By modeling travel costs and the number of trips, we can develop a demand function for recreational use and estimate an average value that you, as a surfer, put on a visit to a surf spot.

Economic theory presumes that if you spend 20 bucks on gas and three hours of your free time getting to a surf spot, that the visit is worth at least that time and financial commitment. As a result, the travel cost method measures the lower bound of this value; it could be higher.

This average value is called the consumer surplus is the difference between the maximum someone would pay for a trip and the amount actually paid. In other words, the benefit you derive above and beyond the value of your time and travel costs.

For example, in a previous post I wrote about a guy whose "willingness to pay" to spend an afternoon at Trestles was very high. Despite his high travel cost he believed it was worth it because the waves are so good. In the model schematic above, he would be found on the upper left region of the demand curve.

Who's Surfing Lowers?

Surfline just posted a little photo expose on "Who's Surfing Lowers". I mapped where they came from here:


View Who's Surfing Lowers in a larger map

Although far from a random sample, I thought it was interesting that it looks somewhat familar to this map that is the result of about 1000 responses to an Internet-based survey:





Surfers are clearly willing to "go the extra mile" to surf Trestles.

Beach Closed

I woke up early this morning (thanks in part to the time change) to check the surf at my local beach. I was hoping that is swell would be showing:



Sadly, when I got down to the overlook, I was reminded that Laguna just experienced a massive 480,000 gallon sewage spill and the beaches were still closed.

That got me to thinking about all the surfers in town who wouldn't be surfing in Laguna this weekend. These surfers would either skip their surf session (like me) or would have to travel out of town to other surfing areas. In economic speak - they would either have lost the value of a surf session or would incur a higher travel cost to go somewhere else, which will reduce their consumer surplus (stoke) assuming all other things being equal (surf quality, etc.).

In February of 1990, the American Trader, dumped over 400,000 gallons of oil in the waters off of Huntington Beach. The spill closed 14 miles of beach for 34 days. Eight years and a ten week trial later a jury awarded the State of California $18 million. To arrive at that figure economists on both sides of the issue used the Travel Cost Method to estimate the non-market value of lost beach and surf recreation. (Click here for an surf-centric explanation).

Here are some numbers from the calculations:

Surfing Trips Lost: 28,290
Value of those trips: $18.75
Total consumer surplus lost: $530,438

Surf trips diverted to substitute site: 28,148
Extra cost associated with going to other site: $12.00
Total consumer surplus lost: $337,776

Back to the sewer spill, I wonder how much lost value did surfers in Laguna suffer from due to the beach closure?

Detailed information on the American Trader spill can be found in the following paper:

Chapman, D. J. and W. M. Hanneman (2001). Environmental Damages In Court: The American Trader Case. The Law and Economics of the Environment. A. Heyes: 319-367.

Surfline does Surf Econ 101

Check out an interview about surf economics on Surfline.