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.

An economic valuation of Mavericks

Save The Waves recently completed a study looking at the non-market value of the Mavericks area (wave and adjacent park). The study was conducted by Dr. Makena Coffman and Dr. Kimberly Burnett from the University of Hawaii. They based their findings on an on-site survey of visitors over a 6 month period in 2009. They used the Travel Cost Method to determine the non-market value (consumer surplus) of those visitors and their estimated an annual value ($24 million/year) using their best guess on annual attendance to the area.

Here are some of the key findings:

• The average visitor received $56.7 in consumer surplus per visit

• 7% of those interviewed were there to surf Mavericks

• ~12% were visiting to watch surfing
  

• Surfers were nearly 5 times more avid than other visitors

• They estimated 421,431 visits to the Mavericks area per year
  

• The total economic benefit from the Mavericks region is $23.8 million/year

• This study did not include the annual contest in their analysis
  

It is important to note that the study included all visitors to the Mavericks areas, not only surfers or those watching surfers, so this value includes the value of the whole Mavericks area.

The final study has not been published yet. Once it does, I'll post it.



You can read a Half Moon Bay Review article about the study here.

The article got a few things confused and Deal LaTourrette, the Excutive Director responded:

Dear Editor,

We appreciate the coverage of the recently released results from our Mavericks economic study in Greg Thomas’ November 11th article, “The $24 Million Wave,” but feel compelled to clarify some key points with your readers:

1) While the study was designed to measure the economic value of the surf break and surrounding area, it also attempts to measure non-economic valuation factors such as the cultural, social and environmental value of the wave. The study is not all about dollars and cents, and a key finding was completely omitted from Thomas’ article: "Almost 90% of the respondents labeled surfing an ecotourism activity, and thus important to the cultural and environmental health of the community. Respondents believed that Mavericks helped to positively define the Half Moon Bay area." This underscores the importance of these studies to be used as a tool to help policy-makers make conservation decisions that allow ecotourism to thrive, while at the same time preserving unique environmental, social, and cultural phenomena.

2) This research project was funded by a grant from the Morgan Family Foundation. Mavericks Surf Ventures helped by supplying information on the area and connecting researchers with key local organizations, such as the Half Moon Bay Chamber of Commerce. MSV and Jim Beam DID NOT fund or financially support the study.

3) The Center for Responsible Travel at Stanford University and the University of Hawaii Economic Research Organization, co-authors of the study, are independent researchers who were commissioned by Save The Waves to execute an academic study. They have no affiliation with Save The Waves, nor did commercial interests influence the study in any way.

Thanks for helping us clear up these important points.

The Cost of Poor Water Quality at Surfrider Malibu

Surfrider Beach at Malibu needs no introduction. Unfortunately, neither do the water quality problems. Malibu has been a chronically polluted beach for decades, consistently getting an "F" on Health the Bay's beach water quality report card. One of the primary culprits is over-capacity and improperly sited septic systems. For years, the City of Malibu has resisted constructing sewage systems as an anti-growth measure while polluting nearby beaches.



Thanks to a strong coalition that included the Malibu Surfing Association, Heal the Bay, Santa Monica Baykeeper and the West LA / Malibu Chapter of the Surfrider Foundation this all changed last Thursday when the LA Regional Water Quality Control Board voted to eliminate septics from Malibu and force the City to install waste water treatment systems. Read more about the outcome here and here and in the LA Times here.

$: Poor water quality is a public health burden that has costs.

Water quality contamination can cause skin rash, eye and ear infections, significant respiratory disease and Gastrointestinal (GI) illness. These illnesses have a variety of economic costs -- ranging from medical expenses to lost time at work to non-market impacts.

At Malibu, Given and Pendleton (2006) estimated that were were 25,000 to 100,000 excess GI illness (meaning above allowable level of illness at clean beaches) in Malibu due to poor water quality.

This results in $1.1 to $4.2 million in public costs annually due to illness associated with contaminated water in Malibu.

$: Clean water has benefits.

Clean water attracts more visitors who spend money (economic impacts) and clean water increase their enjoyment (consumer surplus).

Hanemann & Pendleton (2004) looked at economic benefits of improving beach water quality at Malibu Surfrider Beach by one letter grade. From a C to a B.

They showed that improving water quality at Malibu Surfrider would have two impacts on beach goers. First, the number of trips taken to Surfrider beach would increase by 1,538 visits per year.

The second major impact of an improvement in water quality is the annual consumer’s surplus of beach users improves by more than $140,000/ year.

In addition, the total economic impact (local spending) would increase by $45,000/year.

These are the benefits for one grade. The benefits would be much higher for a 3 or 4 grade level improvement (F to B/A)*.

*The model is nonlinear so you cannot use these figures to extrapolate directly.

These studies show that improving the water quality in Malibu will reduce the high public welfare burden associated with poor water quality and result in increased visits, increased societal benefits (consumer surplus benefits) and increase economics impacts (spending associated with beach visits).

You can read more detail and see the references in my testimony here.

The swell of surfing tourism

SURFING has emerged as an X-factor in the Tweed Shire's economy, after the Gold Coast estimated the sport injected billions of dollars into the city each year.

A recent Surf Industry Development Report, which was a world first, found $2 billion in activity was attributable to the surfing industry on the Gold Coast, making it the city's third biggest industry.

The report estimated the sport generated up to a further $3 billion in output and created 21,760 employment positions paying $1 billion per annum in wages and salaries.

Jim Wilson, General Manger of Connecting Southern Gold Coast said the report showed the southern Gold Coast's economy relied heavily on its pristine beaches.

“That is why we all must respect and not tamper with what nature has created. We need our region to continue to offer up waves of excellence and consistency, as this is what the surfing industry and other businesses depend on to underpin the true surfing experience on the Gold Coast,” Mr Wilson said.

Read the whole thing here....

SurfEcon Myth Busting: Surfers are lazy

Sunrise Surfer from LA times

This morning, I woke up at 4:45 AM to go for a surf at dawn. I suffered through the groggy transition to wakefulness hoping to get better morning conditions and to beat the summertime crowds. I was in the water by 5:30 - 6 guys out. By 6:30 the water was already started to get crowded and by 7:30 is was packed - on a Sunday AM.

I returned home to find these two Facebook messages. Many surfers get up very, very early to go surfing either to get the best conditions (the wind if often blowing offshore), beat the crowds or to get a surf in before work or family obligations.


(Names blurred to protect the committed)

These early beach visits are one of the reasons why surfers are so hard to intercept when economists study beach visitation.

Every morning around the country legions of surfers are waking in the dark, heading to their favorite spot, often changing into a wetsuit before jumping into the chilly ocean at first light. This phenomenon is so common is has its own name - "dawn patrol".

Lazy? I don't think so.

The Coasts & CZMA: A Stimulus for the U.S.

This morning Dr. Linwood Pendleton provided a federal congressional briefing on the coastal economy and the importance of investing in the Coastal Zone Management Act, which provides the management framework for balancing conservation and development in our coastal communities. Here are a few tidbits from Linwood's testimony:

If coastal counties in the US were their own country they would have the world's second largest economy.

The coastal economy is more complex than the rest of our economy because the natural foundations upon which it is based are fluid and constantly changing.

In 2008, the total funding for state coastal programs was only $65.5 million with a cap of $2 million for each of 34 states with coastal programs.

Keep in mind, the coastal economy contributes 5 times more to GDP than the financial sector.

You can read Linwood's entire briefing here: The U.S. Economy Needs the Coastal Zone Management Act.

Effective management of our coasts is essential to protect water quality, beach access, beaches, coral reefs and coastal communities - all elements that are essential to protecting and enjoying our favorite surf spots. As surfers, beach goers and coastal community members, we should all support federal investment in the Coastal Zone Management Act.

The briefing was sponsored by the Coastal States Organization.

Dr. Pendleton is the Senior Fellow and Director of Economic Research at The Ocean Foundation and directs the Coastal Ocean Values Center.

You can keep up with Coastal Values at: www.twitter.com/coastalvalues

If Long Beach had surf, would more people visit?

Image from Surfline.

The obvious answer to this question is yes. The more challenging question is how many people would come to surf. Predicting how many people would come to visit Long Beach to surf would likely depend on the quality of the surf and how often the surf was good.

The Long Beach Chapter of the Surfrider Foundation has a long running campaign to "Sink the Breakwater and Restore the Shore"



As part of their campaign they convinced the City of Long Beach to do a feasibility study of the breakwater removal. Part of that study was an economic analysis of the benefits to tourism resulting from improved water quality, beach conditions & surfing.

To better understand how the surfing would improve and how many surfers might visit, the Chapter contracted with Sean Collins at Surfline (a leading surf forecasting site) to use their models, historical surf records and expertise to predict how many days of surf Long Beach would see, how many good days and how many poor days and then estimated how many surfers would show up to surf it.

You can read this very interesting report here.

So what's the conclusion? Based on this approach, Collins estimates that restoring surf to Long Beach could result in over 394,000 annual visits.

This visitation estimate is being fed into an economic analysis that should be available in mid-July. We'll report on that when its available.

Duke Kahanamoku surfing in Long Beach before the breakwater was installed.