Cost benefit analysis is a tool for determining a project's economic worth to society. It implies the enumeration and evaluation of all the relevant costs and benefits associated with a project. At present irrigation proposals that could significantly affect the Rakaia River as a fishing resource are being evaluated.
The objective of this study was to determine the economic value of the Rakaia's fishery to its users and to provide data to be included in the irrigation proposals' cost benefit calculation. Two methods were used: Firstly, the travel cost method and secondly an application of compensation principles in the evaluation of the resource.
Data for this study were obtained from a random survey of licensed adult male anglers within the North Canterbury and Ashburton Acclimitisation Societies for the 1971-72 fishing season.
The travel cost demand function estimate indicated that only 7.63 per cent of the variability in angler's visits was associated with the variation in their travel and on-site costs per trip, their ages and their net family incomes. The consumer surplus obtained by the Rakaia fishermen was not calculated because the estimated demand function was statistically an inadequate expression of their behaviour.
However, both cost and age were significant at the 5 per cent level in explaining fisherman's visits to the Rakaia. Insufficient specification of the travel cost model and data deficiencies are the most likely reasons for the inadequate results obtained by using this technique.
Two alternatives were used in the compensation approach. The first was based on the willingness of the fishermen to buy their right to fish in the Rakaia. The second was determined by the minimum price fishermen were willing to accept to forgo their fishing right.
The difference between anglers' willingness to buy the right to fish and the willingness to sell this right were attributed to an income (welfare) effect.
The statistical reliability of these estimates was not high and may be subject to bias induced by the questionnaire, apart from other suspected sources.
The study has highlighted the need for very careful model specification for such recreation studies. The results obtained demonstrated that adult male fishermen would be willing to forgo their right to fish in the Rakaia river for one season for $1,318,000. Equally to buy this right to fish for one season (1973-74) they would be willing to pay $147,000. The relationship between the two estimates is explained in the text.[Show full abstract]
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