The Option Price of Recreational Bag Limits and the Value of Harvest

Daily harvest limits are a common form of regulation in consumptive recreation. We show that angler willingness to pay for a bag limit change is an option price and show how it relates to the value of harvest changes. Specifically, if expected utility theory holds, then option prices for one-fish ba...

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Bibliographic Details
Published inMarine resource economics Vol. 37; no. 1; pp. 35 - 52
Main Authors Carter, David W., Liese, Christopher, Lovell, Sabrina J.
Format Journal Article
LanguageEnglish
Published Chicago The University of Chicago Press 01.01.2022
University of Chicago Press
Subjects
Angling
Economic analysis
Expected utility
Fish
Securities prices
Sport fishing
Underwater resources
recreational fishing
valuation
Bag limit
option price
Q510
Q220
stated preference
Q260
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Summary:Daily harvest limits are a common form of regulation in consumptive recreation. We show that angler willingness to pay for a bag limit change is an option price and show how it relates to the value of harvest changes. Specifically, if expected utility theory holds, then option prices for one-fish bag limit increments along with catch distributions can be used to “recover” the compensating surplus (CS) for harvest increments. We also show that further assumptions (e.g., risk neutrality) are necessary to recover the CS for harvest from option prices for larger bag limit increments. We demonstrate our method using a choice experiment and catch data for Gulf of Mexico anglers. This work gives analysts a way to adapt the information at hand to the policy question. For example, when CS estimates are needed for an ex post analysis, but only option prices are available, our work shows how to obtain the required CS information.
ISSN:0738-1360
2334-5985
DOI:10.1086/717284