Abstract
We describe welfare calculations when an environmental injury reduces trips to undamaged sites as well as those that were damaged. The welfare loss is (1) underestimated when standard welfare formulas are applied only to damaged sites but (2) overestimated when these formulas are applied to all sites with lost trips. We provide a formula that appropriately accounts for the lost trips to undamaged sites. Differences among the procedures are illustrated through hypothetical scenarios that differ in lost trips to undamaged sites. We apply the method under linear demand to aggregate estimates of shoreline-use losses from the Deepwater Horizon oil spill.
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