On the Validity and Reliability of Coastal Quality Change Estimates: Evidence from Norway

Abstract

Coastal managers are faced with the challenge of managing sites to maintain or improve their quality. The quality of each coastal site is characterized by site attributes that visitors care about. Since coastal managers face financial constraints, it is useful to know which are the site attributes with the highest implicit value for visitors and thus determine the change in attributes that yields the most benefits. However, estimates of implicit value of site attributes should be both valid and reliable to be informative for coastal managers. If coastal sites present similar characteristics, the data can suffer from lack of variation that can lead to unreliable estimated implicit values. We first present our strategy relying on simulation that confirms that our estimates are unbiased, but only a subset of these is reliable. We then apply the discrete choice model to explain recreational beach site choice by using two alternative models with a view to increase precision of our estimates. We uncover preference heterogeneity by relying on observable group characteristics. We illustrate the policy-relevance of our approach by providing welfare estimates for three scenarios currently being considered by Norwegian beach managers.