The Economic Impacts of Climate Change on Beach Recreation in North Carolina

Nicholas Livy, Appalachian State UniversityFaculty Advisor: John Whitehead, Department of Economics

ABSTRACT

There is growing scientific consensus that climate change is occurring. One effect of climate change in North Carolina is sea-level rise along the Atlantic coast. Climate change-induced sea level rise is expected to claim 50 ft. of North Carolina’s beaches within the next 25 years. This will also cause economic change in the recreation and tourism industry. With fewer beach recreation opportunities, tourists will travel to other regions for their recreational activities and beach communities will suffer.

The purpose of this research is to estimate the economic impacts of sea level rise on southern North Carolina beaches. Using data from a telephone survey of residents of eastern NC we estimate the demand for trips to seventeen southern NC beaches. The dependent variable is the number of trips taken annually to each beach. Independent variables include the travel costs to beaches, income and characteristics of the beaches, including beach width.

In analyses of these data with ordinary least squares regression we find that the number of beach trips increases with decreases in travel cost, increases in income and increases in beach width. With variation in the current beach width we simulate the effects of a loss of width of fifty feet and estimate the reduction in the number of beach trips taken with a more narrow beach.

This analysis will support various policy analyses. One component of the economic benefits of policies that mitigate climate change in North Carolina is the avoidance of lost beach recreation. We will measure these benefits as the product of the consumer surplus per trip and the reduction in the number of trips taken with a more narrow beach. Avoidance of the lost trips is one component of the benefits of climate change mitigation policy.

STUDY LOCATION DATA

• The data was collected via telephone survey.

• The study area includes five southeastern North Carolina counties and encompasses 17 beach locations within these counties.

• The final sample number of households surveyed was 649 with each survey consisting of data for 17 beaches for an overall sample size of 11,033.

POLICY IMPLICATIONS

• Own-price elasticity = 2.52• Income elasticity = 1.35• Consumer surplus of beach trips =

$21.17• Consumer surplus with narrow

beach = $12.58• Change in consumer surplus per

household = $8.59• Study population = 1.58 million

households• Total Change in Consumer

Surplus= -$13.57 million (annually)

For additional information please contact:

Nick LivyAppalachian State Universitynl63934@appstate.edu

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation tc 11033 .00 311.53 122.0012 59.40131 trips 11033 .00 200.00 .8730 7.21732 Access 11033 2.00 69.00 27.4706 19.93054 Fort 11033 .00 1.00 .1176 .32220 Length 11033 1.20 11.50 4.6294 2.81642 Parking 11033 103.00 1479.00 452.5882 349.42762 Width 11033 80.00 400.00 129.5294 73.24757 income2 11033 10.00 100.00 58.8752 27.45281 Valid N (listwise) 11033

DISCUSSION

• In the linear model the dependant variable is trips.

• The independent variables are travel cost, income, fort, length, parking, width, and access.

• Adjusted r-squared = .024. • F-stat = 40.11. • Trips are positively affected by

parking, width, access and income.• The variables that negatively affect

trips are forts, length, access, and travel cost.

THEORY

• Because global warming generates increased temperatures, icebergs will begin to melt and the sea level will rise

• This leads to a reduction in beach width

• As the beach width decreases we may see a overall decrease in the number of beach trips and a decrease in consumer surplus.

$

Trips

DD’

CS

x x’

MODEL

• Ordinary least squares regression• Trips = a + b*Travel cost + e

Coefficients(a)

Model Unstandardized

Coefficients t Sig.

B Std. Error 1 (Constant) 1.121 .267 4.190 .000 Access -.009 .006 -1.486 .137 Fort -1.077 .296 -3.633 .000 Length -.006 .035 -.166 .868 Parking .002 .000 6.987 .000 Width .004 .001 3.192 .001 income2 .020 .003 6.920 .000 tc -.018 .001 -13.951 .000

a Dependent Variable: trips

CONCLUSIONS

• Climate change will have significant negative impacts on coastal tourism and recreation.