Economic Study of Canyon River Runners Gets Low Marks

January, 2004. A recent masters thesis titled "Regional Economic Impacts of Grand Canyon River Runners", by Northern Arizona School of Forestry Masters student Evan Hjerpe, has received low marks. This according to Stephen Fullam, who runs a consulting firm for environmental groups and is a recipient of the prestigious Public Service Fellowship while at the Kennedy School of Government, Harvard University. Mr. Fullam notes "the study examines an issue that compares Macintosh apples (non-commercial river trips) with Granny Smiths (concessions river trips), but the data is so corrupt he's managed to compare apples and oranges." Hjerpa's analysis examines a very contentious, political issue - commercial vs. non-commercial use of a public wilderness area, in this case the Colorado River in Grand Canyon National Park, and the regional economic benefit river runners have on the local economy.

Fullam expressed concern in how data for the study was gathered. A survey was mailed to a large spectrum of non-commercial river runners, while in contrast, all economic data about commercial river running was provided by one source, the commercial river running trade association. "The analysis allows an industry trade group to report economic expenditures for their customers. Given the potential for upward bias, this data collection technique is flawed and should be questioned. Commercial river trip participants surely could have filled out a similar survey as non-commercial boaters. Furthermore, the study does not provide an example of the survey instrument used by commercial firms. These flaws bias any comparison and raise serious questions about the validity of results for the commercial sector" noted Fullam.

Tom Martin, co-director of River Runners for Wilderness, was also not impressed with the study. "We suspected the same thing" said Martin. "Highly detailed economic data from a large number of non-commercial river runners is compared to a lump sum figure reported by an industry trade group whose political motivations are crystal clear. Warning bells and whistles should be going off, but it doesn't even appear to raise the eyebrows of the study's author. I hope the Park Service distances itself from the results of this study."

The analysis not only allows this bias, but makes no effort to alleviate it in reporting from the commercial sector. In fact, Martin argues, commercial interests are more likely to report economic results with an upward bias since they are already organized as a political and economic entity on Grand Canyon wilderness and access issues. "The Grand Canyon River Outfitters Trade Association (GCROA) provided all the commercial data, and I'm sure they understand the political value of such a study" notes Martin. "The other group in this study, the general public who floats the river without using concessions services, are a scattered group of individual households with varying degrees of understanding of the issues. There is little or no expectation that do-it-yourself boaters in a single permit year would organize to over-report expenditures and potentially introduce upward bias."

Mr. Fullam points out other discrepancies with the study, such as the lack of appropriate distinctions between non-commercial user-days and commercial concessions user-days. "It is not clear whether commercial guide user-days are being counted. The omission of these days would inflate economic results since the total number of user-days would be under-reported for commercial firms. It is hard to believe that Hjerpe found that commercial boaters spend $161 per day on regional expenditures and non-commercials only $45. These figures should be less divergent and their divergence should have raised alarms for the author, especially about upward bias from commercial reports and possible downward bias from non-commercial reports" says Fullam.

Yet another flaw in the study, according to Fullam, is the lack of differentiation between commercial firms that run motorized trips verses those that run non-motorized trips. According to Fullam, "The majority of motorized trips make use of the Whitmore helipad and fly clients to Las Vegas. Clients flown to Las Vegas have left the regional economic zone defined by Hjerpe, which does not include Las Vegas. The lack of analysis of this negative economic impact raises more questions about the validity of commercial results. If a commercial customer starts and ends their trip in Las Vegas, then a substantial portion of their trip expenditures was never made in the regional economic zone of northern Arizona. It reflects the potential for additional upward bias or omission bias in reporting by commercial firms, especially motorized concessionaires."

The potential for capital flight by owners of river running concessions is also ignored in the study, according to Fullam. "Although warehouses may be located in the regional economic zone, it is not established to what degree the commercial firms leave revenues in the area."

Other deficiencies in the study have Fullam concerned. There is no consideration in the study of wholesale concessions orders of food, gear, and other services coming from outside the economic zone, which could greatly reduce the multiplier effects of the study. In contrast, non-commercial river runners reported on a case-by-case basis whether they purchased food, gear and other supplies within the economic area or not. Non-commercial trips are more likely to purchase all or most of their groceries, ice, and drinks at retail prices in the regional economic zone, while commercial outfitters can buy wholesale goods and have them transported from outside the economic zone. Fullam also points out that non-commercial trips are 2 to 3 times longer than commercial trips, hence overall food expenditures can be expected to be 2 to 3 times higher on a per trip basis for non-commercial trips, especially factoring in the difference between retail and wholesale prices.

Fullam points out one last discrepancy. Despite the reporting on an aggregate basis and acknowledgment by Hjerpe that only 8 of the 16 firms even have bases within the economic zone, the analysis still states overly confident findings about economic impacts of commercial firms. Fullam says "confidence should be low given these conditions." Combine this with a lack of solid positive information, and Fullam rejects the study as a useful tool for Park Service decision-making. "Open-door methodology simply allows too many opportunities for bias in the economics of the commercial boaters. An economic comparison of the regional impacts from non-commercial and commercial boating would be a useful study, but it needs a more academically strict methodology and independent data collection applied coherently and equally to both groups," Fullam concludes. The study can be read in its entirety at…