Lted1hq4oalpwsji 4 y 5. Integration of Economic Systems and Ecosystems A Dynamic

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INTEGRATION OF ECONOMIC SYSTEMS AND ECOSYSTEMS: A DYNAMIC

MODEL APPLIED TO YELLOWSTONE LAKE
by
Chad E. Settle
A dissertation submitted to the Department o f Economics and Finance and The Graduate
School o f The University o f Wyoming in partial fulfillment of the requirements for the
degree o f
DOCTOR OF PHILOSOPHY
in
ECONOMICS
Laramie, Wyoming
December, 2000
UMI Number. 9993742
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To The Graduate School:

The members o f the Committee approve the thesis of Chad E. Settle presented on
September 11. 2000.
Jason F. Shogren, Chairman
Thomas D. Crocker
Robert Godby
John T. Tschirhart
ayward
APPROVED:
Departmento f Economics and Finance

Owen Phillips, Chair, Department
Stephen E. Williams, Dean, The Graduate School
Settle, Chad E., Integration of Economic Systems and Ecosystems: A Dynamic Model
Applied to Yellowstone Lake. Ph.D., Department o f Economics and
Finance, December, 2000.
This paper builds a general modeling framework to address problems o f
interacting organisms, uses that framework to model a specific problem within the
Yellowstone Lake ecosystem in Yellowstone National Park, and simulates the theoretical
model using Stella II software to explore alternative management schemes.
A general modeling framework is developed which is flexible enough to model
several different ecosystem problems using the same technique. The requirement for
using this technique is a relationship between organisms, either animal or plant, such that
one influences the abundance of the other.
The specific problem analyzed in this paper is the impact from a fish species in
Yellowstone Lake, lake trout. Lake trout are an exotic species that prey upon the native
and popular species in Yellowstone Lake, cutthroat trout. The expected impact o f lake
trout is great, potentially affecting multiple species in and around the lake. The focus o f
this research is twofold: first, determine the importance o f integrating economic systems
and ecosystems; and second, explore the optimal allocation of funds toward the control of
lake trout.
Optimal control theory determines efficient harvesting o f lake trout. Stella II
software uses the resulting optimal paths determined in the general case to build the
simulation model. The model is also run both with and without interactions between the
economic system and the ecosystem to determine the importance o f explicitly modeling
those interactions. Both the steady state solutions and the optimal time path o f extraction
are analyzed for the control o f lake trout.
1
Acknowledgements
To my wonderful wife, Noelle, for her continued support. She is the wonder o f my life
and makes everything I do better and more fulfilling.
And,
to my committee chair, Jason Shogren, for allowing me to take on such an enormous
project and giving me the guidance to finish it.
And,
to my mother, Sigrid Settle, my sister, T. Amber Settle, and my grandmother, Blanche
Barnett. They deserve credit for giving me the strength and wisdom to succeed in life, for
showing me how a person can overcome any obstacle with determination and hard work,
and for allowing me to see how long the learning process can be if you are not afraid to
keep working at it.
And,
to Tom Crocker, Rob Godby, Greg Hayward, and John Tschirhart, the members o f my
committee for helping me along the way and making sure my work had the broad
perspective to go along with the narrow problem I was tackling.
And,
to Greg Hayward, Paul Stapp and Chris Nations for showing how economists and
ecologists can work together successfully and for helping me build the ecological model
for my simulations.
And,
to Wayne Hubert for helping me with specific fish biology questions that arose during
this project.
ii
Table of Contents
Chapter I: Introduction..................................................................................................... 1
Chapter II: Major Questions That Need Answers and the State o f the Current
L iterature............................................................................................................................. 6
Chapter HI: Explanation o f General Modeling Technique..........................................32
Chapter IV: Complete Yellowstone Lake M o d e l.........................................................41
Chapter V: Internet Experim ent.................................................................................... 75
Chapter VI: Simulation M o d e l..................................................................................... 105
Chapter VTI: Conclusion...............................................................................................173
Appendix I: Internet Experiment Screen C aptures.................................................... 177

Appendix II: Stella Model C o d e ................................................................................. 214
List of Tables
Table 1: Familiarity o f Participants to the Lake Trout Introduction..............................90
Table 2 : Participants Perceptions o f the Seriousness o f the Lake Trout
Introduction.......................................................................................................................... 91
Table 3 : Participants Preference for F is h ........................................................................93
Table 4: Percentage o f Particpants who would be affected by seeing attractions o f
the p a rk ..................................................................................................................................95
Table 5: Regression output to determine values for seeing species in Yellowstone
National P a rk ..................................................................................................................... 101
Table 6: Data Collected with Sources for Species-Species Interaction..................... 126
Table 7: Values o f being able to see the species and attractions in the p a r k
128
Table 8: Data Collected With Sources for Species-Human Interaction......................130

Table 9: Cost o f Road W ork in Yellowstone National P a rk .........................................137
Table 10. Resulting cutthroat trout populations with and without feedbacks............140
Table 11: Amount o f wedge created by relaxing assumptions................................... 166
Table 12: Fixed budgets, total value o f the park, length o f survival and level of steady
state cutthroat trout population....................................................................................... 169
iv
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List of Figures
Figure 1: Preference Reversals over T im e .................................................................... 100
Figure 2: Value o f Wildlife Lotteries over T im e .......................................................... 104
Figure 3: System Without Lake Trout (No Human R esponse)...............................
143
Figure 4: System Without Lake Trout (Human R esponse)....................................... 145

Figure 5: System Without National Park Service Effort
(No Human R esponse)................................................................................................... 148
Figure 6: System Without National Park Service Effort (HumanResponse)
151
Figure 7: System With Constant National Park Service Effort

(No Human Response).................................................................................................... 154
Figure 8: System With Constant National Park Service Effort (Human Response).. 156
Figure 9. System With Optimal National Park Service Effort
(No Human Response)....................................................................................................... 159
Figure 10: System With Optimal National Park Service (Human R esponse)
v
161
List of Diagrams
Diagram 1: Lake Trout Flow Diagram ........................................................................... 107
Diagram 2: Cutthroat Trout Flow D iagram ...................................................................110
Diagram 3: Birds o f Prey Flow Diagram...................................................................... 113
Diagram 4: Grizzly Bear Flow Diagram .........................................................................115
Diagram 5: Human Activity D iagram .............................................................................117
Diagram 6: Human Utility D iagram ............................................................................... 119
Diagram 7: Complete Ecosystem Diagram.................................................................... 122
vi
Chapter I: Introduction
A small island off the coast o f Madagascar, Mauritius, is well known for a manmade tragedy. Mauritius was the site o f the earliest known and most well publicized manmade extinction, the Dodo (Raphus cucullatus). The slow-footed Dodo was easy prey to
both man and many types o f exotic beasts brought to the island by man: dogs, cats,
monkeys, rats, and pigs. Humans hunted the Dodo for pleasure; dogs killed the large
flightless bird; and the other animals made meals o f the bird eggs. As a result o f both this
and the island becoming a Dutch colony in 1644, the Dodo was extinct by 1680 (Day,
1981). Mans desire to kill the bird and his introduction o f exotic species (dogs, cats,
monkeys, rats and pigs) to the island led to the demise o f the Dodo.
The Dodo is by no means the only species that has been affected by exotic
invaders. The damage to species has extended to aquatic life forms as well. Many fish are
now extinct due to mans actions. One case is o f particular importance since it has a direct
parallel with this research. Lake trout were introduced into Lake Titicaca by the U.S. Fish
and Wildlife Service and ended up killing off the Lake Titicaca Orestias, the native species
o f the lake (Day, 1981). The end result o f the introduction o f lake trout into Lake Titicaca
was the elimination o f the native species.
Man now faces a similar problem in Yellowstone Lake in Yellowstone National
Park. Lake trout were first discovered in Yellowstone Lake in July o f 1994. Lake trout are
an exotic species to Yellowstone Lake and a predator o f the popular and native species,
cutthroat trout. Cutthroat trout are a popular species for fishermen and the main food
source for predators such as ospreys, white pelicans, river otter and an important seasonal
food source for grizzly bears. The expected impact from the introduction o f lake trout into
the Yellowstone Lake ecosystem is large. Some conceptual models suggest lake trout
populations will increase substantially while cutthroat decline (Stapp and Hayward, 1999).
The ecosystem impact will not end with the reduced number o f cutthroat trout; ospreys,
white pelicans and river otters will see their main food source diminish which may in turn
reduce the numbers o f those species found around Yellowstone Lake (Varley and
Schullery, 1995).
M ans impact on the ecosystem is not limited to introducing exotic invaders.
Humans interact with ecosystems on a daily basis and through these interactions alter
ecosystem structure and function. The ecosystem and the economic system are linked changes to the ecosystem will result in changes to the economic system and these changes
to the economic system will result in further changes to the ecosystem.
As a result of this interdependence, changes in the populations o f species will
impact tourism in Yellowstone National Park. Several people come to Yellowstone to
fish, go bird watching, and see grizzly bears. A few visitors may stop coming to the park,
reduce the frequency of their visits or will at least have diminished enjoyment o f the park
as a result o f the changing conditions within the ecosystem. Yellowstone National Park
managers may wish to control the lake trout population to help visitors enjoy the park.
In addition, Yellowstone National Park managers may wish to keep a baseline, or
minimum number, o f specific species alive including cutthroat trout. Cutthroat trout have
been proposed for endangered species protection, which might force park managers to
focus on keeping a baseline population o f cutthrout trout. Even if cutthroat trout werent
up for endangered species protection, one o f the purposes o f the park is to preserve the
integrity of the greater Yellowstone ecosystem. Maintaining viable species populations

may be part o f that management strategy.
National Park management strategies were laid out in two crucial acts. Land was
first designated for creating Yellowstone National Park under the Yellowstone National
Park Act o f 1872 and the rules for managing the park were laid out in the National Park
Service Act o f 1916 (Executivesummary, 2000). The National Park Service Act o f 1916
specifically calls for two overriding goals o f the management o f National Parks - first, to
provide for the enjoyment o f the park by its visitors; and second, to leave them
unimpaired for the enjoyment o f future generations (NPS Act, 2000), (Preserve, 2000).
These two goals seem in at least partial conflict with each other. One stresses the
availability o f the park for the enjoyment o f visitors while the other stresses a sustainability
criterion for park managers. It is expected managers will both allow for the enjoyment of
current visitors and the enjoyment of future visitors. This conflict is further exacerbated by
the strategic plan of Yellowstone National Park, which has two main goal categories - one
to preserve the Yellowstone National Park resource so it is maintained in good
condition; the other to provide for the public use and enjoyment so visitors...enjoy and
are satisfied with (their)... opportunities (Strategicplan, 2000). The goal o f the park
managers is to simultaneously allow the current generation o f visitors to enjoy the park,
while also providing for the enjoyment o f future generations.
Along these lines, park managers play a similar role as that o f a typical social
planner dealing with a common property resource (Wade, 1987). They are placed in a role
to insure the resources o f the park are used at optimal levels for both current and future
generations, given their constraints. One o f those constraints with respect to National
Parks is a fixed budget' (Strategicplan, 2000). The managers must decide how to allocate
these limited funds across various activities to maximize the benefits to current and future
generations. One way to achieve this goal is for managers to maximize the
intergenerational utility o f visitors (not helping one generation at the expense o f another)
given a fixed budget. This sets up naturally as a budget constrained utility maximization
problem.
While the details o f this maximization problem are left for chapter IV, this dynamic
maximization problem has several advantages. First, this model makes explicit the links
between the economic system and the ecosystem. The two systems are connected and
changes in each system will impact the other system. Ignoring these links assumes changes
in one system will not lead to changes in the other. In order to capture the effects of the
links, these links need to be specifically modeled.
Second, dynamic modeling makes it possible to measure differences between two
specific equilibria and monetize differences that occur in the time period between those
two equilibria. A dynamic model measures the utility gained in the intermediate period
while the system is in between two equilibria. By measuring this interequilibrium behavior,
the length o f time between the equilibrium is not important. Since aquatic ecosystems in
general often take several decades and sometimes even centuries to achieve a new
equilibrium and since Yellowstone Lake is expected to take several centuries to do so, the
activity between equilibrium is o f great importance in this instance.
Finally, the modeling technique is flexible enough to handle a variety o f issues.
Many of the assumptions of the model can easily be changed and the number o f species
included in the model and ways the average visitor can interact with the ecosystem is
flexible. This flexibility allows many potential policy problems to be handled using this
technique. While it has its limitations, this model is both unique and flexible.
This research is part o f a large project including economists and ecologists: Todd
Cherry, Tom Crocker, Rob Godby, Greg Hayward, Wayne Hubert, Chris Nations, Jason
Shogren, Paul Stapp, and John Tschirhart all contributed to both this work and the project
as a whole. Part o f this group work is my research, which creates an analytical framework
representing the management issues facing Yellowstone National Park managers. I
develop an economic model, build an ecosystem model following work done by Greg
Hayward, Chris Nations and Paul Stapp, and then integrate the two into one modeling
framework that incorporates both flows inside each system and flows between the two
systems. These links between the two systems are often underplayed in the literature, but
are important since these interactions describe how both humans and other animal species
react to changes in the ecosystem. Fully incorporating these links makes the model a more
complete and accurate representation o f the problem facing National Park Service
managers. This research answers a few key questions. First, does integrating the economic
system and the ecosystem using explicit links between the two systems yield significantly
different results than ignoring these links? Second, is there any economic reason for man
to intervene in the Yellowstone Lake ecosystem?
Chapter II: Questions That Need Answers and the State of the Current Literature
This research combines an ecosystem model and an economic model in one

framework. My motivation is the current problem facing National Park Service managers
in Yellowstone National Park with regard to management of lake trout in Yellowstone
Lake. Although this motivation is a specific issue, I build a modeling framework that is a
general approach and can be used to analyze several types o f problems. Portions o f this
modeling framework have been explored at length in the literature and others have not.
Creating a model that incorporates a fishery into an economic model has been explored in
depth, however most of these models deal with a commercial fishery and only 1 fish
species is considered. My model not only explores a fishery, but a recreational fishery with
an exotic predator. Fewer models have been built that deal with recreational fisheries or
competing species. In addition, this model also deals with a specific problem in
Yellowstone National Park and builds an ecosystem model representing the interactions
between lake trout and cutthroat trout in Yellowstone Lake. For this reason, papers that
deal directly with Yellowstone National Park or deal with ecological topics related to
species in Yellowstone National Park may have already addressed issues I focus on in this
modeling framework. To guarantee that this research is both unique and productive, I
make sure that this dissertation addresses issues that have not been examined before or it
uses previous work to build a new tool for analyzing ecosystem problems.
A great deal o f literature has been devoted to fisheries and recreation problems.
Issues from ownership, regulation o f the fishery and even stocking o f the fishery have all
been discussed. Within this vast literature, only a few attempts at combining an economic
model and an ecosystem model in the same general framework have been made. Within
this class o f models, my research is unique by incorporating three important features in
one model. First, my model uses a dynamic framework that can incorporate the behavior
that takes place between two equilibria. Static models can only account for differences
between two equilibria themselves. Using a dynamic model, the activity along the path
between two equilibria can be quantified. Second, my work focuses on the direct
regulation o f an animal species. Previous attempts at regulation focused attention on
regulation o f the economic agents behavior by reducing mans impact alone. This work
allows for species to be directly controlled by allowing the park managers to kill lake trout
in an effort to alleviate pressure on cutthroat trout - A practice already being done in
Yellowstone National Park. Finally, my research allows visitors to the park to both act
myopically and to have bounded rationality o f the problem facing the ecosystem - this
model does not have to assume visitors wish to maximize the intergenerational utility o f
everyone who will ever visit the park nor do they have the information to do so. Many
previous models assume fishermen have knowledge o f the consequences o f their actions.
In my model, the sole person that has full information is the park manager. The park
manager is in the sole position to take action so that the average visitor to the park will
maximize his utility. Combining these three features in one model is unique in this
literature and makes this research original. In addition, this modeling technique is also
flexible and may have future applications to a variety o f ecosystem problems.
Since a great deal o f work has been done in this literature, I need to determine
what is original in my research and what has already been done. To make this distinction, I
ask 4 questions o f the literature.
7
1) What has been accomplished in previous attempts to integrate economic systems and
ecosystems?
2) What are the main themes already addressed in the economic fisheries literature?
3) Within the fisheries literature, have any of the features of my research been addressed?
4) Has research specific to Yellowstone National Park or ecological research touched

issues relevant to this paper?
5) What does the literature have to say about exotic invaders?
Answering these 4 questions gives insight into both the uniqueness and relevance
o f my research. First, what has already been accomplished in integration o f economic and
ecosystems? To see if my research is extending the literature in a fruitful direction, I need
to make sure that what I plan to do has not already been done. Second, what major
themes exist in the fisheries literature? If my attempt to integrate is heading in a fruitful
direction, I next need to see if the fisheries literature has already addressed integration or
the activity o f dynamic systems as one o f its main themes. Third, beyond integration and
dynamic activity, what themes o f my research have already been addressed? Assuming the
work is original with respect to integration and dynamic processes, I need to next see if
the other main themes o f my research are as well. Finally, since the specific problem
motivating this research deals with a fishery in Yellowstone National Park, I need to
determine what ecological research or other research pertaining to Yellowstone National
Park has already accomplished.
What has been accom plished in previous attempts to integrate economic system s a n d
ecosystems?
Since this model integrates ecosystem modeling and economic modeling in one
framework, I start by discussing previous attempts to combine the two. Previous attempts
to combine the two in one model have taken modest steps forward. Integrated work
combining ecosystems and economic systems was first done by Bruce Hannon (Hannon,
1983; Hannon, 1976; Hannon, 1979). Hannons work used input-output analysis to model
an ecosystem in a similar fashion to how input-output models have been used to analyze
entire economies or sectors within those economies. The flow o f resources between the
components o f an ecosystem are fixed coefficients. No change in behavior, either by
species or humans is assumed. The interdependencies o f the two systems are not modeled.
The use of input-output models to describe ecosystems has been used in other papers as
well, (Ayres and Kneese, 1969; Isard, 1972; Anas, 1988). A major challenge facing
economists is to integrate fully the ecosystem and the economic system by allowing
changes in each system to affect the other via feedback loops. A feedback loop shows how
each system will be affected by changes in the other system. These changes are an
9
important part o f system interactions not addressed with fixed coefficient input-output
models.
The challenge now is to build models that specifically account for feedback loops.
This is one o f many challenges facing economists and ecologists who attempt to work
together though. One recent paper addresses problems associated with the integration of
economics and ecology. Horst (1998) focuses on the problems o f not integrating. This
paper breaks down the most frequently used approach in the literature and discusses the
limitations and problems with this approach. In his typical model, the impacts on the
ecological system are determined in a static approach with no adaptive behavior. The links
between the economic system and ecosystem are ignored in his typical model. Ecological
impacts are translated into economic impacts to determine the expected damages from the
disturbance. This view assumes changes in the ecosystem will alter the value o f the
economic system, but the economic system will not alter its actions in response to these
changes. This approach ignores the major component o f a truly integrated approach,
which is the explicit links between the two systems. In his fully integrated modeling
approach, Horst shows that intra-system relationships exist, matter, and that economic
agents will adapt to the changing environment. These feedbacks are an important and
necessary part o f a truly integrated system. While the technical model in Horst is basic, the
important issues are discussed. H orsts paper is a call for change to the typical modeling
done in this area.
This call for a change is not limited to work in economics. Other social scientists
have made a similar call. In a two-part paper, Gary Machlis and Jo Ellen Force make the
same plea for a change in the common approach to ecological problems (Machlis et al,
10
1997), (Force and Machlis, 1997). These papers do not lay out a formal model in the way
that Horst did, but they reiterate the point economic systems and ecosystems are not
distinct from each other. The two systems must be integrated to more accurately represent
an ecosystem problem.
We live in a complex world. As a result, we divide the world into smaller parts by
creating different disciplines that each study a smaller part o f the world. However, this
approach comes with a cost. That cost is a misspecified system. Reducing this
specification problem requires creating explicit links between two disciplines that allows
knowledge from multiple disciplines to be used in one model.
Still other papers show the damage that can be caused by failing to integrate the
ecosystem with the economic system. One result o f this work was to show how grossly
adjusted equilibrium outcomes can be by failing to integrate a system (Swallow, 1990;
Swallow, 1993; Swallow, 1996). Both papers indicate that equilibrium conditions are
vastly different when the ecosystem is integrated into the economic system. Failing to do
so can yield misleading results by not taking into account how changes in one system can
affect behavior and outcomes in the other.
A good model done in integration o f economics and ecology is done by Crocker
Tschirhart (Crocker and Tschirhart, 1992). Their paper, Ecosystems, Externalities, and
Economies, which builds on previous work (Crocker and Tschirhart, 1987), combines an
ecosystem model and an economic model in the same integrated general equilibrium
framework. Agents in both systems optimize a specific objective over a given choice
variable. Species maximize their stored energy while humans choose to divide their labor
between cropping different species for manufactured goods production to maximize
11
utility. An equilibrium can be achieved for both systems if they function alone. The
inclusion of both systems will also yield an equilibrium, an integrated equilibrium, and is
the way to fully describe an ecosystem problem. This paper is a fully integrated model in
the literature.
Under the umbrella o f integration o f economic systems and ecosystems, steps
forward have been achieved first using one-way feedbacks and now recognizing we need
to use feedback loops in both directions. Previous attempts use one-way feedback from
either an ecosystem to an economic system or from an economic system to an ecosystem.
The important distinction that needs to be made is the interrelationship between the two
systems. Feedbacks work both directions and those feedbacks need to be incorporated in
order to fully describe the relationship. The only paper that has completely addressed these
feedbacks thus far is done by Tom Crocker and John Tshirhart (Crocker and Tschirhart,
1992). Work addressing these feedbacks is limited and leaves much room for entry.
Research that recognizes these feedback loops are not only important, but the
explicit modeling o f these loops needs to be done. Since this research explicitly models the
feedback loops between both the economic system and the ecosystem, it extends the
literature in a positive direction.
What are the main them es already addressed in the econom ic fisheries literature?
The economics o f fisheries is an old field. Fisheries articles have been published for
several decades now, starting in 1954, when a basic model was developed to determine
how effort levels will be determined in a common property fishery (Gordon, 1954).
12
Already by 1957, economists were studying differences that can arise between a model
using the growth o f a single fish population (Beverton and Holt, 1957) and the growth o f
a single fish biomass (Schaefer, 1957). The early literature focused on simple fishery
problems and the literature fell out o f favor for almost 20 years until a resurgence in the
1970s.
Several articles dedicated to this field can be found in the last 25 years, however
most share the narrow focus o f common property ownership o f a fishery. Multiple papers
by Sandler and others are among the long list (Comes and Sandler, 1983), (Comes et al,
1986). They examined problems dealing with simple common property ownership and the
overexploitation o f fisheries, commons and the optimal number o f firms for a single
species fishery, and even introduced harvest uncertainty into the commons problem
(Sandler and Sterbenz, 1990). Elinor Ostrom has done a vast amount o f work that focuses
on the issue o f commons and the problems that can arise from commons ownership
(Ostrom et al, 1994). Unfortunately, most o f these papers deal with commons and how it
relates to irrigation (Ostrom et al, 1993), (Ostrom and Gardner, 1993), (Ostrom, 1992) or
how commons problems can be overcome by changing the type of ownership (Ostrom and
Walker, 1991), (Ostrom et al, 1992). Common property ownership is not tied directly to
my paper and, as such, I will not delve further into this literature.
Despite the age and breadth o f the commons literature, work in the area is still
active. A recent paper has taken the problem and added a spatial component to it
(Sanchirico and Wilen, 1999). Different biological patches that have unique ecological
features within each patch and have interactions between those patches are discussed. The
biological aspects within a patch and between patches are both important. While adding
13
this spatial component is a key addition to the literature, space is not the focus o f my
research and applications o f spatial dimensions are not addressed in my work.
Commons papers are a narrow focus for the broader problem o f ownership o f a
fishery. The problem o f ownership has been studied at length in the literature and dates
back to the 1950s (Gordon, 1954). These issues include a range from open access versus
private ownership (Weitzman, 1974) to the amount o f rent able to be captured in different
ownership schemes (Grafton, 1995). Ownership issues are a main focus o f this literature,
but not my research. For this reason, I do not further explore this issue in the literature.
Optimal ownership o f a fishery is not, however, the end all to fisheries problems.
Quotas and gear restrictions have been studied as a possible solution to reach
sustainability in fisheries. Sustainability in natural resource problems, including fisheries, is
an issue that has been discussed in the literature for decades, including Ken Arrows work
(Arrow, 1974). Lee G. Anderson is a central figure in the gear restriction literature
(Anderson, 1986). Andersons work adds on to the work done by others (Allen et al,
1984), (Clark, 1985). Anderson has also contributed a large number o f papers in the field
to draw upon. His key paper on the applicability o f gear restrictions showed that gains
could be had under any cost system (Anderson, 1985). His paper described a model in
which gear restrictions would always reap positive benefits in constant cost industries,
while increasing cost industries could increase benefits given a few assumptions.
The literature on quotas is vast. Instead o f dragging the reader through all the
articles, I will instead bring to light a central paper that changed the view on quotas. The
one person whose work has changed the thought o f the typical quota belief is Rognvaldur
Hannesson. His early paper, Fishery Dynamics: A North Atlantic Cod Fishery in 1975,
14
showed that constant seasonal catch may not be the first-best solution as previously
thought (Hannesson, 1975). In a controversial paper, Rognvaldur Hannesson and Stein
Ivar Steinshaan showed that constant effort quotas were preferable to the common
practice and thought that constant catch quotas could solve the problems associated w ith'
fluctuating fish populations (Hannesson and Steinshaan, 1991). Hannessons articles have
led a change to the work in fisheries models.
Many models have been developed that use dynamics or differential games to
consider optimal fishing in a dynamic setting. In a piece along the same vein as Hannesson,
Daniel Spulber created a model with a competitive firm owning a fishery (Spulber, 1983).
Introducing uncertainty and using a dynamic approach, Spulber finds that under specific
conditions, pulse fishing is optimal. Pulse fishing involves no fishing at certain times and
high levels of fishing at others. Further research in dynamic games has provided both some
intuitive results and some surprising results. Using the Nash and Stackelberg concepts of
equilibrium in a differential game, the firm with the cost advantage can induce a higher
catch rate and elicit a higher profit than his competitor (Dockner et al, 1989). While using
a two-country dynamic game with whaling ships in international waters, jointly used
strategies can result in Pareto-efficient solutions (Ehtamo and Hamalainen, 1993). While it
can be shown that a portion o f these strategies rely on credible threats, some restrictions in
the model are severe. These three previous models rely on assumptions o f constant and
enforceable property rights. This may not always be the case. One paper that addresses
this issue is a fishery model with poaching developed by Crabbe and Van Long (Crabbe
and Van Long, 1993). It is not surprising that the optimal stock level under open access
poaching is greater than under exclusive ownership. The ability o f poachers to drive down
15
the stock of fish, will cause the owner to overexploit the fishery and extract more rent
early. It is surprising that entry deterrence by the rightful owners o f the fishery is more
successful under open access poaching than under a system o f restricted entry. The harder
it is for the poachers to enter the fishery, the harder it also becomes to deter illegal entry
into the fishery. Other work addresses the optimal harvesting o f single species, but ignores
interactions with other species (Clark, 1990), (Hartwick and Olewiler, 1998).
All of these previous articles address several main themes in the fisheries literature.
However, none o f the aforementioned articles address two important issues. First, fish
species interact with each other. Many fish species that are wanted in commercial fisheries
or for recreational fishing, are predators to other fish species who are wanted themselves.
Second, commercial fisheries are an important part o f fisheries literature and generate
significant monetary gain, but recreational fisheries also generate a great deal of human
utility in addition to monetary gain and should not be overlooked. A good deal o f work
has been done in recreational fisheries discussing non-market valuation o f a recreational
fishery, but not much modeling o f a recreational fishery has been done. The issues of
ownership, the use o f quotas to elicit first-best behavior and the ability o f owners to elicit
rent from a fishery are all explored at length in the commercial fisheries literature.
Ownership of the fishery is not of great importance in the case o f Yellowstone Lake
though. Yellowstone Lake is a recreational fishery with competing fish species. The next
section looks into recreational fisheries papers and papers that deal with competing fish
species.
Within the fisheries literature, have any o f the features o f my research been addressed?
16
To see if utility derived from recreational fishing is explored in the literature, I now
turn to models that deal directly with recreational fisheries and models that specifically
incorporate competing species. As compared to commercial fishery models, relatively few
models have been developed that either focus on recreational fisheries or have competing
fish species. Even within this sparse literature, few papers focus on recreational fishing in
lakes or streams. This is a developing literature. While none o f the papers in this section
are a direct parallel with my work, several o f them use similar techniques.
The first paper written on competing fish species was Flaaten (1983). His work fits
nicely into the previous work on open access fishing, the one new tweak added to the
literature was the introduction o f competing fish species in one model. This new tweak
does not change the results that open access creates overexploitation of fish, which has
been shown extensively in the commercial fisheries literature. The new twist was adding
competing fish species into the open access literature.
This theme o f competing fish species focusing on the optimal harvest o f one o f the
species has been continued in many other papers (Hannesson, 1983), (Ragozin and
Brown, 1985), (Flaaten, 1991), (Flaaten and Stollery, 1996), (Wacker, 1999). Ronald
Fisher and Leonard Mirman compile a summary article in The Compleat Fish Wars:
Biological and Dynamic Interactions (Fisher and Mirman, 1996). They cover articles on
dynamic externalities and biological externalities. Dynamic externalities are competition
between countries (or between two fishing boats in a simple example) while biological
externalities are competition between two fish species. The article combines the two
externalities from (Levhari and Mirman, 1980) and (Fischer and Mirman, 1992) into one
17
model. The model shows explicitly when both types o f externalities are present, catch
rates will be set too high and overexploitation o f the fishery will occur. While this deals
with competing fish species, the necessity o f competing countries for fish is not found in
my research. This work also does not deal with the introduction o f an exotic fish species
into an ecosystem.
Two books in the literature delve into the issue o f competing species as well,
(Clark, 1990), (Hartwick and Olewiler, 1998). While both o f these contain sections on
multiple species, the specific technique used and the focus o f the work is different from
this paper. The introduction o f exotic species and the optimal management o f a
recreational fishery with an exotic is not explored in their work.
One paper that does have an explicit link with my work is a paper by Kenneth
McConnell, who developed the first simple biological model for a recreational fishery
(McConnell and Stinen, 1979). McConnell took the modeling approach that catch rates
depend on stocks o f fish and future stocks o f fish depend on current catch rates. The
results from this paper are threefold. First, this paper shows the now well-known result
that when a recreational fishery is open access, the fishery is overexploited. This result
supports previous work from the commercial fisheries literature. Additionally, the paper
explores the optimal regulation o f a fishery when it is jointly used for both commercial and
recreational fishermen. The final and most interesting result when compared to my work is
in the last section of the paper. McConnell explains that when a small portion of
recreational fishermen (highly skilled fishermen) are responsible for the majority of the
catch, direct regulation on only that small portion of fishermen can result in the first-best
outcome. This last result needs to be taken with caution. It may be difficult to distinguish
18
skilled fishermen from all other fishermen at the time when regulation needs to be set
forth. Even if it is the case and it is possible to selectively regulate specific individuals, it
could very well be politically costly to do so. The modeling approach that catch rates
depend on stocks o f fish and future stocks o f fish depend on todays catch is one o f the
most important ideas used in my research. Tracking the population o f species is necessary
in my model. The use o f variables that directly account for changes in populations is a
critical aspect o f both my research and McConnells work.
The second crucial paper is a piece by Anderson. Anderson developed a full model
o f a recreational fishery with stock enhancement (Anderson, 1983). Anderson showed the
conditions when stock enhancement could improve the welfare o f fishermen as well as
when it could not. Only under certain restrictions would pure stock enhancement (straight
stocking of the fish) result in welfare gains. Anderson instead finds that improving the
habitat o f fish would be much more likely to increase the welfare o f fishermen than
stocking fish would.
By studying the recreational fisheries literature, work closer to my research can be
found. This literature does deal with humans deriving utility from recreational fishing.
While most o f these papers still have little in common with the specific model I use, some
similar approaches are taken. I use the competing fish species approach from Flaaten, the
dynamic approach from Fisher and Mirman and the concept that current catch rates
depend on current fish populations and that future fish populations are at least partly
determined by current catch rates from McConnell and Stinen. Parts o f each o f these three
papers are used in the ecosystem portion o f my model.
19
In addition to the insight into the ecosystem model I use, two papers directly lay
out concepts used in my economic model. The two papers most closely linked to my work
are Theory and Estimation o f the Household Production Function for Wildlife
Recreation by Nancy E. Bockstael and Kenneth E. McConnell and Toward a Complete
Economic Theory o f the Utilization and Management o f Recreational Fisheries by Lee G.
Anderson. One essential idea is taken from each o f these papers and used in m y model.
Bockstael and McConnell build a theoretical model to describe the interaction
between the households behavior and... wildlife recreation. (Bockstael and McConnell,
p. 199). An important relationship is discussed in the paper, but is not fully explored; the
interrelationship between government decisions and individuals decisions on h o w to
allocate time in national parks or other wildlife refuges, In the chain o f causation, public
actions affect the stock of wildlife, which in turn influences success per day on which net
benefits depend. (Bockstael and McConnell, p.200). Bockstael and McConnells paper
brings this issue to light but does not fully explore its relationship on any specific case.
Their paper does not fully allow the National Park Service managers control over
decisions in the same way as my work, however many useful ideas in my work w ere
initially examined in their paper. The framework o f Bockstael and McConnells model is a
static theoretical model of inputs {both public (exogenous) and private (endogenous)}
into household production functions to provide final goods to consumers. Specifically, a
relationship between the public agencys choice variable, A (newly purchased wetlands)
and the stock o f a particular species (fish) S is explicitly written as, S = S(A). A s the
public agency increases expenditures on A the stock o f the species increases. In this
model, two environmental goods are desired, both the quantity o f species caught, x and
20
the quality o f the experience, q. This framework is used with a constrained utility
maximization problem for the individual. The end result is a set o f structural demand
functions for catch and quality, which shift with changes in public agency actions
(Bockstael and McConnell, p.203). Bockstael and McConnell go on to derive welfare
improving results under different scenarios for quantity (catch) and quality o f
environmental goods. The necessary conditions for which cost and preference functions
can be identified increase when both quantity and quality are endogenous.
Bockstael and McConnells 1981 paper takes a different approach from my work.
While not a direct parallel to my research, some common threads exist between the two
papers. Both o f these models: 1) Use household production functions in the theoretical
model for private wildlife recreation; 2) Have individuals spending resources (time in my
model and intermediate goods in Bockstael and McConnells) to produce final
environmental goods; 3) Have a public agency choosing the level o f a choice variable to
help the desired species. While these themes are common between the two models, the
approach taken is very different. Regulatory control is different in the two models.
Household production uses different inputs to create a final good in each model. The type
o f regulator and the type o f regulations in the model are different. And finally, and most
importantly, my research has dynamic interactions and links between the ecosystem and
the economic system.
Anderson builds a model to describe the optimal management o f a recreational
fishery (Anderson, 1993). Anderson acknowledges the work done in fisheries literature
has ... for the most part, been developed in the context o f commercial fisheries.
21
(Anderson, p.272). The main purpose o f this paper is to derive the conditions for optimal
utilization o f a recreational fishery.
Anderson sets up a static model to represent the recreational fisherman. He sets up
a benefit function, which depends on the number o f days spent fishing, the landings per
day and the catch per day (Anderson, p.274). This benefit function is used to form a
Lagrangian constrained maximization problem (Anderson, p.277). The maximization
shows the optimal number o f days spent fishing and the optimal number of landings using
Kuhn-Tucker analysis. Anderson uses a key assumption in his model; the harvest or
Catch Per Day (CPD) is the control variable o f the regulatory agency. The agency can
limit the number o f fish that leave the lake to each person fishing. He then develops his
model under several scenarios: CPD is a function o f stock size only, CPD is used in
conjunction with a tax per day spent fishing, The CPD constraint is binding for some
people and non-binding for others.
The focus o f Andersons paper is similar to the focus o f my model. Both try to
develop the optimal actions taken by the regulatory agency overseeing the recreational
fishery. Even though the focus of Andersons paper and my paper are similar, the models
take a very different approach. Anderson sets up a static model. I set up a dynamic model.
Anderson uses both taxes per day and CPD as a regulatory tool. I use direct actions on
one of the species as a regulatory tool. Anderson focuses his model on a single fish species
with no biological interactions. I focus on the interactions of several species. While the
focus is similar, the paths taken to the end are very different.
Few models incorporate dynamic interactions in a fishery or competing fish species
in a fishery. Fewer still deal with specific issues related to my research. Anderson has
22
modeled the behavior o f individuals when a regulatory agency has control over the fishery.
The regulatory agency plays a similar role in his model as the park manager does in my
model. While the focus is the same, the path taken to this end is very different. Anderson
focuses in on catch per day as both a regulatory tool and an outcome. Regulation in my
model deals with directly impacting fish species.
While few models have a direct link with my work, two papers use some similar
modeling techniques. Both Anderson and Bockstael and McConnell have direct parallels
between their work and my research. These common techniques create a link between
their work and mine, but the while the tools are the same, the problems analyzed with
those tools vary greatly.
H as research specific to Yellowstone N ational P ark or ecological research touched issues

relevant to this paper?
I also searched the literature dealing with Yellowstone National Park. Since the
specific problem studied in my research is an ecosystem problem in Yellowstone Lake, it is
necessary to find out what previous research in Yellowstone National Park has been done.
I need to ensure that the focus o f my research has not already been done in either
economic work or ecological work.
Several papers in economics have some facet o f Yellowstone National Park as the
focus. This research has a long history, with the valuation and protection o f species as a
main focus. This literature is divided into two main groups, valuation and management.
The valuation literature primarily uses either travel cost or contingent valuation as the
23
method o f valuation. Management papers focus on limiting behavior o f visitors to the park
in order to reduce their impact on either species in the park or other visitors to the park.
A problem when using a travel cost model to determine willingness to pay is
heterogeneous visitors (Smith and Kopp, 1980). A group of travel cost models have been
developed that separate on-site costs from long-distance travel costs, called on-site cost
models (McConnell, 1975). This approach has been used for a variety o f topics (Shaw,
1991), (McConnell, 1992), (Larson, 1993). The on-site cost model is a popular way to
estimate economic values o f environmental goods. It has been used to calculate the
economic value o f Yellowstone National Parks fishery (Kerkvleit and Nowell, 1998).
Using the on-site cost model, the value of fishing in and around Yellowstone National
Park is calculated.
However, the on-site cost model approach has its own problems. One such
problem is parameter instability. Parameter estimates are sensitive to the sample
composition. A recent paper used a new approach to get around this issue and estimated
benefits from visiting Yellowstone National Park (Kerkvleit and Nowell, 1998). The
approach used in this paper is to separate the visitor days and vacation itinerary from
actual travel costs. When used, this eliminated the parameter instability for the data. This
work needs to be addressed if travel cost models are used to calculate non-market values
for environmental goods. I do not use travel cost models though and thus do not need to
worry about these problems.
Two issues key to the introduction o f lake trout are discussed in separate papers.
First, questions about congestion in Yellowstone are discussed (Wilkinson, 1995). This
paper asks two key questions; is congestion currently a problem at National Parks? And
24
can these congestion issues be controlled? The determination o f whether or not crowds
are a problem at each individual park is left for further research. Instead the issue o f
congestion is discussed more on a philosophical level in Wilkinsons paper. The issue o f
congestion being a problem in the specific case o f Yellowstone Lake is discussed further in
later work. Controlling congestion is discussed and multiple methods o f limiting visitors
are used. The second key problem the literature discusses is that o f intra-use conflicts.
Certain uses o f parks are in conflict with each other. For instance, a fishery has two uses;
It can be used as an intermediate good in the production o f other species in the ecosystem
or it can be used as a final product for fishermen who enjoy catching fish. The two uses
interfere with each other. While the specifics are left to a case-by-case basis, the issues
surrounding this topic are discussed in the literature (Jacob and Schreyer, 1980). Intra-use
conflicts are important since they are used in my research, while the issue o f congestion is
not o f central interest in my research11.
Another key issue facing park managers is the use o f regulations to achieve park
goals. Park managers have several tools to achieve their goals. They can restrict visitation,
restrict gear use, increase the cost of a yearly pass, or increase the cost of a single visit. A
few of these specific tools and their use in Yellowstone National Park in particular are
discussed in the literature (Kerkvleit and Nowell, 1998). Two key results are found that
directly affect this research. First, while congestion is an issue to fishermen, the number o f
fish caught per hour is a much greater determinant in fishermens behavior than any other.
Second, the increase in the cost o f annual fishing permits and per day permits both have a
problem associated with them. Direct regulation o f the fishermen is not a first-best policy
for Yellowstone National Park. This is an important result for my work. My research
25
allows no direct regulation o f fishermen, but instead direct regulation o f species

populations through using money to kill lake trout. Since direct regulation o f fishermen is
already being used in Yellowstone National Park, using direct control o f lake trout as a
further control on the ecosystem is a reasonable way to model the problem o f lake trout in
Yellowstone Lake.
The results from Kerkvleit and Nowells 1998 paper alleviate the questions studied
in other work. Since the number o f fish caught per hour mainly concerns fishermen, human
congestion within a fishery will not need to be the main focus o f my research. Previous
works have studied congestion at length (Anderson, 1980), (Deyak and Smith, 1978).
Kerkvleit and Nowells results suggest my current modeling technique can be used
without major concerns about congestion or the use o f direct regulation o f fishermen.
Although the focus o f this paper is on species interactions, research in ecosystem
management has not been limited to species. Ecosystems have been valued in previous
papers as both insurance and as human capital (Crocker et al, 1996), (Agee and Crocker,
1997). The same modeling approach used in my research is also used in Agee and
Crocker. They also use household production functions in their analysis. While household
production functions are used in both Agee and Crockers work and my research, research
papers using household production functions outside the realm of species production will
not be discussed at length since their focus is different than the current research.
The most comprehensive research done on the Yellowstone Lake ecosystem was
done by the director o f research at Yellowstone National Park, John Varley (Varley and
Schullery, 1995). This paper is the single best written work on the lake trout problem in
Yellowstone Lake and it is also the best collection o f all different types of work done by
26
both biologists and economists on the introduction o f lake trout into Yellowstone Lake in
Yellowstone National Park. The work starts out with a description o f the problem facing
park managers and the potential consequences from the introduction o f lake trout to the
ecosystem. Varley and Schullery combine previous work on contingent valuation studies'
on fishing (Duffield et al, 1987) and the value o f a fishery (Varley et al, 1983) plus travel
cost surveys on the value o f grizzly bears (Swanson et al, 1994) and wolves (Duffield,
1992). These surveys were compiled to not only estimate the overall value o f the
Yellowstone Lake ecosystem, but also to estimate the damages that might be caused by
the introduction o f lake trout. In addition, various ways to reduce the lake trout
population are discussed. The total elimination o f lake trout is seen as impossible unless
the entire lake was treated chemically to kill all trout species including both lake trout and
cutthroat trout and then cutthroat trout were introduced at some point in the future to
return the ecosystem to its original state. Using previous estimates o f the value o f the
cutthroat trout fishery, a benefit-cost ratio was developed to show the potential for
economic gain from killing lake trout.
The work done by Varley and Schullery suggests that the introduction o f lake
trout into Yellowstone Lake is a risk that can be reduced but not completely eliminated.
The benefit-cost ratios suggest money would be well-spent killing lake trout to alleviate
pressure on cutthroat trout. This work is good motivation for the importance o f my
research. If the money is well spent, then how much money should be spent and if the
National Park Services budget is fixed, what is the true cost o f killing lake trout?
27
Once you broaden the focus to include ecological and biological papers, the
literature on Yellowstone becomes massive. To keep focused, I work with research that is
crucial to either this research directly o r the research done by the ecologists on the grant.
Ongoing research indicates which o f the species in the Yellowstone Lake
ecosystem will be most affected by a decline in the cutthroat trout population.
Consumption estimates show that although a great deal o f research has been done on the
potential effect on the grizzly bear population, they will not be affected nearly as much as
birds o f prey will (Stapp and Hayward, 1999). Other research indicates that a particular
age class o f cutthroat trout is o f the greatest importance (Stapp and Hayward, 1999). The
juvenile fish are more important to the survival o f cutthroat trout than are adult spawning
age fish. Since lake trout feed primarily on juvenile cutthroat trout, their impact is
expected to be great.
Research devoted to Yellowstone National Park and ecological research on the
lake trout problem in Yellowstone Lake have addressed issues close to this topic. Some
research gives insight into what issues are important in regulation o f Yellowstone Lake.
Some research, including work on this project, deals with issues specific to the ecology of
the ecosystem in and around Yellowstone Lake. While the research touches issues dealing
with Yellowstone Lake, none o f this work is describing the type of activity described in
this research.
What are the potential problem s and how large is the risk o f exotic invaders?
28
In this particular problem an exotic invader, lake trout, have been introduced into
an ecosystem and are threatening the native species, cutthroat trout. What does the
literature have to say about exotic invaders in general? Is this a widespread phenomenon?
Is this an isolated incident?
We have already seen exotic invaders being responsible for the extinctions o f
species. The Dodo is now extinct, largely in response to exotic species introduced by man
into the Dodos ecosystem (Day, 1981). We also know exotic invaders were responsible
for the extinction o f the Lake Titicaca Orestias and the culprit responsible was lake trout
(Day, 1981). Current research is being done to determine how much o f a problem lake
trout are expected to cause in Yellowstone Lake. We know exotic invaders have caused
extinctions in the past. We know lake trout have caused extinctions in the past. This is not
an isolated incident. But how far reaching is this problem?
Evidence does exist showing that exotic species being introduced into a foreign
ecosystem does not always end up in ruin. Often times the introduced species does not
even survive in the new surroundings (Kareiva, 1996), (Mack, et al, 2000). If invaders do
not always become a problem, information about the specific case needs to be determined.
If the problem does exist, we have options about how to handle the problem as well.
Mitigation and adaptation can both be done to reduce the effect o f an exotic invader
(Shogren, 2000).
An overriding assumption made in this ecosystem problem is that cutthroat trout
are facing significant pressure from the introduction o f lake trout. This assumption is given
great credibility by a key paper in the fisheries science literature (Lassuy, 1995). The
damage caused by species introduction is the focus of Lassuys work. The results show
29
that 68% o f North American native fish species extinctions were a result o f introduced
exotic fish and that 70% o f the 69 listed species for Endangered Species protection with
adequate information about their listing were caused by introduced fish species.
Further evidence shows neglecting the potential damage o f introduced fish species
can cause extinction. Several species o f fish have become extinct as a result o f introduced
species, including the Lake Titicaca Orestias, the Ash M eadow Killifish, and the Pahroup
Kiilifish (Day, 1981). Since lake trout are an introduced species to Yellowstone Lake and
are threatening the native cutthroat trout population, this work suggests the potential
impacts o f lake trout should be studied to determine the extent o f expected damage from
the lake trout introduction.
Further w ork suggests this particular exotic invader will cause immense damages if
left alone. Projections of the amount o f damage lake trout could do to cutthroat trout
suggest the cutthroat trout population could fall by as much as 90%, from its current size
o f 2,500,000 to 250,000 (Varely and Schullery, 1995).
It appears fish species in general are some of the most damaged o f all species
facing exotic invaders. O f those, not only do lake trout have a history o f causing
extinctions, but in this particular case they are expected to seriously threaten the survival
o f cutthroat trout. This particular exotic invader is o f serious concern.
Overview
This literature review has given insight into my research. Previous work in
integration o f economic systems and ecosystems has shown that my specific dynamic
30
approach that combines links between both systems is unique. My work uses a dynamic
ecosystem-economic system model incorporating feedbacks between the two systems to
analyze a specific problem. That problem is an exotic invader in Yellowstone Lake
expected to make a large impact on the native fish population. The manager wishes to
maximize the intergenerational utility o f visitors to the park who use household production
functions using time to produce goods. None o f the specific work in the fisheries literature
addresses all the main issues that my model incorporates. Some w ork has been done on
recreational fisheries and papers that use a dynamic model to represent a fishery have been
developed. Within this narrow range, however, no one model has incorporated all o f the
main themes o f my work. This insures my research is both unique and productive, adding
new aspects to the current literature.
Chapter in lays the groundwork for the general modeling technique used
throughout this paper. Chapter IV takes the general modeling technique and applies it to a
specific problem - the introduction o f lake trout into Yellowstone Lake. Chapter V
explains the internet experiment used to gather data for valuation o f the goods in
Yellowstone National Park. Chapter VI explains the simulation model in parts, as a whole
and gives the simulation results across a variety o f possible scenarios. Chapter VTI
concludes the paper.
31
Chapter HI: Explanation of General Modeling Technique
Before laying out the full Yellowstone Lake model, we first motivate the
integrated modeling technique using the simplest case, a 2 species model. This general
model has two interacting species. These two species need not be animals, but any species
interacting with each other for survival. A simple predator-prey model is the least
complicated o f this type. The predator species (denoted as species Z) eats the prey species
(species Y) for survival and the prey species tries to survive the predator species. I further
assume humans (an average visitor) derive utility from a household production function,
using time to consume the two species. The model also allows the average visitor to
derive utility from enjoying the rest o f the park in the form o f a park public good. All other
attractions at the park are subsumed in the park public good (denoted as X). All notation
used in this paper is given in a notation sheet on the back o f the dissertation.
This type o f model can easily be adapted to include non-consumptive uses as well.
Instead o f harvest functions, the same functions can be thought o f as viewing functions for
species (either bird watchers or other wildlife viewing). Time and the species population
would still be the inputs to the household production functions, however human
consumption would result in no decline o f the species populations for true non
consumptive uses. If human consumption resulted in either a decline in the species
population (by killing the species) or a decline in the population o f the species in the area
they are viewed (perhaps driving the species into the woods by viewing them), the
production function would still be consumptive in nature. Since consumption o f the
species (viewing the species) would reduce the number o f species later visitors could see,
32
that would drive down the population o f viewable animals. Even though the average
visitor is not directly killing the animal, he is reducing the viewable population and thus
reducing the relevant population. This model is also not limited to either consumptive or
non-consumptive uses. Both could easily be incorporated in the same model. In addition '
to non-consumptive use, existence values could also be easily incorporated in this model.
The addition o f existence values would apply directly in the average visitors utility
function. The species populations would appear, possibly as a binary variable: 1 if the
population is positive, 0 if it is not. The use of a binary variable assumes existence values
do not fluctuate with different levels of the species population. If the species has not
become extinct, the existence value exists and is constant. If the species has become
extinct, the existence value is zero. Thus, if the species is alive, the existence value is
positive. If the species is not alive, the existence value is zero1".
Human activity is not limited to the consumption of the species by the average
visitor. In addition to the direct effect that the average visitor has on the ecosystem, the
park manager is engaged in activity to ensure that the average visitor maximizes his utility.
The park manager must determine how to best use the limited park funds to help the
visitor maximize his utility. He decides how much money to spend relieving pressure on
the prey species (mz) and how much money to spend improving the rest o f the parks
public good (mx). We presume the park manager spends money on either improving the
rest o f the park public good or relieving pressure on the prey species. This does not mean
the park manager only spends money on these two activities, rather he has a limited
budget to spend on them and must decide how to allocate those limited funds across both.
In one specific case, the park manager may relieve pressure on the prey species by killing
33
the predator species. In this case, the money spent relieving pressure is used to reduce the
population of the predator species. It must be noted this is by no means the only way
money can be spent to reduce pressure on the predator species. Often times a park
manager has other options at his disposal. A manager can restrict or change the behavior
o f the average visitor to relieve pressure on the prey species. An example would be a
fishery, which changes its gear restrictions. If more harmful gear use is disallowed, a catch
and release fishery will result in fewer o f the fish being killed. The manager changes a
policy to increase a species survival rate. A manager can also improve the habitat o f the
prey species to help reproduction. Any activity costing money to help the prey species can
be done within this framework.
Use o f Household Production Functions
In this model, humans allocate their time across different activities. The average
visitor must choose how much time to spend doing each activity. He can either spend time
trying to catch species Z, trying to catch species Y, or trying to see all the other
attractions of the park, X. M ore time spent at each activity will produce more o f the good
(either species Z, species Y or the park public good X). In addition to time spent doing
each activity, the level o f the good (species populations for Z and Y or the level o f the
public good X) also helps determine how much of the good will be produced. A larger
population or higher level o f the good will lead to a larger number o f individuals being
caught or viewed by the average visitor. The average visitor has control over the amount
o f time he spends doing each activity. Unlike with a market economy, the average visitor
34
does not trade money for goods, he instead gives up time to produce goods. This is why
household production functions are used to represent the production o f goods for the
average visitor.
In the household production functions, humans use time and the species
population as inputs to produce the final good - catching or seeing species or enjoying the
public good. I call these household production functions harvest functions since humans
catch the species for enjoyment. The subscript on the harvest functions denotes the
species. In this model, there is a harvest function for the predator species (hz) and one for
the prey species (hy). Tz is the amount o f time spent by the average visitor attempting to
catch the predator species. Ty is the amount o f time spent by the average visitor
attempting to catch the prey species. Once again it is important to note humans need not
consume either o f the species. These production functions could be non-consumptive in
nature where the visitor simply sees the species in its environment. The example outlined
in this chapter has consumptive use. The last household production function, Sx, also uses
time as an input, but uses a level o f the public good as its second input in place o f a
species population.
These production functions are similar to those built by Bockstael and McConnell,
however time enters into the function differently (Bockstael and McConnell, 1981). They
assume time is multiplied by a catch per day function. The catch per day function depends
on effort and the stock o f the species. My harvest functions depend on time and the
species population. Another similar production function is done by Anderson (Anderson,
1993). His production also depends on the species populations and aggregate effort,
however the catch per day is a direct regulatory tool by the manager o f the ecosystem.
35
Other catch functions in the literature have catch as a linear function o f species
populations (McConnell and Sutinen, 1979), (Fischer and Mirman, 1996), include biomass
instead o f species populations (Dockner, et al, 1989), or relate biomass and species
populations (Spulber, 1983). Each o f these production functions have species population
or species biomass as an argument in catch rates. As a species population or the biomass
of a species increases, the harvest increases. The three production functions are listed
below.
hz = hz(Tz, Z) - harvest function for the predator species
(1)
hy = hy(Ty, Y) - harvest function for the prey species
(2)
Sx = SX(TX, X(mx)) - viewing function for the public good
(3)
where dhz/dZ > 0, dh/dY > 0, dSx/dX > 0, dhz/dTz > 0, d h /d T y > 0, and dSx/dTx > 0
The first two functions are set up to be harvest functions. These represent the
number o f the particular species caught either in hunting or fishing (consumptive use). The
final household production function (Vx) is a non-consumptive use function (viewing
function) for the park public good. The park public good is a pure public good
representing all non-species related activities, such as enjoying any other attraction at the
park other than the two species.
36
State Variables fo r Species Populations
Species populations play a vital role in this model. The larger a population o f a
particular species is, the larger the catch o f the average visitor on any particular visit to the
park. A change in species populations either reduces or increases the productivity o f time
spent at that activity. A higher population o f a species would result in a higher harvest of
the species for a fixed amount o f time spent trying to catch the animal (since dh /d Y > 0,
dhz/dZ > 0 ). In this manner, a higher population corresponds to a lower productivity and
a lower population corresponds to a higher productivity where productivity is denoted by
the amount o f time it takes to catch a particular number of individuals. With lower species
populations, more time must be spent to catch the same number of a species.
Species populations are used in this model as state equations. The population
(state) of the species next period is a function o f its own population the current period and
the population o f other species the current period. For instance, the change in the
population o f the predator species is a function of its own population, since a larger
population will spawn a larger number o f offspring each year than a smaller population,
and the population o f the prey species since they are the main food source o f the predator
species and get consumed by them.
(4 )
ddf = 1 - (k)(Z)/(Y)
(5)
37
Y {Y,Z,hy)
(6 )
X = X(X,m x)
(7)
The above equations show the relationships between the tw o species populations
and the growth function for the park public good. The change in predator population ( Z )
is a function o f the current population o f the predator (Z), the number o f predators
harvested (caught) by the average visitor (hz), the amount o f money spent by the park
manager killing the predator species (mz) and the prey species population through a
density dependence factor (ddf).
A density dependence factor relates the population o f the predator species that can
be sustained from a specific population o f the prey species. In the equation (5), (1/k) is the
amount of predators that can be supported by one prey species. The density dependence
factor is shown as an indicator for how many predators can be sustained by a population
o f the prey species. Within a formal model, the density dependence factor can be
subsumed in the first equation by directly relating the predator species to the prey species
as in equation (8).
This modeling technique that assumes current populations o f a species depends on
previous populations and previous levels o f harvest comes from McConnell and Sutinen
(McConnell and Sutinen, 1979). As harvesting o f a species increases, the population
decreases.
38
Equation (6) describes the change in prey population (T ), which is a function of

the current population o f the prey species (Y), the current population o f the predator
species (Z), and the number o f prey species that are harvested by fishermen (hy). The final
equation, (7), describes the state o f the public good in the park. The change in the state o f
the public good ( X ) depends on the current state o f the public good (X) and the amount
o f money spent improving the public good (mx). These equations give a functional
representation to how species populations will change over time for given population
levels and harvest functions. I f we rewrite equation (4) subsuming the density dependence
factor by adding in the prey species population instead o f explicitly writing the density
dependence factor, we get:
Z = Z ( Z ,m z ,h x,Y )
(8)
State equations are essential to the harvest functions. State equations represent
productivity (in the amount o f time they have to spend in order to get a specific harvest
level o f a species) o f the average visitor. This productivity is necessary to determine how
many o f a particular species are caught. As the population (state equation) increases, the
amount o f that species harvested will increase (given a fixed amount o f time spent at that
activity). Time becomes more productive in the household production function. The same
amount o f time now produces more o f the good. This will in turn increase the utility o f the
average visitor. The use of state equations in the harvest functions is essential to determine
catch rates.
39
The two important concepts described in this chapter, household production

functions and species state equations that represent the species populations, have been
explained in the last two sections. These concepts will be used in the specific model.
Chapter IV takes the analytical framework of chapter m and applies it to the specific
problem in Yellowstone Lake - the introduction o f lake trout.
40
Chapter IV: Complete Yellowstone Lake Model
F ull M odel Specified
With the groundwork established for the general modeling technique, we now
apply the technique to a specific problem. The problem of the lake trout introduction into
Yellowstone Lake is explored in detail in this chapter. Having discussed the crucial parts
o f the model separately, I now combine the parts into the full model representing the
Yellowstone Lake ecosystem and economic system. The general model is built with the
guiding assumption that both the general goal o f the National Park Service and the people
visiting Yellowstone National Park is to maximize the utility o f all people who will ever
visit the park.
The general model uses an average visitor framework to solve a dynamic optimal
control model. The average visitor is the composite average o f all visitors to the park. The
visitor is not one person. Some people go to fish and spend all their time fishing. Others
come to see Old Faithful and the other core attractions to the park. On average, a person
spends some time across all activities. This average visitor is not a Representative Agent.
A Representative Agent is infinitely lived. By using an average visitor, we allow for the
composition of this average visitor to change over time and to realize multiple generations
o f visitors will come to the park. As this visitor changes, the amount o f time he spends
across activities will change. Therefore, his impact on the ecosystem will change. We also
allow for updating o f information on the part o f the park as time goes on. The information
available on species interactions, expected versus real paths o f expansion, and visitor
41
composition will change in the future. As time goes on, the simulation model can be run
with new information to see how the optimal path will change over time. This necessary
flexibility is the reason to use an average visitor instead o f a Representative Agent.
Updating o f information will happen, just as the average visitor to the park will change
over time. As visitation changes, the average visitor changes and the results o f these
simulations will change. Allowing the new information to be used and recognizing this
new information is critical and an explicit feature o f this model. For instance, if in 20 years
more is learned about lake trout breeding locations and it becomes easier to kill lake trout,
that new information will change the outcome of the simulations. Using new information
as it becomes available is an important tool to determining paths. The variables in this
model are determined using current o f information. Since lake trout were only discovered
in Yellowstone Lake a few years ago, more information is being gathered all the time.
That new information is important as it can change the parameters o f the model.
The average visitor is faced with a choice; either spend time fishing for cutthroat
trout or spend time enjoying the rest o f the park by driving to see the core attractions o f
the park. Utility is gained from either catching a cutthroat trout, catching a lake trout,
seeing a grizzly bear, seeing a bird o f prey or seeing the core attractions o f the park. The
visitor can only see the core attractions o f the park by spending time driving around the
park. Likewise, the visitor can only catch lake trout or cutthroat trout by fishing. Assume
the visitor can see grizzly bears or birds o f prey doing both activities, but has a better
chance o f seeing a grizzly or a bird o f prey while fishing since grizzly bears and birds o f
prey spend more time near the lake than on the road.
42
The National Park Service manager and the average visitor collectively choose
their individual control variables to maximize the flow o f discounted utility to the average
visitor on into the future. The average visitor can change the amount o f time he spends
fishing as compared to the amount o f time he spends driving around the park. As he
spends more time fishing, he catches more cutthroat trout. Cutthroat trout populations
decrease as the average visitor catches more cutthroat trout. This declining population
makes it harder for visitors in the future to catch a cutthroat trout. Assume the average
visitor takes this into account when deciding how to allocate his time across the various
activities. The manager decides how to allocate his budget between killing lake trout and
improving the rest of the park public good. He also makes this decision in order to
maximize the discounted utility o f the average visitor.
The objective o f the model is to maximize the discounted flow o f utility to the
average visitor. The utility function is comprised o f household production functions for the
average visitor, called harvest functions or viewing functions. These functions have
two inputs, time and the population of one o f the species in the Yellowstone Lake area (or
in the case o f the public good, the level o f the public good).
Both the average visitor and the park manager make their choices - how much
time to spend doing each activity for the visitor and how to allocate funds for the
manager. The different activities are 1) fishing, and 2) enjoying the rest o f the park (a
public good composite for all activities not at Yellowstone Lake or not described in 1)
above). The manager acts as a social planner deciding how to divide money between 1)
killing offlake trout and 2) improving the rest o f the park (public good).
43
The use o f this model assumes both the National Park Service and the visitors
choose their actions to maximize the utility o f all people that will ever come to the park.
This restriction is unnecessarily stringent since it requires each visitor to not only wish to
maximize all other visitors utility, but also assumes he has complete information about
both the entire Yellowstone Lake ecosystem and complete information about future
visitations to the park. After a formal description o f the model, I explain how to relax this
assumption within this framework.
M axjui(ha (T/ ,C T ) A (T f ,LT),St (T/ ,TB),Sl (T/ ,T,.G).Sr(T.,X(.mJ)]e "'dt

0
mt, mx, Tf, Tx are control variables
s.t. CT = C T (C T L T , B, G,h ct)

L T = LT (LT ,h u,mu,CT)
B = B(B,CT )
G = G(G,CT)
X = X ( X , m x)
Tf + Tx < Tt
mu + mx = mp
44
mu = National Park Service expenditures to reduce the lake trout population

mx = National Park Service expenditures on non-lake Yellowstone public good
mp = Total available National Park Service funds
Tf = Time spent fishing (by average visitor)
Tx = Time spent in Yellowstone, but not at Yellowstone Lake
Tt = Total time available in Yellowstone National Park
CT = Cutthroat trout population (in Yellowstone Lake)
LT = Lake trout population (in Yellowstone Lake)
B = Population o f Birds o f Prey (Ospreys and White Pelicans at Yellowstone Lake)
G = Grizzly Bear population (at Yellowstone Lake)
X = State o f the non-lake public good (in Yellowstone National Park)
hct = harvest function for cutthroat trout
hu = harvest function for lake trout
Sb = viewing function for seeing birds o f prey
Sg = viewing function for seeing grizzly bears
Sx = household production function for enjoying non-lake Yellowstone public good
r
= social discount rate
t = time
U[(hct(Tf,CT), hn(Tf,LT), Sb(Tf,Tx,B), Sg(Tf,Tx,G), Sx(X, Tx,mx)] = average visitors utility
function

C T , L T , B , G , X = state equations representing population changes in ecological system
(and the level of the public good) over time
1/x = population o f lake trout that can be supported by one cutthroat trout
45
1/y = population o f birds o f prey that can be supported by one cutthroat trout (assuming G
= 0)
1/z = population o f grizzly bears that can be supported by one cutthroat trout (assuming B
= 0)
The model above generates a first-best solution. The omnipotent social planner
(park manager) makes his decision on budget allocation to maximize the utility o f the
visitors to the park and has the full help o f the visitor who makes his decisions with full
knowledge o f how the ecosystem and economic system work, how they interact and how
his actions today will affect visitors in the future. For these reasons and for reasons o f
complexity these solutions cannot be obtained. The major pitfalls o f this model are three
major assumptions: 1) that each generation o f people visiting Yellowstone National Park
have perfect knowledge of how both the economic system and ecosystem work and how
the two interact with each other. 2) their main objective is to maximize the utility o f all
generations who will ever visit the park instead o f maximizing their own utility irrespective
o f others utility, and 3) The inclusion o f several control variables.
First, this model assumes every visitor to the park has perfect information about
how their actions affect the ecosystem and exactly how those changes affect future visitors
to the park. It is an extreme restriction to assume everyone who will ever visit the park
knows exactly what the ramifications of their actions are. Many people go to the park with
no thought o f how their actions will affect other people or animals.
Second, it assumes that every visitor to the park will act in a manner to maximize
the utility o f all visitors regardless o f the effect it has on his or her own utility. This
46
assumption is also unnecessarily stringent. Visitors care about their own utility. The
maximization o f individual utility is a guiding principle in economics.
Finally, this model will not achieve general form solutions to the maximization
model. A model with 4 control variables and 5 state variables would be nearly impossible
to solve. With only 2 control variables and 4 state equations, solving models o f this type
where each state equation depends on the value o f other state equations can become quite
difficult.
One simple change to this model eliminates 2 o f the control variables. Instead o f
assuming the average visitor is concerned with every visitors utility, assume the average
visitor is myopic (maximizes his utility at one point in time, without consideration of
future generations). He is uninterested in the consumption o f future generations and, even
if he does wish to maximize their utility, has limited knowledge about how the ecological
system works (especially compared to the level that the National Park Service does). He is
already at the park. He has to decide how much time to spend participating in each
activity. In this type of model, the average visitor maximizes in a static framework and the
National Park Service acts as the benevolent social planner that wishes to maximize the
present discounted value o f all future generations utility. This is a two-stage optimization
procedure. The National Park Service managers know how the average visitor will
respond to the conditions at the park and, given that knowledge, acts in a manner to
maximize the intergenerational utility o f all visitors to the park. It should be noted once
again this is a second-best outcome. The first-best outcome requires both the National
Park Service managers and the visitors work together to maximize the utility o f all future
visitors.
47
In addition to the assumption that the average visitor acts myopically, I also
assume non-satiation o f the public good to force non-equality constraints to always bind.
Therefore, the non-equality constraints have been lifted in favor o f equality constraints.
The average visitor can increase his utility by spending more time enjoying the non-lake
public good with no negative future ecological ramifications and, therefore, the average
visitor would always prefer to spend more time enjoying the non-lake public good than
less.
Using these two assumptions (assumption 1. the average visitor acts myopically;
assumption 2: the National Park Service takes action to maximize the discounted utility o f
the average visitor), the model breaks down to two linked models with feedback between
each; the individuals optimization model in which the average visitor chooses how to
divide his time in the park across the various activities; And the National Park Service
model - where the park manager must decide how to divide money between killing lake
trout and improving the rest o f the park. The outcome o f these two models are mu (t) and
mx (t) which are functions that represent a decision rule for how much money should be
optimally spent killing lake trout and improving the rest o f the park as a function o f time.
At each instant in time, these functions tell the National Park Service manager how much
money he should spend on each activity given the parameter values for species
populations.
One final change to the model was made for specific reasons. Solving the dynamic
portion of the optimization problem becomes more complex with each species added.
Equation (36) is over 20 pages long instead o f its current size o f 1/3 o f a page long if
grizzly bears and birds o f prey are kept in the dynamic portion o f the model. Assuming
48
grizzly bear and bird o f prey populations are constant over time relieves this constraint in
the dynamic model.
Grizzly bear and bird o f prey populations have remained relatively constant over
time even with large perturbations to the population o f cutthroat trout. With the grizzly
bear population and the bird o f prey population remaining relatively constant they are the
most likely species to be left out o f the model. For this reason, grizzly bears and birds of
prey have been eliminated from the dynamic portion o f the model in order to solve
equation (36) for the simulation model.
This dynamic approach with each species population depending on and being
affected by all other species populations, a maximum o f 3 state equations can be included
without the mathematics becoming unwieldy.
Grizzly bears and birds o f prey have been kept in the static portion o f the model
for a specific reason though. While these two species populations remain constant, visitors
still enjoy viewing a grizzly bear and birds o f prey and are more likely to see a grizzly or
bird when they are fishing. As visitors switch from fishing to driving around the rest o f the
park, they are less likely to see a grizzly bear or bird o f prey. Thus, even with constant
bird o f prey and grizzly bear populations, switching from fishing to driving around the
park has a cost associated with it - missing chances to see grizzly bears and birds o f prey.
As a result, grizzly bears and birds o f prey need to be in the static optimization model. If it
is determined at a later date birds o f prey need to be included in the model, it can be done,
but at great cost.
A verage V isitors Role - Individual's Optimization M odel (static)
49
The average visitor maximizes his utility at the park. He has already decided to
visit Yellowstone National Park. His remaining decision is how much o f his time to spend
fishing and how much o f his time to spend driving around the rest o f the park. He receives
utility from catching cutthroat trout and lake trout, seeing grizzly bears and birds o f prey
and enjoying the rest o f the park. He maximizes his utility o f the visit without concerning
himself about the affect his visit will have on the ecosystem in the future or how the park
will change as a result o f his actions - put another way, he maximizes his utility statically
for a single visit. The maximization problem is as follows:
Max U{hct(Tf, CT(LT(m)), hIt(Tf, LT(m)), Sb(TcTx, B), Sg(Tf) TX,G), Sx(X, Tx, mx)}
[Tf,Tx] are control variables
(10)
s.t. Tf + Tx= Tt
Lagrangian maximization yields the optimal amount o f time spent by the average
visitor. Tf*, Tx* (Varian, 1992). These are functions representing this optimum as a
function of the species populations at the time o f the visit - these functions take into
account the visitors preferences. As with the general model, it should be noted that the
species populations do not directly drive utility. Utility is derived from the consumption or
encounter with one o f the species. The population of any one species directly influences
the number o f catches or encounters with that species. A higher species population will
lead to a greater number o f encounters with that species, while a lower species population
50
will lead to a lower number o f encounters with that species. In this manner, species
populations act as a price. A higher population represents a lower price and a lower
population represents a higher price.
The average visitor will equate marginal utility across both activities to the shadow
value of time. There are two possible activities. Equations (11) & (12) give these results
and equation (13) yields the constraint o f the system:
(dU/dhcXdhct/dTf) + (dU/dh,t)(dh/dTf) + (dU/dSb)(dSb/dTf)

+ (dU/dSg)(dSg/dTf) = X
( 11)
(dU/dSx)(dSx/dTx) + (dU/dSb)(dSb/dTx) + (dU/dSg)(dSg/dTx) = X
( 12)
Tf = Tt - Tx
(13)
dhi/dT; > 0
d2 h/dT;2 < 0
d h /d l> 0
d2h;/dl2 > 0
with I indexing populations o f the various species I e (c, 1, g, b, x)
51
Congestion and the Choice o f Functional Forms

Both the harvest and sight functions are increasing at a decreasing rate with
respect to time spent and increasing at an increasing rate with respect to the species
population to guarantee interior solutions and to allow for congestion. Congestion enters
the harvest and sight functions with decreasing returns to time spent. While a single visitor
may enjoy near constant returns to time spent (his second hour o f fishing may be as
productive as his first hour fishing) holding all other visitors time spent constant, when the
average visitor increases his time spent at a particular activity, it increases the total number
o f people at that activity. For instance, if the average visitor increases his time spent
fishing, more fishermen are at the lake. Increases in the number o f fishermen lead to
congestion at the lake. In order to account for this congestion when the average visitor
increases his time spent at any one activity, his marginal return to time spent fishing
declines with an increase in time spent (d2h/dTj2 < 0). The same can be said for his
marginal return to time spent driving around the park - congestion will occur from
increasing his time spent (d2hx/dTx2 < 0). By allowing for decreasing returns to time spent
by the average visitor, congestion is assumed in the choice o f functional forms.
In order to solve for the optimal amount o f time spent by the average visitor at
each activity, the marginal utility o f each activity, spending time fishing (Tf) and spending
time enjoying the rest o f the park (Tx) are set equal to each other. These 2 equations are
solved simultaneously to derive Tf* and Tx* which are the functions giving the optimal
amount o f time spent by the average visitor across both activities depending on the
population o f each species in the ecosystem and the state o f the non-lake public good (CT,
52
LT, B, G, X). These functions are then substituted into the NPS optimization model to
give the park manager a guide for how the average visitor will act when he comes to the
park. The manager then uses these functions to decide how to allocate funds across his
two activities to maximize the intergenerational utility o f the visitor. The manager plays
the role of the social planner, deciding how to best allocate his funds given how the visitor
will react to the condition o f the park.
Equating (11) and (12) yields:
(dU/dhct)(dhct/dTf) + (dU/dhlt)(dh,t/dTf) + (dU/dSb)(dSb/dTf) + (dU/dSg)(dSg/dTf) =

(dU/dSx)(dSx/dTx) + (dU/dSb)(dSb/dTx) + (dU/dSg)(dSg/dTx)
(14)
Which is equating marginal utility o f time spent fishing to the marginal utility o f
time spent driving around the rest o f the park.
In order to solve equation (14) by isolating time spent fishing and time spent
driving around the rest o f the park by the average visitor, we need general forms for the
partial derivatives in equation (14). We now decompose the partial derivatives o f the
production functions since they will have time spent fishing and time spent driving around
the rest o f the park in their partial derivatives. The first partial derivatives o f harvest and
sight functions can be broken into two components, one component a function o f time,
and the other a function o f the species population. Each o f the harvest and sight functions
are therefore o f the general formv:
53
aij(T)(Population)p, ajj > 0, 0 < a < 1, (J > 1, (i indexing species) ie (c, 1, g, b, x),
(j indexing activity) j e (f, x)
(15)
Which leaves the partial derivative o f each o f these functions with respect to time
in the general form:
aijaCry^CPopulation/
(16)
Using this common general form, rearranging terms in equation (14) and solving
for Tf as a function o f Tx yields:
Tf = Tx {[a(dU/dSx)Xp + abX(dU/dSb)Bp + agx(dU/dSg)Gp]1/(ct-,V [a^dU/dhcOCT3 +

ail<dU/dhu)LTp + abf(dU/dSb)Bp + a^dU /dS ^G 3]1^ * 1}
(17)
Setting equations (13) and (17) equal to each other and solving for Tx as a function
o f Tt and species populations yields:
Tx* = Tt / 1 + {[a^dU/dhcOCT3 + au(dU/dh)LTp + ab((dU/dSb)Bp + a^dU /dS ^G 3]'1^ ' 0/
[a^ d U /d S ^X 3 + abx(dU/dSb)Bp + agx(dU/dSg)Gp] 1/(al)}
54
(18)
Since Tf* = Tt - Tx*,
Tf* = Tt - Tt / 1 + {[acKdU/dMCT* + a(dU/dhu)LT(J + a(dU/dSb)Bp + a^dU/dS^G*5]
1/(a IV [axx(dU/dSx)Xp + abx(dU/dSb)Bp + agJt(dU/dSg)Gp]-1/(a-,)}
(19)
Equations (18) and (19) are the optimal amount o f time spent by the average
visitor across the two activities. Since p > 0, Species populations are greater than or equal
to 0, and the partial derivatives o f utility with respect to each species are greater than or
equal to 0;
Tf* > 0, and Tx* > 0
(20)
We now inspect equations (18) and (19) to determine how a change in the
ecosystem or the park will alter the behavior o f the average visitor. An increase in the
population of cutthroat trout, CT, will increase the time spent by the average visitor
fishing.
dTf*/dCT = Tt [a^dU /dS^X * + abx(dU/dSb)Bp + ajfX(dU/dSg)Gp]1/a

/{[axx(dU/dSx)Xp + abx(dU/dSb)Bp + agx(dU/dSg)Gp]/ + [acl(dU/dhct)CTp + au(dU/dh)LTp
+ abf(dU/dSb)Bp + agl(dU/dSg)Gp] 1/a}2 (p a^ (dU/dhct) (CT)^1> 0,
55
since Tt > 0, ajj > 0, (dU/dSi) > 0, and X, B, G, CT, LT > 0, 1/a > 0, p > 0, and
P - 1 > 0;
As the population o f cutthroat trout increases, the average visitor gets a higher return on
his time spent fishing and will therefore shift his time away from enjoying the rest o f the
park and toward fishing. Similarly,
dTx7 dX > 0
dTf*/ dLT > 0
dTf*/ dB" > 0
dTfV dGvii > 0
As expected, as the populations o f each species in the ecosystem increase, the

return on time spent fishing increases and the visitor will shift his time away from enjoying
the rest o f the park and toward fishing. Meanwhile, as the level o f the public good
increases, the return on time enjoying the rest o f the park increases and the visitor will
shift his time away from fishing and toward enjoying the rest o f the park.
The second order conditions for a maximum are: d2U/dTf2 < 0 and d2U/dTx2 < 0.
Equations (11) and (12) take the genera* forms o f (21) and (22):
dU/dTf = kct (Tf)(a l) (CT)2 + kit (Tf)(aI) (LT)2 + kb (Tf)(a l) (B)2+ kg (Tf)(a ,) (G)2
(21 )
56
dU/dTx = kx (Tx)(al) (X)2 + kb (Tx)(a'l>(B)2 + k, (Tx)(a,) (G)2
(22)
Differentiating (21) and (22) yields:
d2U/dTf2 = (a - 1) ka (Tf)(a*2) (CT)2 + ( a - l)k,t (Tf){-2) (LT)2 + ( a - 1) kb (Tf)(a*2) (B)2+ (a

l)kg (Tf)(a2>(G)2
(23)
Since k; > 0, Tf > 0 , 1 > 0, and ( a - 1) < 0, then
d2U /dT 2 < 0
d2U/dTx2 = ( a - 1) kx (Tf)('2) (X)2 + (a - l)kb (Tf)(a-2) (B)2 + (a - 1) kg (Tf)(a'2) (G)2

(24)
Since k; > 0, Tx > 0 , 1 > 0, and ( a - I) < 0, then
d2U/dTx2 < 0 which satisfy the second order conditions for a solution.
Equations (18) and (19) yield the functions, T f, Tx\ which are then used to
capture the behavior o f the average visitor. For any combination o f species populations,
the amount o f time the average visitor will spend at each activity can be determined from
equations (18) and (19). From there, the NPS managers can predict for each species
57
population how the average visitor will act when he comes to the park. It is then up to the
park manager to take action that will maximize the discounted stream of future benefits to
the average visitor. Equations (18) and (19) represent the best-response functions o f the
average visitor to the conditions o f the park.
National Park Services Role - N PS Optimization M odel (dynamic)
Based on these best-response functions, the National Park Service manager knows
how the average visitor will divide his time between fishing and enjoying the rest o f the
park by knowing the form o f equations (18) and (19). With this information, the park
managers wish to maximize the discounted stream o f intergenerational utility o f all visitors
to the park in the future. The park managers can spend their limited funds on one o f two
activities, killing lake trout to reduce pressure on cutthroat trout and help partially return
the ecosystem to pre-lake trout invasion or spend the money improving roads for visitors
to ease traffic and make it easier to get around the park. This money is a fixed yet annually
recurring budget. The managers must decide how to allocate this fixed budget across the
two activities so as to maximize the utility o f all visitors, given the best-response functions
for the average visitor. Their optimization problem becomes:
Max\U[(ha (Tf ,CT),hl,(Xf ,LT),Sb( T , X , B ) , S s(Tf ,T G \S '(T x, X ( m M e " ' dl

0
[m u,
mx} are control variables
(25)
58
s.t. CT = CT(CT,LT,B,G,hct)
L T = L T (L T, hit, m lt,C T )
G = G (G ,C7T) vi
5 = B(B,CT)a
X = X (X,m x)
mu + mx = nip
Where Tf and Tx are the best-response functions from equations (18) and (19). These bestresponse functions determine how the average visitor will respond to the current
conditions o f the park.
The Hamiltonian function (Chiang, 1992) for the maximization model is:
H = U(hct(Tf,CT), h|t(Tf,LT), Sb(Tf,Tx,B), Sg(Tf,Tx,G), Sx(X, Tx,mx) e _,,dt +

Xy (CT = CT(CT,LT,B,G,hct)) + X2(LT = LT(LT,hl(,mlt,CT)) + X3(5 = B (B ,C T )) +
A* ( G f = G(G, CT)) + \ S( X = X { X , m x ) )
Maximization o f this optimal control model yields functions that represent the
optimal amount o f money divided between the two activities at the disposal o f the NPS
managers, mit*(t), mx*(t). The total budget of the NPS is fixed and therefore these
59
functions represent the fraction of money spent on each activity. These functions give the
NPS managers a guide for how much money should be spent on each activity to maximize
the discounted stream o f utility for the average visitor. By solving this model, the NPS
maximizes intergenerational utility of the average visitor. The NPS Manager will equate
the marginal benefits from spending a dollar killing lake trout to the marginal benefits from
spending a dollar improving the roads in the park (improving the park public good).
Equation (26) gives this condition.
dH/dmu = (dU/dhct)(dhct/dCT)(dCT/dLT)(dLT/dmu) e^-t- (dU/dh,t)(dh/dLT)(dLT/dm,t) e*

rt + (dU/dSb)(dSb/dB)(dB/dCT)(dCT/dLT)(dLT/dm,) e*rt +
(dU/dSg)(dSg/dG)(dG/dCT)(dCT/dLT)(dLT/dm) C"- (dU/dSx)(dSx/dX)(dX/dm,t) e rt +
Xi(dCT I dLT)(dLT / dmlt) + X2(d LTIdm lt)+ X3(dB/dCT)(dCTZ dLT)(dLT I dm lt) +
^4(d G l d C T )( d C T I d L T ) ( d L T /d m lt ) - X5( d X I dmlt) = 0
(26)
Equation (26) represents the equating o f marginal utility from the two uses o f NPS
funds (killing lake trout and improving the rest o f the park). We know the park managers
have a fixed budget, so a dollar spent on one activity reduces money spent on the other
activity in a one-to-one ratio. In other words we know Admx = - Admit which is used to
calculate equation (26). In addition to the entire fixed budget being spent on the two
activities, no capital markets exist for the managers to borrow money. The fixed budget is
exactly that, fixed.
60
With the grizzly population and the bird o f prey population assumed constant over
time, dG = 0, G = 0, dB = 0, B = 0 regardless o f time. Making these changes to equation

(26) yields the following rewritten first order condition:
dH/dmit = (dU/dhct)(dhct/dCT)(dCT/dLTXdLT/dmu) e^-f- (dU/dhlt)(dhIt/dLT)(dLT/dmu) e*

rt - (dU/dSx)(dSx/dX)(dX/dm,t) e"1+ h ( d C T / d L T ) ( d L T / d m l t) + \ 2(dLTldmlt) A-s ( d X! dmlt) = 0
(27)
Equations (28) - (32) give the complete system o f differential equations for the
change in shadow prices o f each state equation across time.
A1 = [-(dU/dhctXdhc/dCT) -(dU/dhu)(dhu/dLT)(dLT/dCT) -(dU/dSb)(dSb/dB)(dB/dCT) (dU/dSg)(dSg/dG)(dG/dCT)] e^ - k x(dCT /dCT ) - U { d C T t d C T ) - U { d B ! d C T ) ^(dG ldC T)
(28)
X2 = [-(dU/dhit)(dh|t/dLT) -(dU/dhcl)(dhct/dCT)(dCT/dLT) (dU/dSb)(dSb/dB)(dB/dCT)(dCT/dLT) - (dU/dSg)(dSg/dG)(dG/dCT)(dCT/dLT)] e'rt Xi (dC T/d L T) - ^ i d d L T / d L T ) + (dLT!dCT)(dCTI dLTJ) - **(d B ld C T )(d C T / dLT)
- ^-4 ( d G /d C T )(d C T IdL T )
(29)
61
A3 = [(dU/dSb)(dSb/dB) -(dU/dh^Xdhct/dCTXdCT/dB) (dU/dhIt)(dhlt/dLT)(dLT/dCT)(CT/dB) -(dU/dSgXdS^dGXdG/dCTXdCT/dB)] e'rtAi (dCT/dB) - A2(d LTI dCT)(dCT / dB) - U {(dB/dB) + (dB/dCT)(dCT I dB)) (30)
U (d G /d C T )(d C T /d B )
A4 = [-(dU/dSg)(dSg/dG) -(dU/dSb)(dSb/dBXdB/dCT)(dCT/dG) (dU/dhcOCdhc/dCTXdCT/dG) -(dU/dh,t)(dhlt/dLT)(dLT/dCT)(dCT/dG)] e* Ai (dCT/dG ) ~ A i(dLT/dCT)(dCTIdG ) -**( dLTIdCT)(dCT/dG) "U((d G /d G ) + (d Gl dCT)(dCT / dG))
(31)
AS = -(dU/dS*)(dS*/dX) e"1 - X5(d X /d X )
(32)
Once again, with dG = 0, G = 0, dB = 0 and B = 0 equations (28)-(32) change

and equations (30) and (31) both are equal to 0. The new system o f equations becomes:
i l = [-(dU/dhctXdhct/dCT) -(dU/dhlt)(dhu/dLT)(dLT/dCT)] e * - U ( d C T / d C T ) A* (dLT/dCT)
(33)
62
A2 =[-(dU /dh,t)(dhh/dLT)-(dU /dhct)(dhct/dC T)(dC T/dLT)]e-, t - X 1(</C 7 7 < a 7 0
X2 ((dLT/dLT) + ( d LT! dCT)(dCT / dL T))
(34)
XS = -(dU/dSx)(dSx/dX)
(35)
- X5(</ A7<fl0
This system o f 3 equations, 3 unknowns (equations (33) - (35)) is a function o f the

populations o f each species. As a result, as species populations change over time, the
coefficients in these functions will change. Since these functions change over time, solving
the system for specific form solutions cannot be done using the standard techniques*
Instead, equations (33) - (35) must either be 1) integrated with respect to time to get the
shadow values as a function o f the other shadow values, which can be solved without
differential equation row reduction or 2) these equations can be solved as a system o f
differential equations o f general form. Both o f these methods yields solutions that are a
function o f 3 arbitrary constants. The value o f these constants can be obtained by using the
information Xi (T) = 0. The shadow value o f the resource must be gone by the endpoint.
The first o f these two methods is used to solve these equations. Solving the system o f
equations yields the following solution:
XI = - (a - aa (dZ,*77dCT)t + a ((dLT/dLT) + (d L T /dCT)(dCT/dLT))t + (k it) +

((dLT /dLT) + ( d L T /dCT)(dCT/dLT))t (k it) - (dZJVdCT)t (k2t))/ (- 1 - (dC 77dC T )t +
63
(dZ77dCT)t (dC77dLT)t - ((dL T /d L T ) + ( d L T /dCTXdCT/dLT))t - (dC 7'/dC T )t

((d L T /dLT) + (d L T /dCT)(dCT/dLT))t)
X2 = - ( aa + aa (d CT /dCT)t - a (dcV /dLT)t - (dC T /dLT)t (kit) + (k2t) + (d CT /dCT)t

(k2t))/ ( - 1 - (dC T /dCT)t + (dL77dCT)t (d C T /dLT)t - ((dzV/dLT) +
(d L T /dCT)(dCT/dLT))t - (d cV /d C T )t ((dZ T /dL T ) + (d L T /dCT)(dCT/dLT))t)
25 = (-(dU/dSx)(dSx/dX)e*rtt + k5t)/ (I + (d X / d X ) t )
where a = [-(dU/dhctXdhc/dCT) _ (dU/dh,t)(dh/dLT)(dLT/dCT)] e^t
aa = [-(dU/dhlt)(dhit/dLT) - (dU/dhct)(dhc,/dCT)(dCT/dLT)] e^t
dH/dm,t = (dU/dhct)(dhcl/dCT)(dCT/dLT)(dLT/dm,t) e"1+ (dU/dhlt)(dh/dLT)(dLT/dm,t) e

rt - (d U/d Sx)(d Sx/dX)(dX/dm) e"1 + (- (a - aa (d Z,*77dCT)t + a ((d L T /d L T ) +
( d L T /dCT)(dCT/dLT))t + (kit) + ((dZJVdLT) + (d L T /dCT)(dCT/dLT))t (kit) ( d L T /dCT)t (k2t))/ (- 1 - (dcV/dC T)t + (dZ77dCT)t (dcV/dLT)t - ( ( d L T /d L T ) +
( d L T /dCT)(dCT/dLT))t - (dcV/dC T)t ((dZ.V/dLT) + (dZ,77dCT)(dCT/dLT))t))
64
( d C T !dLT)(dLT/ dmlt) + (- ( aa + aa ( d C T /dCT)t - a ( d C T /dLT)t - (dC77dLT)t (kit)
+ (k2t) + (dC77dCT)t (k2t/ ( - 1 - (d C T /d CT)t + (dZ,V/dCT)t (dC77dLT)t ((dZTVdLT) + (dZ77dCT)(dCT/dLT))t - (dcV /dCT)t ((d77dLT) +
( d L T /dCT)(dCT/d L T ))t (dL T Idm lt) - (-(dU/dSOCdSx/d^e^t + k5t)/ (1 +
(d i r /dX)t) (</X I d m lt) = 0
(36)
The first partial derivatives o f the species populations and the state o f the public
good can be broken into two components, one component a function o f the amount of
money spent, the other component a function o f the population o f lake trout or the state
o f the public good. Each o f these functions are therefore o f the general form :
ai(mi)a(Population)p', a; > 0, a = 1/2', f5 > 0, (i indexing possible outlets for the fixed
budget) is (1, x)
(37)
Which leaves the partial derivative o f each o f these functions with respect to
money spent in the general form:
aia(mi)a' 1(Population)p,
(38)
65
Using this common general form, rearranging terms in equation (36) and solving
for mu as a function o f m , yields:
m,t = mx (a[aLTpi ((dU/dhct)(dlWdCTXdCT/dLT)t e"* + (dU/dhu)(dh/dLT)t e* + (- (a - aa

(d L T /dCT)t + a ((ALT/dLT) + (d L T /dCT)(dCT/dLT))t + (k it) + ((dzY /dL T ) +
(dzY /dCT)(dCT/dLT))t (kit) - (dZ77dCT)t (k2 t))/ (- 1 - (dcV/dCT)t + (dzY/dCT)t
(dcY/dLT)t - ((dL T /dLT) + (dL T /dCT)(dCT/dLT))t - (dC77dCT)t ((ALT/dLT) +

{A LT /dCT)(dCT/dLT))t))(dC T/d L T) + (- ( aa + aa (dcY/dCT)t - a (dcY/dLT)t (d cY /dLT)t (k 11) + (k2 t) + (d cY /dCT)t (k2 t))/ (- 1 - (dcY /dCT)t + (d L T /dCT)t
(dcY /dL T )t - ( { A L T /dLT) + (dzY/dCT)(dCT/dLT))t - (dcY/dCT)t ((dzY/dLT) +
(ALT /dCT)(dCT/dLT))t)))/axaX x((dU/dSx)(dSx/dX)t e"1+ (-(dU/dSx)(dSx/dX)e',,t +
k5t)/(l +(d X /dX)t)))2
(39)
Using the information, mu = m - mx yields:
m* = mt / (1 + (a,oLTpl ((dU/dh*)(dh/dCT)(dCT/dLT)t e"1+ (dU/dh)(dh/dLT)t e* + ((a - aa ( A L T /dCT)t + a ( ( A L T /dLT) + (dzY/dCT)(dCT/dLT))t + (k it) + ((dzY/dLT) +
66
( d L T /dCT)(dCT/dLTt (k it) - ( d L T /d C T ) t (k2t))/ (- 1 - (dC7VdCT)t + (dZ,77dCT)t

(d C r /dLT)t - ((d L T /dLT) + (d L T /dCT)(dCT/dLT))t - (d C T /dC T)t ((d L T /dLT) +
( d l V /dCT)(dCT/dLT))t))( d C T / d L T ) + (- ( aa + aa (dcV/dCT)t - a (dcV/dLT)t (dC77dLT)t (kit) + (k2t) + (dcV/dCT)t (k2t))/ ( - 1 - (dCr/dCT)t + (dzV/dCT)t
(d C T /dLT)t - ((d L T /dLT) + (d L T /dCT)(dCT/dLT))t - (d C T /dCT)t ((d L T /dLT) +
(d L T /dCT)(dCT/dLT))t)))/axa X Px((dU/dSx)(dSx/dX)t e* + (-(dU/dSx)(dSx/dX)ertt +
k5t)/ ( l + ( d i / d X ) t ) ) ) 2
(40)
and
mIt = mt - mt/ (1 + (a,aLTpI ((dU/dhct)(dhct/dCT)(dCT/dLT)t
+ (dU/dh)(dhIt/dLT)t
+ (- (a - aa (d lV /d C T )t + a ( (dL T /d L T ) + (d L T /dCT)(dCT/dLT))t + (k it) +

( ( d L T /dLT) + (dL T /dCT)(dCT/dLT))t (kit) - (dzV/dCT)t (k2t))/ (- 1 - (dC T/d C T)t +
(d L T /dCT)t ( d C T /dLT)t - ((dZ,V/dLT) + (dL T /dCT)(dCT/dLT))t - (dcV/dCT)t
((d L T /dLT) + (d L T /dCT)(dCT/dLT))t)) ( d C T /d L T ) + (- ( aa + aa (d C T /dCT)t - a
(dcV /dLT)t - ( d C T /dLT)t (kit) + (k2t) + (dcV/dCT)t (k2t))/ ( - 1 - (dcV/dCT)t +

(dL T /dCT)t ( d C T /dLT)t - ((dLT /d L T) + (d L T /dCT)(dCT/dLT))t - (dcV /dC T )t
67
{(d LT /dLT) + (d
/dCT)(dCT/dLT))t)))/alcaX <5x((dU/dSx)(dS,/dX)t ert + (-
(dU/dSx)(dSx/dX)e"rtt + k5t)/ (1 + (d X /dX)t)))2
(41)
Equation (36) is a function o f key parameters, and therefore the specifics o f the
comparative statics rely on the values o f these key parameters. A comparative static
analysis is provided in chapter VI.
Since the system is not intended to be fully extracted o f all resources by some finite
time horizon, we must also inspect the system for an infinite horizon steady state solution.
While the path o f extraction o f the resource will follow the beginning o f the path explained
above, we want the Yellowstone Lake ecosystem to be maintained for future generations.
Allowing for human intervention to achieve a steady state solution allows for the system
to reach a new equilibrium.
In addition to m^ (t) and mx (t), optimization of the infinite horizon problem yields
the necessary conditions for a steady state equilibrium in this system. This will yield the
conditions under which the system will be in equilibrium - each o f the populations of the
various species will be constant, the amount o f time the average visitor spends at each
activity will be constant and the amount o f money the park manager spends killing lake
trout will be constant. Infinite horizon problems are often used to determine the conditions
under which the system can finally come to rest when a planning horizon is intended to go
on indefinitely (Chiang, 1992). The following system is the steady state solutions for the
infinite horizon problem:
68
C T = CT (CT, LT, B, G, hct) = 0
(42)
L T = LT(LT, hit, m lt, C T ) = 0
(43)
G = G(G,CT) = QMU
(44)
B = B (B ,C T) = 0
(45)
X = X(X,m x) = 0
(46)
This equilibrium steady state occurs when the populations o f each species are not
changing over time. Each species has found a balance within the ecosystem and
populations are constant. Harvesting of each of the species is also constant across time.
Harvesting can be positive or zero, but must be constant. For the population o f lake trout
to be constant, expenditures killing lake trout must also be constant, mu = c. These
expenditures do not necessarily have to be equal to zero, but they must not be changing.
In a steady state solution, the NPS managers must have dedicated a fixed long-term
budget to fight lake trout, or they must abandon all expenditures on reducing the lake
trout population. The specifics o f the steady state and the levels o f expenditure are
explained in detail in chapter VI.
One overriding assumption throughout the paper is the average visitor is worse off
after the introduction o f lake trout into the ecosystem. If the average visitor is worse off,
action needs to be taken to help the visitor regain some o f his lost utility. We now inspect
to see under what conditions the average visitor will indeed be worse off.
69
The introduction o f lake trout to the system will make the average visitor worse
o ff iff:
Condition 1) dU/dLT < dU/dCT (more specifically (dU/hi,)(dhlt/dLT) <

(dU/dhct)(dhct/dCT) (the utility from an additional lake trout in the system is less then the
lost utility from an additional cutthroat trout being taken from the system) and
Condition 2) x > 1 (each lake trout must consume more than 1 cutthroat trout each
year to survive.)
The second condition has been shown true in previous work (Varley and Schullery,
1995), (Ruzycki and Beauchamp, 1996), (Stapp and Hayward, 1999). By inspection, the
first condition equates the gained utility from an extra lake trout to the lost utility o f the
lost cutthroat trout (plus aijy other species that are affected by a reduction in cutthroat
trout populations). As a result, the higher number of species in the model that prey upon
cutthroat trout will make it more likely that the introduction o f lake trout will hurt the
average visitor.
This result is summarized in proposition 1.
Proposition 1: Including additional species impacted by the reduction in cutthroat trout in

the model will make it more likely that the introduction o f lake trout into Yellowstone
Lake will decrease the utility o f the average visitor.
70
Proposition 1 explains by adding more species into the model who rely on
cutthroat trout for survival (possibly birds o f prey and less likely grizzly bears) makes it
more likely that the lake trout introduction will make the average visitor worse off. If birds
o f prey or grizzly bear populations were affected by the decline in the cutthroat trout
population, this would only make the possibility that visitors are worse o f f even greater.
Proposition 2 summarizes the results from both conditions above. It is key to note,
each additional lake trout in the ecosystem will reduce cutthroat trout numbers, which may
in turn reduce other species in and around Yellowstone Lake (although this may be the
case, birds o f prey and grizzly bear populations are assumed constant). As cutthroat trout
and any other species populations decline, encounters with these species will decline. The
decline o f these interactions results in the loss o f utility by seeing or catching these species
since fewer encounters will happen.
Proposition 2: The utility of the average visitor will decline if the utility gained from an
increase in the lake trout population is less than the utility lost from the declining cutthroat
trout population.
Proposition 2 can be set in a mathematical representation o f the utility tradeoff

between lake trout and cutthroat trout/ birds of prey, which is done by combining both
conditions above to get:
If (dU/dh)(dh/dLT) < (dU/dh.Ofdhc./dCT)
71
Then the introduction o f lake trout into Yellowstone Lake will hurt the utility of
the average visitor. The valuation data confirms that dU/dLT < dU/dCT. Even without
including birds o f prey or grizzly bears into the analysis, the value o f the cutthroat trout
each year is greater than the value o f lake trout each year. This valuation data is explained
in chapter VI.
Assumptions/Extensions o f M odel
Some assumptions made in the theoretical model are essential to the current
modeling technique and cannot easily be changed. These critical assumptions have already
been discussed in this paper, such as the average visitor acting myopically, the NPS having
a fixed budget and the park public good being a pure public good.
Still other assumptions underlie the model. They are listed below. These
assumptions are explained in detail in this section and the potential for relaxing each is
explored.
Assumptions
1) People fish for CT, but inadvertently catch LT.
2) Only consumptive use values apply (non-consumptive use values for fish dont apply
and existence values dont apply).
72
3) T f and Tx are separable in the household production functions (no joint products).
Each of these assumptions are currently embedded in the model, but they could be
relaxed if needed. Relaxing each o f these assumptions can be done, but would they
enhance the realism o f the model?
Relaxing assumption 1 is relatively straightforward within this framework. The
current model has a time spent fishing component, Tf. Relaxing this assumption would
break this into two components, time spent fishing for lake trout, T|t and time spent fishing
for cutthroat trout, Trt. This assumption would imply some fishermen at Yellowstone Lake
have a desire to catch cutthroat trout while others have a desire to catch lake trout.
Evidence suggests Yellowstone Lake is a cutthroat trout fishery (Varley and Schullery,
1995). Lake trout fisheries, including one in Jackson Lake just south o f Yellowstone
National Park, are in the same area. People fish for cutthroat trout at Yellowstone Lake.
In addition, our valuation data indicates a strong preference o f cutthroat trout over lake
trout. There is little indication assumption 1 should be changed in this particular case.
Relaxing assumption 2 is equally straightforward. If non-consumptive use values
also apply, we would have two household production functions for humans enjoying fish.
The first would be the consumptive harvest functions we already are employing. The
second would be a non-consumptive catch function. This would be akin to a catch and
release fishing function where no fish are harmed in the catch and release process. The
addition of existence values would apply directly in the average visitors utility function
directly. The species populations would appear, possibly as a binary variable. 1 if the
population is positive, 0 if it is not. Contingent valuation surveys would need to be done to
73
determine if existence values above and beyond consumption values are necessary. For the
purposes o f this research, existence values or assumed to be insignificant as consumption
values are the main focus.
Relaxing assumption 3 would result in joint products being produced. A person
who goes fishing would be able to see the core attractions o f the park at the same time.
This would force Tf to be a product in the household production function o f seeing the
core attractions o f the park. Since a person will obviously have a problem seeing Old
Faithful while he is on Yellowstone Lake, this assumption is reasonable for this particular
case.
Each o f these assumptions is currently used in the model. While many are
necessary, the three explored above could be changed in the model with a some work. The
extra effort would have costs and benefits associated with it. The benefits must outweigh
the costs for the changes be worth making. It does not appear any benefits o f relaxing
assumptions 1 and 3 exist in this particular case. If this technique is applied to other
problems, perhaps a case could be built where these assumptions would need to be
relaxed.
Now that the specific model has been laid out for the lake trout invasion in
Yellowstone Lake, we take the specific functions generated and use them to run
simulations. One component o f these simulations is valuation data on seeing and catching
the species in and around Yellowstone Lake and seeing the core attractions o f the park.
The technique used to gather this data is the focus of chapter V.
74
C h ap ter V: Internet Experiment
Rationality is not an individual concept. It is a societal concept. A person must be

placed in a market situation to learn rational behavior. A sole person cant learn rationality
by himself. Arbitrage is a useful tool to induce more rational behavior. Take an example
that has specific ties to this chapter. Assume a person (Bob) prefers a good (lottery A) to
another good (lottery B) in a market setting, but is willing to pay $1.50 for lottery A and
$2.00 for lottery B. An agent who is capable o f buying and selling these goods may sell
the person lottery B for $2.00, trade lottery B for lottery A, and then buy lottery A for
$ 1.50. After this transaction, the person has lost $0.50 and has no good (no lottery) to
show for it. The agent who did the selling and buying gains $0.50 while Bob loses $0.50.
Other agents will likely do the same thing to Bob until he changes his preferences. Bob
needs to learn there is something inconsistent with his preferences. He needs to leam how
he is losing $0.50 and having nothing left to show for it. Bob would never leam his
preferences are inconsistent if the agents werent around to take his money.
This example shows rational behavior isnt simply learned by itself. Markets help
agents construct rationality as opposed to requiring agents to find it on their own
(Cherry, et al, 2000). The market mechanism, that allows the agents to buy and sell the
goods to Bob, helps Bob leam. So what do inconsistent preferences have to do with this
dissertation?
In order to build the utility function for the average visitor, valuation data needed
to be collected on viewing or catching the species in and around Yellowstone Lake. This
data collection involved two special features. The first problem with gathering this data is
75
the non-market (e.g.-environmental) nature o f the goods. When a person visits

Yellowstone National Park, they hope to get a variety o f goods, seeing Old Faithful,
Upper and Lower falls, seeing a bird o f prey in the wilderness, or perhaps catching a
cutthroat trout. However, these goods are non-marketed goods. The visitor does not go
to the store and purchase a viewing o f a bird o f prey. First, a species viewing is not a good
they have practice buying or selling - visitors dont buy the good all the time and as a
result have little experience with the good o r how much they have to pay for the good.
This lack o f experience with buying these goods in markets does not give them a chance
to be arbitraged for making poor decisions. As a result, they may have inconsistent
preferences over these goods and have never become aware o f it.
These goods have a second problem, a probabilistic nature. When the average
visitor goes to the park, he or she does not even know if they will see or catch an animal.
They purchase the chance to see the animal (a lottery with a chance o f seeing a species wildlife lottery). The chance o f seeing or catching an animal is bounded between 0 and 1.
For many o f the goods in the park, probabilities for a visitor seeing them are quite low, for
example seeing a bird of prey. However, the payoff from seeing the animal may be quite
large - Low probability event with a high payoff. Other goods in the park have a high
probability o f occurring, for example catching a cutthroat trout for fishermen. The payoff
for this event may be relatively low - high probability event with a low payoff. It has been
shown in experimental testing people reverse their preferences when faced with a high
probability event with a low payoff and a low probability event with a high payoff (Cherry,
et al, 2000). Preference reversals indicate that something is wrong with the stated
preference. A person says they value a good (A) at $2 and they value another good at $3
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(B), but they prefer A to B. If they value A at $2 and value B at $3, they should prefer B
to A or something is wrong with their stated values. One o f three explanations could be
behind this behavior, either: 1) the true preference should be reversed. 2) the value o f the
low probability/high payoff good should be lowered, or 3) the value o f the high
probability/low payoff good should be raised. In previous tests, the preference and the
value o f the high probability/low payoff good remain constant, but the value of the low
probability/high payoff good is reduced to avoid the preference reversal.
The process o f the rationality spillover experiment is to bring in a known
commodity (a marketed good) with the non-marketed good. Participants must make
binding choices in a market setting (over real lotteries) and must make non-binding
choices in a non-market setting (over wildlife lotteries). The market setting is binding since
the participants spend actual money to purchase the real lottery. The lottery has a positive
outcome and a negative outcome. A chance they will win money with a fixed probability
(p) and a chance they will lose money with probability (1-p). They must choose preference
between two marketed lotteries and then must give a specific dollar value to each o f the
two lotteries. Then, a computer player determines which o f the lotteries to sell the
participants if any. The computer is allowed to sell the player a lottery at the participants
stated value, buy a lottery from the player at the participants stated value or trade the
lotteries for each other at the participants stated preference. I f a lottery is in the
participants possession at the end o f a round, the lottery gets played with a random
number generator determining the outcome of the lottery. The player incurs any winnings
or losses.
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The non-market setting is non-binding since the participants do not have to pay
money. They are asked the same hypothetical questions as in the market setting. They
#
have two lotteries over wildlife and must choose which lottery they prefer and must give
values to each lottery. However they dont spend money purchasing the lotteries and they
dont get to play the lottery. The wildlife lotteries are strictly hypothetical.
Lab evidence suggests that we can induce more consistent behavior by placing an
individual in side-by-side situations, a market on the left and a non-marketed situation on
the right. The participant maintains his preferences, but will lower one o f his values to
make his choices rational. The lab evidence suggests we can induce more rational behavior
and get more rational valuation estimates for the non-market goods by putting participants
in this setting. Will the results follow the same pattern when we use the specific lotteries
for the wildlife at risk in Yellowstone Lake?
Before discussing the results o f the internet experiment, lets first discuss the
specifics o f the design and implementation o f the experiment. The design o f the
experiment has 7 steps to it. The following descriptions are taken directly from the
experiment to see how each o f the seven steps are explained. The actual screen captures of
the internet experiment are presented in Appendix I to see specifically how the experiment
looked to the participants.
S T E P 1: O PT IO N S AND S IT U A T IO N S
O PT IO N S
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Options are uncertain outcomes. Each option has an outcome and the likelihood o f
realizing that outcome. You will face two types o f options: MONEY and WILDLIFE.
M ONEY O PTIO N : An example o f a money option is having a 50% chance o f
winning $10 and a 50% chance o f losing $5.
W IL D L IFE O PTIO N: An example o f a wildlife option is having a 50% chance o f
seeing a grizzly bear.
SITUATIONS
There are two situations: 1 and 2. The screen is split down the middle with Situation 1 on
the left side o f the screen and Situation 2 on the right side o f the screen. Though the two
situations are presented together, they are separate. In both situations, you are presented
two options. Thus, the layout of the options and situations will be:
SITUATION 1
Option A l
Option B 1
SITUATION ONE
The two options in situation 1 are money options. An example of the options and their
interpretation follows:
A l: 86% 5.25; 14%-1.25
B l: 28% 9.00; 72% -1.75
In this case:
Option Al has an 86% chance o f winning $5.25, and a 14% chance o f losing $1.25
Option B 1 has a 28% chance of winning $9.00, and a 72% of losing $1.75
SITUATION 2
The two options in situation 2 are wildlife options. The wildlife options will contain one or
more o f the following animals:
W IL D L IFE CATEGORIES DESCRIPTION
AND SYMBOLS
Birds of Prey
Including Birds of Prey means that you may
(B)
see an Osprey or a Pelican, which prey on
trout. We use "B" to represent the Birds o f
Prey.
C u tth ro a t T rout
Including Cutthroat Trout means that you
(CT)
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(CT)
may catch a Cutthroat Trout, which are the

native trout species in Yellowstone Lake.
We use "CT" to represent the Cutthroat
Trout.
Lake T rout
(LT)
Including Lake Trout means that you may

catch a Lake Trout, which are non-native to
Yellowstone Lake. W e use "LT" to
represent the Lake Trout.
Grizzly Bears
(G)
Including Grizzly Bear means that you may

see a Grizzly Bear without harm. We use
"GB" to represent the Grizzly Bear.
Core A ttractions
(CA)
Including Core Attractions means that you

may see 'roadside' sites, such as, Old
Faithful, Yellowstone Falls, etc.. We use
"CA" to represent the Core Attractions.
W ILDLIFE CA TEG O RIES AND SYMBOLS

REFEREN CE SHEET
A reference sheet to help you remember what the wildlife abbreviations represent is
available on your browser. When you are running the survey, a link to this reference sheet
is located just below the survey.
W ILDLIFE CA TEG O RIES AND SYMBOLS

NUMBER O F SIGHTINGS AND/OR CATCHES.
We show the num ber of each wildlife sighting o r catch in an option by the num ber
listed prior to the wildlife symbol.
Example: 2G
Example: 3CT, 1LT
means that you may see two grizzly bears.

means that you may catch three cutthroat trout and one lake trout.
OPTIONS IN SITUATION TW O
Here is an example o f how the options are displayed in situation 2.
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This should be interpreted as:

Option A2 has an 80% chance o f catching one Cutthroat Trout
Option B2 has a 39% chance o f seeing one Bird o f Prey and the Core Attractions
OPTIONS IN SITUATION TW O
Another example:

Option A2 has an 86% chance o f seeing the Core Attractions
Option B2 has a 28% chance o f seeing one Grizzly Bear and two Birds o f Prey
The screen will be split down the middle. Situation 1 is on the left; situation 2 is on the
right. The two situations are presented simultaneously but are separate. The presentation
of both situations looks like:
SITUATION 1
A l:
88 %
5.00
12%
-1.25
B l:
25%
9.00
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BEGINN IN G MONEY BALANCE

F O R SITUATION 1:
You are given an amount o f money. You may use part or all o f your money to buy
options. I f you purchase an option, your money balance will decrease by the amount o f the
purchase price and you will own the option. Once you own an option, it may be bought
from you - increasing your money balance by the selling price. You keep any unspent
portion o f your beginning balance.
F O R SITUATION 2:
You are not given money and no buying or selling will take place in situation 2. Recall,
situation 1 and 2 are separate.
SITUATION 1
Balance: 10.00
STEP 2: BINDING CONTRACTS FO R CH O ICES
INDICATING YOUR PR EFEREN CE

You are first asked to state which option you prefer in each situation.
Beginning with situation 1, you are asked "WHICH OPTION WOULD YOU PREFER,
Al or B 1?" In other words, if you had to choose one o f the two options to face, which
would it be? Indicate the option you prefer by typing either "Al" or "B1."
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By typing in your preferred option, you agree to a binding contract. For example, suppose
you indicate that you prefer option A l. If you are holding option B l, you may have to
trade the option you hold (B 1) for the option you prefer (A l) accept A l and give up
B lThis will be repeated for situation 2, where you will indicate which option you prefer - A2
or B2. Indicate the option you prefer by typing either "A2" or "B2." In situation 2, you are
not agreeing to a binding contract by typing in your preferences.
STEP 3: BINDING CONTRACTS FO R VALUES
INDICATING YOUR VALUES

Next you are asked how much you value each option. Your valuation o f each option
should be the dollar and cent amount that you would be willing to buy or sell the option.
In other words, how much you are willing to pay to face the option OR how much you are
willing to receive to give up facing the option.
Beginning in situation 1, you are asked "WHAT IS YOUR VALUE FOR OPTION Al?"
Indicate your value by typing the amount using dollar and cents (EX. 6.29). Then you are
asked "WHAT IS YOUR VALUE FOR OPTION Bl?" Again, indicate your value by
typing the amount using dollars and cents.
By entering a dollar amount, you agree to a binding contract. For example, suppose you
indicate that your value for option Al is SX.XX. The computer market may buy or sell
option A l for SX.XX.
This will be repeated for situation 2, in which you will be asked your value for options A2
and B2. Indicate your value o f facing the wildlife option by typing the amount using dollar
and cents. In situation 2, you are not agreeing to a binding contract by typing in a dollar
amount.
STEP 4: BUYING, SELLING AND TRADING OPTIONS
After you indicate:

1. which option you prefer in each situation, and
2. your value for each option,
the computer market may buy, sell and/or trade options with you in situation 1 according
to your binding contracts.
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For example, suppose you agreed to the following binding contracts for situation 1:
you preferred option A l to B l
your value for option A l is SX.XX
your value for option B l is SY.YY
The computer market may do one or more o f the following:
buy or sell option B l for your value o f SY.YY
buy or sell option A l for your value o f SX.XX
trade option A l for option B l (give up A l for your B l)
The computer market will only act according to your binding contracts. Thus, the
computer market only buys and sells at your indicated values, and only trades according to
your preferences.
The computer market will buy, sell and/or trade with you only if it is beneficial. If your
selling price is too high, the market will not buy from you.If your buying price is too low,
the market will not sell to you.
The computer market will only buy, sell and/or trade in situation 1. There is no buying,
selling and trading in situation 2.
Y O UR HO LD IN GS O F OPTIONS
If the computer decides to sell you an option, the transaction will be indicated on the
screen. For example, suppose the market sells you Option A l for $4.00. The following
message will appear: "THE MARKET SELLS YOU OPTION Al FOR $4.00." Also, the
screen will indicate your money balance decreased by the purchase price to $6.00 and that
you now hold Option A
Such as:
SITUATION 1
A l:
85%
5.25
15%
-1.25
B l:
35%
9.00
65%
-1.75
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Balance: -4.00 Holding: A

There are no transactions, and thus no balance or holding, in situation 2
YOUR BEST STRATEGY
It is in your best interest to be accurate in your PREFERENCES and VALUES, that is,
the best thing you can do is to be honest.
If your preferences are incorrect, you are passing up opportunities that you prefer and face
situations that you do not prefer. Suppose you prefer option A l to B l, but you indicate
that you prefer option B l over option A l, the computer market may trade A l for B l even
though you would rather keep A l.
If your values are incorrect, you are passing up opportunities that you prefer. For
example, suppose you overstate your value for an option, the computer market may sell
you the option for the overstated price. Thus, you may pay a price more than you wish. If
you understate your value for an option, the computer market may buy the option for the
understated price. Thus, you may sell for a price lower than you wish. Again, the best
strategy is to be honest and accurate in your preferences and valuations.
STEP 5: PLAYING TH E O PTIO N S
PLAYING TH E OPTIONS
After any transactions in situation 1, you may or may not be holding an option in situation
1 If you hold an option, the outcome will be determined at this time. The outcome will be
determined by a random draw.
For example, suppose you hold the following option:
78% 4.75
22% -1.00.
The random draw will determine the outcome where you have a 78% chance o f winning
$4.75 and a 22% chance o f losing $1.00.
STEP 6: END O F ROUND
ENDING M ONEY BALANCE

After the outcomes of the options held in situation 1 are determined from the random
draws, your money balance will be adjusted by the amount o f your earnings or losses.
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Thus, your ending balance will be:

the beginning balance,
LESS the amount spent on buying options,
PLUS the amount received from selling options,
PLUS the earnings received from any winning option,
LESS the losses incurred from any losing option.
The ending balance for situation 1 is presented on the screen. This concludes the first
round o f the experiment. Additional rounds will follow. The subsequent rounds will be
identical, but will have a new beginning balance in situation 1 and different options in both
situations. There will be 10 rounds.
STEP 7: END O F SURVEY
TOTAL EARNINGS FROM SURVEY

Your total earnings will be the sum o f the ending balances for all rounds.
SUMMARY
1. You are presented two separate situations simultaneously (situation 1 & 2). Each
situation will present two options (option A and B).
2. You first indicate which option you prefer in each situation (A or B).
3. You then indicate your value for the two options in both situations.
4. The computer market may buy, sell or trade with you in situation I according to
your indicated preferences and values.
5. The outcome o f any option you may own in situation 1 is determined with your
money balance being adjusted according to your winnings or losses.
6. End o f round, next round will repeat with a new initial money balance in situation
1 and new options for both situations.
7. After completion o f the final round, your balance from each round will be totaled
and converted to real cash - this is your earnings for the survey
86
As with any experiment, whether it is done in a lab or on the internet, issues

dealing with control o f subjects are important. We did not control for:
1) Whether people started the experiment and then restarted it at a later date
before finishing the experiment.
2) The number o f practice rounds the participants played.
3) The number o f people who could be looking at the screen at the same time
helping the participant decide how to make their choices.
4) A consistent environment for all participants, since the survey was done
over the internet.
These issues are specific to the internet experiment since we could not be in the
room with the participants. However, while these specific issues deal with the internet
experiment, issues o f this sort exist in any experiment.
To implement the experiment over the internet, we need to recruit participants.
The participants used were gathered from 2 different sources. The first source was done
by posting announcements to environmental newsgroups on the internet. The number of
participants was far too low from the newsgroups and more data needed to be collected
which led to the second source. An ad was run on the New York Times web page to
gather participants. Over 250 people were gathered from the New York Times web page,
as compared with less than 20 from the lit serves. The hit rate from the banner
advertisement was well above industry standard of 0.5%, nearly doubling that to 0.9%.
Possible explanations for the high hit rate were the $20 that was an average earnings for
87
participation and the cleverness o f the banner ad. The campaign ran from June 7 to July 6,
2000 at various locations on the N ew York Times web page.
P articipant Information
A total o f 269 people completed the internet experiment. O f these 269, 82 actually
visited Yellowstone National Park. The first important distinction to make is
differentiating fishermen from all other visitors. While about 1% (about 25,000 out o f
approximately 3,000,000 total annual visitors to Yellowstone National Park) o f the people
who visit Yellowstone National Park go to the park to fish, 5.6% o f all participants in the
experiment were classified as fishermen. If w e consider only participants who actually
visited Yellowstone National Park, the percentage o f these participants who are classified
as fishermen jumps up to 17.1%.
Another important distinction to make is how familiar people are with the problem
o f the lake trout introduction into Yellowstone Lake. Participants were asked how familiar
they were to the problem and could respond with well informed, moderately informed,
barely informed or not informed at all . Table 1 divides familiarity into either all
participants or just those participants who visited the park.
Not surprisingly, people who had actually visited Yellowstone National Park were
much more familiar with the problem o f the introduction o f lake trout into Yellowstone
Lake than were people who had never been to the park. Limiting the participants to just
those people who had visited the park led to an increase in the percentage o f people who
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were well informed, moderately informed and barely informed, while only increasing
not informed at all.
Next, we look at the perceived seriousness o f the introduction o f lake trout into
Yellowstone Lake. Participants were asked how serious they thought the problem was and
could respond with very serious, moderately serious , barely serious and not serious
at all. We once again divide the participants into 2 groups, all participants and then just
those who have been to the park. Table 2 summarizes these results.
Once again participants who had visited the park had stronger views on the
seriousness of the problem. Visitors view the problem as more serious, have a higher
frequency o f responses o f very serious and moderately serious and lower response
rate o f barely serious and not serious at all. People who have visited the park view the
problem as more serious, although the breakdown o f views is similar to that o f all
participants.
89
Table 1: Familiarity of Participants to the Lake Trout Introduction

well informed
All Participants
moderately
barely
not informed
informed
informed
at all
5.6%
12.6%
25.3%
56.5%
14.6%
17.1%
29.3%
39.0%
Just Participants
Who Had
Visited
Yellowstone
National Park
90
Table 2: Participants Perceptions of the Seriousness of the Lake Trout Introduction

very serious
moderately
barely serious
serious
All Participants
not serious at
all
25.6%
53.9%
13.8%
6.7%
31.7%
54.9%
9.8%
3.6%
Just Participants
Who Had
Visited
Yellowstone
National Park
91
An important indicator of preferences for this particular problem is fish preference.

Participants were asked their preference for catching fish; which fish would they prefer to
catch at Yellowstone Lake? Visitors had to respond to their preference with one o f the
following: cutthroat trout, lake trout, doesnt matter or I dont fish. Table 3
provides these results.
While both visitors and non-visitors show a preference for cutthroat trout over
lake trout, visitors show stronger preferences again. 46.4% o f visitors had a fish
preference while only 34.2% o f non-visitors had a preference. This could be a direct result
o f the composition o f the visitor. People who had visited the park were much more likely
to have fished Yellowstone Lake than were all participants. Beyond the percentage o f
people who had a preference, the direction o f preference is consistent - people prefer to
catch cutthroat trout as opposed to lake trout at Yellowstone Lake.
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Table 3: Participants Preference for Fish

cutthroat
lake trout
trout
All Participants
doesnt
I dont fish
matter
28.3%
5.9%
20.1%
45.7%
36.6%
9.8%
18.3%
35.4%
Just Participants
Who Had
Visited
Yellowstone
National Park
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Finally, we consider how the changes to species populations might affect visitors
decisions to come to the park. We asked participants whether a decreased chance o f
seeing a cutthroat trout, grizzly bear, bird o f prey or the core attractions o f the park would
decrease their chance of coming to the park. Responses were not limited to one species a particular person could say they would be less likely to come to the park if they had a
decreased chance o f seeing any or all o f the species in the park. Table 4 summarizes the
results:
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Table 4: Percentage ofParticpants who would be affected by seeing attractions o f the park
Cutthroat Trout
Bird o f Prey
Grizzly Bear
Core
Attractions
All Participants
13.4%
43.1%
61.7%
77.7%
31.7%
54.9%
72.0%
78.0%
Just Participants
Who Had
Visited
Yellowstone
National Park
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Visitors to the park are once again much more affected by the presence o f the
different species around Yellowstone Lake. Visitors had a higher change o f visiting the
park less often if any o f the 4 w ere affected.
The results on preference reversals from the internet experiment are similar to
those in the lab. The initial preference reversal rate is lower than that in the lab, but the
pattern o f reducing preference reversals in later rounds is seen in the internet experiment
as well as the lab. The experiment does reduce irrational behavior. The intention o f the
experiment was to: 1) gather valuation estimates of the park species goods and 2) make
the valuation estimates more rational than a straight contingent valuation survey. Both o f
these intended outcomes were realized. The specifics on the valuation estimates are
explained in detail in the next chapter.
Regression Analysis
Valuation data was collected in the above internet experiment. This data contained
information on valuation, composite probabilities on seeing or catching the various species
(including the park public good), individual characteristics, and a unique participant
identification number for each o f the 269 participants. Valuations were collected for both
lotteries the participant was faced with (both lottery A and lottery B) over 10 rounds for
each participant. 10 rounds per participant, 269 participants and 2 lotteries per round
yields the total o f 5380 observations.
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A 2-way fixed effects model was run to account for both time specific fixed effects
and for participant specific fixed effects. Time specific fixed effects would arise from the
presence o f arbitrage in the experiment. Participants who exhibit irrational behavior
(reverse their preferences) are arbitraged by selling the higher valued lottery to the
participant (at the participants stated value), trading the higher valued lottery for the
lower valued lottery (according to the participants trading preference) and then buying
back the lower valued lottery from the participant (at the participants stated value). The
participant will lose money if he exhibits irrational preferences. In both the lab experiment
(Cherry, et al, 2000) and in the internet experiment here, participants lower their
preference reversal rate. In earlier rounds the preference reversal rate is high, while in later
rounds the preference reversal rate is low. Figure 1 shows the time trend for preference
reversals in both the monetary (real) lotteries and the wildlife (hypothetical) lotteries. The
general time trend is down, however with an upward spike in the middle rounds. The
reduction in reversal rates is typically done by lowering the stated value on the low
probability, high value lottery (Cherry, et al, 2000). Reducing the preference reversal rate
needs to be done in one o f three ways - either 1) raise the value on the high probability,
low value lottery 2) lower the value on the low probability, high value lottery or 3) change
the preference. The experiments done in the lab lower preference reversal rates by the
second method (Cherry, et al, 2000). Lowering preference reversal rates in the internet
experiment was done by both the first and second methods above. As such, the values for
the lotteries might be a function o f time. If the first method dominates, values for the high
probability, low value lotteries will increase over time. A positive correlation between time
and values would exist. If the second method dominates, values for the low probability,
97
high value lotteries will decrease over time. A negative correlation between time and
values would exist. Time specific fixed effects are used to determine if time is correlated
with values.
The second fixed effect tested for in the regressions was player specific fixed
effects. Certain individuals may have a preference for environmental goods, regardless of
what the goods are. In this case, a player may give a specific value for most o f the lotteries
they are faced with. For example, assume Tom and Jane. Tom may not value
environmental goods very highly or he may not care about the bundles o f goods offered at
Yellowstone National Park. He may give a low value for any lottery faced in the
experiment. Perhaps he values all goods at about 10 cents. High valued goods would be
around 15 cents, while low valued good would be around 5 cents. Jane may have the
exact opposite reaction to environmental goods. Perhaps she just loves everything that
comes with a visit to Yellowstone National Park. She may value all of these goods at
about $50. A high value good would be around $60, while low valued goods would be
around $40. If this is the case, and Toms and Janes exist, individual fixed effects would
capture this. We do not want to bias the value of the specific goods faced by either Toms
or Janes. Player specific fixed effects are used to determine if certain players have a higher
value for all environmental goods examined in this experiment.
The regression equation is as follows:
Value; = a + PiXu + p2X2i + p3iX3i + u;
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Where Xu are the dummy variables for individual effects, X* are the different dummy
variables for time effects (a dummy for each o f the rounds o f the experiment) with the
dummy variable for the first round being excluded, and X 31 are the variables for valuation
- percent chance o f seeing each species (cutthroat trout, lake trout, grizzly bear, bird o f
prey, core attractions) and the square root of the percent chance o f seeing each species.
The percent chance o f seeing each species is included for a specific reason - diminishing
marginal utility. Diminishing marginal utility is usually included by squaring the variable;
however, in this case, since the probability of seeing each species is bounded between 0
and 1 , the probability needs to be a square root to allow for diminishing marginal utility.
10
dummy variables were created for the time effects - a dummy for each round in the
experiment. The dummy for time in the first round was omitted to see how time would
change the values later in the experiment. The sign o f the coefficient for 6 o f the 9
dummies was negative, however, the time specific fixed effect was not significant, yielding
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Time
Figure 1: Preference Reversals over Time
ioo
Table 5 . Regression output to determine values for seeing species in Yellowstone National
Park
areg eval time2 time3 time4 time5 time6 time7 timeS time9 time 10 ct ct2 It It
> 2 b b2 g g2 ca ca2, absorb(p(ayerid)
Number o f obs = 5380
F( 19, 5092) = 0.90
Prob > F
= 0.5831
R-squared = 0.4850
Adj R-squared = 0.4560
Root MSE
= 9.4001
eval |
Coef. Std. Err.
time2 | -.061884 .5737104

time3 | -.202973 .5739942
time4 | .0679514 .5737116
time5 | -.1909503 .5736364
time6 | -.1666534 .5739622
time7 | -.0624135 .5738612
time8 | .4057644 .5736608
time9 | .6403657 .5738104
time 10 | -.5640327 .5736166
ct | -2.95145 2.594106
ct2 | 1.947955 1.608566
It I -.5057245 2.524052
lt2 | -.0568558 1.561598
b 1 .8790863 2.564753
b2 | .0603153 1.593567
s l 4.766931 2.490014
82 I -2.089917 1.573739
ca | 5.614063 3.889957
ca2 | -3.458681 1.973759
_cons | 4.16851 .5276623
playerid |
F(268,5092) =
P>|t|
-0.108 0.914
-0.354 0.724
0.118 0.906
-0.333 0.739
-0.290 0.772
-0.109 0.913
0.707 0.479
1.116 0.264
-0.983 0.326
-1.138 0.255
1.211 0.226
-0.200 0.841
-0.036 0.971
0.343 0.732
0.038 0.970
1.914 0.056
-1.328 0.184
1.443 0.149
-1.752 0.080
7.900 0.000
17.815 0.000
[95% Conf. Interval]

-1.186603
-1.328248
-1.05677
-1.315524
-1.291866
-1.187428
-.7188574
-.4845492
-1.688568
-8.037013
-1.205526
-5.453951
-3.118259
-4.148932
-3.063762
-.1145659
-5.175123
-2.011926
-7.328097
3.134065
1.062835
.9223024
1.192673
.9336236
.9585591
1.062601
1.530386
1.765281
.5605023
2.134113
5.101437
4.442502
3.004548
5.907104
3.184393
9.648428
.9952884
13.24005
.4107357
5.202955
(269 categories)
test time2 time3 time4 timeS time6 time7 time8 time9 time 10
( 1) time2 = 0.0
( 2) time3 = 0.0
(3 ) time4 = 0.0
( 4) timeS = 0.0
( 5) time6 = 0.0
( 6) time7 = 0.0
( 7) time8 = 0.0
( 8) time9 = 0.0
( 9 ) timelO = 0.0
F( 9, 5092)= 0.68
Prob > F = 0.7266
102
an F value of 0.68. This was not significant even at the 10% level.
Figure 2 shows the values o f both the A and B lotteries. Values o f both lotteries
have a downward trend with an upward spike in round 8. Dummy variables were also
created for the 269 participants in the experiment using their unique player identification
number. The F value for the participant specific fixed effects was highly significant. The F
value was 17.815, which was significant at the 1% level.
The two-way fixed effects model was run on values to determine how the average
person, after netting out time and player specific effects, values each o f the environmental
goods offered by a visit to Yellowstone National Park. How much does the average visitor
value seeing a bird o f prey or grizzly bear, catching a cutthroat trout or lake trout, or
seeing the core attractions o f the park? Valuation estimates show the average visitor has a
positive value for seeing a cutthroat trout, seeing a bird of prey, and seeing the core
attractions o f the park. However, seeing grizzly bears is borderline and catching a lake
trout is an economic bad. The average visitor needs to be compensated for catching a lake
trout. This is in line with expectations at the beginning o f the project. We assume visitors
fish for cutthroat trout, but inadvertently catch lake trout. Given this is the case, since
visitors are fishing for cutthroat trout, it is reasonable to think o f a lake trout as an
economic bad.
This internet experiment was done to determine 1 o f the components necessary to
run the simulations. The specifics on the values generated and the specifics o f all the
information gathered for the simulations are saved for Chapter VI.
103
Figure 2: Value of Wildlife Lotteries over Time
BsgsSSag
wmMi
mkmm
j P ji vzMmmmm. WMMfw
illliilS ^ s ill
w m m m
a n |B A
104
C hapter VI: Simulation Model
Stella 2.0 software was used to generate a simulation model for this interface
between an economic model and ecosystem. Stella is a software package used to generate
dynamic model systems. Dynamic systems o f all kinds can be modeled using Stella
software, including economic analysis such as competitive equilibria and dynamic fisheries
models (Hannon and Ruth, 1994). Just as in a dynamic theoretical model, Stella uses the
concepts o f state variables, flows as inputs and outputs and constants and equations to
describe an ecosystem. Within this model, both the ecosystem component and the
economic system component are built just as they appear in my theoretical model.
Consumption estimates o f each species and estimates o f the impact lake trout are expected
to have come from research done by other members on the EPA/EPSCoR grant (Stapp
and Hayward, 1998), (Stapp and Hayward, 1999). After working the reader through the
general model piece by piece, I explain the functional forms o f the simulation equations.
M odel Sections
The full Stella simulation model is a ball o f yam when first eyeballed. For this
reason and to convey all the information in the model, this section takes the reader
through the model piece by piece. The simulation model is divided into 6 sections. In each
section, a key part o f the model is discussed and then related to the dynamic theoretical
model. After going through all 6 sections, the full model will be shown without highlighted
sections.
105
Section 1: Lake Trout
Diagram 1 shows the lake trout population and everything in my model that can
affect it. The box labeled lake trout is a state variable indicating the population o f lake
trout in Yellowstone Lake at any given time.
You will notice several flows in and out of the lake trout box, inflows and
outflows. Inflows show a cause for an increase in lake trout population. Outflows show a
cause for a decrease in lake trout population. The sole inflow to the lake trout population
is natural births. Natural births depend on the population o f lake trout in the previous
period, the natural birth rate and the density dependence factor o f the system. The density
dependence takes on a specific form. Initially, each individual species is assumed to eat a
specific amount of cutthroat trout. They reproduce at a constant rate. However, once past
a particular threshold, the species is unable to catch enough cutthroat trout due to
declining numbers. As they catch fewer cutthroat trout, they are spending more of their
time and energy finding food. They will have less time now to spend spawning and their
birth rate decreases. The reason for this comparison is simple. Each lake trout needs to eat
a specific number of cutthroat trout each year in order to survive. A larger lake trout
population would need a larger cutthroat trout population to feed upon. These three
components (lake trout population, natural birth rate, and the density dependence factor)
determine the increase in lake trout population for any given time.
Three outflows exist for lake trout in this model. Once again, outflows represent
deaths, or a decline in the lake trout population. The three outflows are natural deaths,
106
Human LT
LT births
.T natural deaths
LT birth rate.
LT natui
leath rate
LT killed
Diagram 1
107
lake trout caught and lake trout lulled. Natural deaths are deaths that occur naturally for
any given lake trout population. These deaths depend on the death rate and the population
o f lake trout in the system. Lake trout caught is a representation o f the number o f lake
trout caught solely by fishermen on Yellowstone Lake. The number o f fish caught is a
function o f both the lake trout population and the amount o f time the average visitor
spends fishing. The final outflow is lake trout killed. This does not include fish caught by
fishermen or natural deaths. These are fish that are killed by gill netting by the National
Park Service, which if a function o f one o f the control variables in this model, in an
attempt to alleviate pressure on the native cutthroat trout population. The sum o f these
three outflows determine the decrease in lake trout population. The total change in lake
trout population in any given time is the inflows minus the outflows.
The lake trout population box and all o f its flows are representations o f the
structural equations from the theoretical model. The population with flows represents the
species population equations o f change from the dynamic model. In the dynamic model,
the equation is:
L T = L T (LT, hu, mu, ddfi,)
The change in the population ( L T ) depends on the previous population (LT), the
harvesting o f lake trout (hu), the amount o f money spent killing lake trout (mu), and the
population o f cutthroat trout (density dependence factor, ddfu). The density dependence
factor is brought in to allow for the lake trout population to decline as the cutthroat trout
108
population declines. Lake trout need to eat a specific amount o f cutthroat trout to survive.
If the cutthroat trout population falls low enough, obtaining the food to stay alive will
become a larger task and will take more o f the lake trout energy. As this happens, lake
trout are not able to reproduce as quickly. All o f the elements from the theoretical model
show up in the same manner in the Stella simulation model.
Section 2: Cutthroat Trout
Diagram 2 shows the cutthroat trout population and everything in my model that
affects it. The box labeled cutthroat trout is a representation o f the population o f cutthroat
trout at any given time.
Just as with lake trout, cutthroat trout have several inflows and outflows. As
before, the sole inflow is the natural birth rate, which depends on the population o f
cutthroat trout, and the natural birth rate for cutthroat trout* . Also, just as with lake
trout, two o f the outflows are natural deaths, which depend on the natural death rate and
the population, and cutthroat trout caught which depend on the population and the
amount o f time the average visitor spends fishing.
Not all flows have a corollary with lake trout. Three outflows are unique to
cutthroat trout. Since cutthroat trout are the main prey species for lake trout and birds o f
prey (such as ospreys and white pelicans), they lose some population to predation to each
o f these species. Each o f these three outflows depends on the population o f cutthroat trout
and the population o f the predator (either lake trout, grizzly bears or birds o f prey). In the
same manner as with lake trout, the total change in the population
109
iFct
CT birth rate
CT kill
births
CT natural death rate
CT catch
CT natural deaths
LT
CT killed B
D iagram 2
110
o f cutthroat trout is the sole inflow minus the combination o f the outflows.
Once again, the cutthroat trout population and its flows represent the equation o f
change for cutthroat trout population from the theoretical model. The equation from the
model is:
C T = C T (CT, LT,G, B, he, dd&)
The change in the cutthroat trout population depends on the previous population
(CT), the predation from the population o f lake trout (LT), predation from birds o f prey
population (B), predation from grizzly bears (G), the human harvest o f cutthroat trout
(h) and their own density dependence factor (ddfct). This density dependence factor is
brought in for a specific reason. Yellowstone Lake is only so big and can support only so
many cutthroat trout. This density dependence factor is used to put a cap on the number
o f cutthroat trout that can be supported by Yellowstone Lake (the carrying capacity o f the
lake). Without some sort o f density dependence, the cutthroat trout population could
continue growing without bound. All o f the elements from the theoretical model are
represented in the simulation model.
Section 3 : Birds o f Prey
111
Diagram 3 shows the population o f birds o f prey and everything in my model that
can affect it. Just as before, the box labeled birds o f prey represent the population o f both
osprey and white pelicans around Yellowstone Lake.
Unlike with both lake trout and cutthroat trout, however, birds o f prey dont have
either predation from humans or predation from another animal in the system. Birds o f
prey only have their own natural birth and death rates, 2 flows (1 inflow and 1 outflow).
The natural birth rate depends on the population o f birds o f prey and the natural birth rate.
As discussed before, we assume the population o f the birds of prey is constant. We simply
set the birth rate equal to the death rate to accomplish this. Just as with the two trout
populations, the bird o f prey population depends on the same variables as the theoretical
model. The equation for the change in population is:
B = B( B)
The change in the bird o f prey population depends on the same variables as in the
theoretical model, the previous population (B). The main point here is the consistency o f
the population. It does not change over time. The population of birds o f prey stays
constant which in turn means the amount o f cutthroat trout they eat remains constant and
the number o f birds of prey seen by the average visitor stays constant as long as time spent
fishing and time spent viewing the rest o f the park dont change.
112
B Births
B niturfl deaths
B natural death rate
Diagram 3
113
Section 4: Grizzly Bears
Diagram 4 shows the final population o f a species. In this section, the flows and
stocks affecting the grizzly bear are explored. The box labeled grizzly bears represents the
population o f grizzly bears around Yellowstone Lake at any given time.
The population o f grizzly bears is similar in setup to the population o f birds of
prey. Grizzly bear population has only 1 inflow and 1 outflow. These outflows are natural
birth and natural death rates. Once again, the birth rate is a function o f the bear
population, the natural birth rate. We once again assume the grizzly bear population are
constant across time. We accomplish this by setting the birth rate and death rates equal to
each other. In the same fashion as birds o f prey, the equation is:
G = G (G)
The change in grizzly bear population depends on the previous population of

grizzly bears (G). The main point here is the consistency o f the population. It does not
change over time. The population o f grizzly bears stays constant which in turn means the
amount o f cutthroat trout they eat remains constant and the number o f grizzly bears seen
by the average visitor stays constant as long as time spent fishing and time spent viewing
the rest o f the park dont change.
114
G births
G natural deaths
G natural death rate
Diagram 4
115
Section 5: Human Activity
Humans affect the Yellowstone Lake ecosystem in a variety o f ways. Each of these
ways are shown in Diagram S. Humans have a choice about how to allocate their time.
The average visitor is the collective o f all visitors to the park. He can spend time fishing
(Tf) or enjoying the core attractions o f the park (Tx). Both o f these activities are
represented in Diagram 5. The sum o f each of these must equal the total time spent in the
park (Tt). Time spent fishing (Tf) is the sole activity that directly affects the species
populations. More time spent fishing will lead to more fish being caught (both lake trout
and cutthroat trout) which will change the composition o f the species in the Yellowstone
Lake area. These activities are the choices made by the average visitor.
The choices made by the average visitor is not the only choice o f humans that
affects the species populations. The National Park Service managers also make a choice
that will change the species populations. The National Park Service must decide how to
allocate its limited funds. The two activities they must choose between are killing lake
trout
(m u )
and improving the rest o f the park (mx). Any money spent killing lake trout
(m u )
will reduce the lake trout population and ease pressure on cutthroat trout. The
activity of both the average visitor and the National Park Service managers is included.
The human activity in the simulation model comprises a large portion o f the
theoretical model. The human component comprises both actions taken by the average
visitor (fishing and enjoying the rest o f the park) and actions taken by the NPS managers
(killing lake trout and improving the park public good). Human activity is represented in
116
Lake Trout
Cutthroat/Trout
Birds of Prey
Human LT
CT catch
lied
Grizzly Bears
(irds viewed
TF
Gwiewed
$T
Sx
Tt
TX
X gained
Xlost
Diagram 5
117
the theoretical model by both time spent enjoying the park (T f and Tx) and actions that kill
lake trout or improve the park (mu, mx). Some o f the activity will directly affect the
species populations (catching fish, h|t, hct and killing lake trout, mu) while others do not
directly alter the species populations (seeing birds o f prey Sb or grizzly bears Sg and
enjoying the rest o f the park Sx).
Section 6: Human Enjoyment
The goal o f this model is to maximize the enjoyment o f visitors to the park, given
specific constraints. These constraints are both monetary (limited funds o f the NPS, mp)
and non-monetary (minimum acceptable populations for specific native species, given how
the average visitor will act when facing the choices in the park). In this initial model, the
only constraints examined are the monetary constraint and the constraint o f human choice,
however, further constraints can be added to this framework later. Human enjoyment is at
the intersection o f the economic model and the ecosystem model. To examine the human
enjoyment component o f the simulation model, this part has been highlighted in Diagram
6
The enjoyment o f visitors is given by a state variable that is the utility o f the
average visitor. This utility has several components, each o f which is a inflow to overall
utility. The average visitor can achieve utility from catching lake trout (LT utility),
catching cutthroat trout (CT utility), viewing grizzly bears (G utility), viewing birds o f
prey (B utility) or enjoying the core attractions o f the park (X utility). Each o f these
118
B Utility
Total
CT Utility
X Utility
LT Utility
G Utility
Diagram 6
119
activities leads to utility by the average visitor. It is the goal o f the NPS managers to
maximize this utility given the best response by the average visitor.
The goal o f the park manager is to maximize the enjoyment o f the visitors to the
park, given how visitors will act when they come to the park. Humans derive utility from
each o f their activities. The total utility derived is represented by the utility function in the
theoretical model. In the simulation model, this utility is a state variable labeled total utility.
It is the sum total o f utility derived from all activities. The NPS managers choose to
manage their limited funds to ensure maximization o f this utility to achieve the 2nd best
solution.
Integration o f all 6 Sections
Now consider the entire model together to see how a perturbation o f the system,
whether it be a natural change or policy change, works. The full Stella model includes
each part o f the model described above. The full model with no highlighted sections is
presented in Diagram 7. Boxes representing each species population, the utility o f the
average visitor and the flows within and between the economic section and the ecosystem
are included.
The usefulness o f this model is that it is a dynamic representation o f an ecosystem
and economic system in one model and more importantly that the flows between and
120
within ecosystems and economic systems are given. To show this, I go through one
perturbation in this simulation model to show how these flows are followed in the system.
121
DDFct
G ^h
IT birthsialc* Trout
Births
Bird! of Prey
Hutra
CT natural deaths
CT natural deatfuate
B natural deaths
0
B natural death
natural death rat

CT kill
G natural death rate

Birds viewed
viewed
Q
T Utility
Total Ufa
CT Utility
X gaine<
Xlost
Sum ofbiscounted Utility
G Utility
discoutned utility
Diagram 7
122
For example, we will examine the changes in the system from an increase in NPS
funds being fully spent on killing lake trout by the NPS managers. Changes that occur are.
both within one system and between the economic and ecosystem are incorporated.
Increasing activities killing lake trout (mn) will reduce the number o f lake trout in the
system, an activity that occurs between the two ecosystems; actions taken by humans
change the composition of the ecosystem - a change in the economic system affecting the
ecosystem. That will in turn reduce the pressure on cutthroat trout, increasing their
population; this is a change within just the ecosystem. As these species populations shift in
this manner, the average visitor will see the price of catching lake trout increase and the
price o f catching cutthroat trout decrease. Assuming the average visitor has a preference
for cutthroat trout over lake trout (which he does in this case), he will now increase his
time spent fishing; now a change between the ecosystem and the economic system - a
change in the ecosystem affecting the economic system. Also, since the total amount of
money spent on both activities is constant (mt), less money will be spent improving roads
making it more difficult to see the core attractions of the park. As it becomes more
difficult to see the core attractions o f the park, less time will be devoted to enjoying the
rest o f the park. Assuming time spent fishing will increase (since cutthroat trout are more
popular to fishermen than are lake trout), lake trout caught will increase and cutthroat
trout caught will increase. This will in turn reduce the number o f cutthroat trout, but will
also reduce the number of lake trout, thus reducing pressure on cutthroat trout from lake
trout - all changes within the ecosystem. Although, at this point further analysis is difficult
123
to determine since the effect o f a decrease in lake trout and an increase in cutthroat trout
is unclear, it is easy to see that this one perturbation will lead to severe changes and will
lead to a new equilibrium. Changes within the ecosystem and changes between the
economic and ecosystem occur since both flows within systems and between systems are
included in this model.
The reason for this simulation model is to take the theoretical model and flesh it
out for a real world example. The simulation model gives equations for mi,(t) and m*(t).
These equations are estimates for the National Park Service for how much money should
be spent killing lake trout and improving the rest of the park given the assumptions o f the
model hold. In addition to the estimates for NPS managers, the simulation model is the
first attempt to show that proposition 2 holds. A great deal of work is done to either
calculate the value o f the cutthroat trout in Yellowstone Lake, or use those estimates to
calculate how much damage will be done by the introduction o f lake trout into the system.
This simulation model will also show whether or not these damage estimates can be
proven to be robust.
M odel Parameters
A total o f three sets o f equations must be determined. First, the equations
determining the ecosystem must be specified. These equations determine the species
populations and how the different species populations change from changes in the
ecosystem over time. Table 5 shows the numbers used for these equations. Because o f the
interdependence o f the species, each species population is a function o f its own population
124
and the population o f both its predator and prey species. A more complete model would
have different age classes for each species interacting with each other. Hayward and
Nations1are building this more complete model following the work o f Stapp and
Hayward (Stapp and Hayward, 1999). Before publication, this full model, once completed,
will be used to test the robustness o f my simplified model, seeing how close these
simulation results are to the maximization procedure that comes from the full model.
125
Table 6: Data Collected With Sources for Species-Species Interaction

Species
Population Estimate
Number o f Catchable Size

Cutthroat Trout Eaten (per
year)
cutthroat trout
2,500,000 catchable size
N/A
(Varley and Shullery, 1995)

lake trout
2,500 (Varley and Shullery,
3XV, (Ruzycki and
1995)
Beauchamp, 1996) &

(Stapp and Hayward, 1999)
grizzly bears
Osprey
50 (Varley and Shullery,
50 (Varley and Shullery,
1995)
1995)
120 (Swensen, 1979)
approx lO* (Davenport,

1974) & (Diem and
Pugesek, 1994)
white pelicans
540 (Diem & Pugesek,
approx 20x=c(Davenport,
1994)
1974) & (Diem and

Pugesek, 1994)
126
Second, the equations determining the economic system must be calculated. This
entails using experimental data collected on species valuation from Yellowstone National
Park via the internet experiment. The utility function is assumed separable in each
argument. Seperability implies that each argument in the utility function has a unique level
o f utility associated with it (Moschini et al, 1994). The level o f other arguments in the
function is irrelevant to the individual utility from any other argument. The value o f
catching a cutthroat trout does not depend on whether you have seen the core attractions
o f the park. Assuming seperability is restrictive, but necessary at this point in the analysis.
The results of this section from the internet experiment are presented in Table 6.
127
Table 7: Values o f being able to see the species and attractions in the park
Grizzly
Birds o f Prey
Lake Trout
Bears
Value of
$0.28*
$1.31
$-0,013
Cutthroat
Core
Trout
Attractions
$2.22
$23.75*"
seeing the
species"1
128
Finally, the interaction between the systems must be determined. These equations
specify how humans and animal populations interact. These are the equations for fishing,
animal watching, enjoying the rest o f the park and how much effect the National Park
Service funds will have in improving the park and killing lake trout. The data for these
interactions have been taken from several sources. A summary is listed in Table 7.
129
Table 8: Data Collected With Sources for Species-Human Interaction

Species
cutthroat trout
lake trout netted
Population estimate
Time Spent or
Number Caught or
Money Spent
Rate o f Catch
2,500,000 (Kaeding,
206,995 angler
16,615av caught
Boltz and Carty,
hours (NPS report,
(NPS report, 1995)
1996)
1995)
2,500 (Kaeding,
$300,000 (Varley
580 netted (Varley
Boltz and Carty,
and Schullery, 1996)
and Schullery, 1996)
1996)
lake trout caught by
2,500 (Kaeding,
206,995 angler
156 caught
fishermen
Boltz and Carty,
hours (Kaeding,
(Wuerthner, 1995)
1996)
L.R., 1995)
50 (Varley and
1228 hours flown
132 sightings
Schullery, 1996)
(Blanchard, 1980)
(Blanchard, 1980)
birds of prey (osprey
660 (Diem &
100 days
444 sightings
& white pelicans)
Pugesek, 1994) +
(Davenport, 1974)
(Davenport, 1974)
24 hours
Probability = 1
grizzly bears
(Swensen, 1979)
core attractions
310 = miles o f
paved road in YNP
(100%) if T x = 1440
(Roads, 2000)
(24 hours) and

X = 620
The data in Table 5 is then used to calculate the interactions between humans and
species in the park. Humans use time to either fish, which has benefits o f being able to see
grizzlies or birds o f prey and catch lake trout or cutthroat trout, or humans can drive to
see the core attractions of the park and may see a grizzly or a bird o f prey, but at lower
probabilities than if they fished.
It is assumed the average visitor spends two days at Yellowstone National Park.
The two days comes from park information on visitors stating 48% o f visitors spend one
day or less, while 30% of visitors spend more than two days in the park (Intro, 2000). The
average visitor is assumed to have twelve hours available for visiting the park each day for
a total of twenty four hours each visit. Tt = 24
Results
Solving equations (18) and (19) and (40) and (41) for specific functional forms is
done to run the simulation model. Equations (18) and (19) are used to determine the
optimal amount of time spent by the average visitor between fishing and enjoying the rest
o f the park. These are functions o f the species populations at the time o f the visit. As the
species o f lake trout, cutthroat trout, birds o f prey, grizzly bears and quality o f the park
public good change, so will the amount of time spent at each activity. Equations (40) and
(41) are used to determine the optimal amount of money the National Park Service
managers should spend both killing lake trout and improving the rest o f the park public
131
good. These are functions o f the species populations and the amount o f time spent by the
average visitor at each activity.
A total o f five simulation scenarios were run to test how the Yellowstone area
would look under various scenarios. The first scenario (the natural baseline without the
exotic invader) was a simulation run to see how the Yellowstone area would be if lake
trout were never introduced. The current population o f cutthroat trout would increase
without the presence o f lake trout. This simulation is done to see the optimal solution.
Since lake trout are not valued as an economic good by the average visitor, we know with
certainty that the introduction o f lake trout into the Yellowstone Lake ecosystem is
hurting the utility o f the average visitor - the park is worse off now than they would have
been if lake trout were never introduced. The question becomes how much worse off.
The second scenario (the natural baseline with the exotic invader) runs the system
with lake trout being introduced, but with no intervention on the part o f the National Park
Service. We assume in this run that no money is spent killing lake trout. The entire park
budget available is spent improving the park public good. This is a worst-case scenario.
Lake trout are introduced, but nothing is done about it.
The third scenario (policy baseline) is our baseline case. Lake trout are introduced
into the ecosystem. The National Park Service does act to help the problem by spending
money killing lake trout, but it is fixed at its current level. We assume the current
expenditures killing lake trout is a fixed portion of the budget dedicated only to killing
lake trout. This budget does not change. This is the business as usual, or baseline case.
The fourth scenario (optimization) is the optimization procedure. National Park
Service mangers have a fixed budget to dedicate to either the lake trout problem or
132
improving the rest o f the park public good. The amount o f money spent killing lake trout
is found by optimizing a dynamic optimal control model given how visitors will react to
the conditions o f the park. This is our second-best solution. Given lake trout have been
introduced, how much o f the lost economic value can we get back?
Many o f the parameters in the simulation model are held constant through all 4 o f
the simulations. These parameters are now explained. A social discount rate o f 5% was
taken from the average yield on certificates o f deposit from the New York Times web
page50" (cdrates, 2000). Yellowstone National Park has an average o f about 3,000,000
visitors annually - each spending about 2 days at the park (Intro, 2000). These visitors
have a total o f 72,000,000 hours to spend at the park each year. 25,567 anglers spent a
total o f 206,995 hours fishing at Yellowstone Lake, which has been relatively constant
over the last 10 years (Kaeding, 1995). The average visitor thus spends approximately
0 .2875% o f his time fishing at Yellowstone Lake. Therefore, out of his 24 hours (1440
minutes), he spends approximately 4.14 minutes fishing. The average visitor by our data
has a positive value for both the goods associated with fishing (catching fish and seeing
other animals). This indicates our average visitor will spend some time fishing and some
time driving around the rest o f the park. However, only 25,567 people actually spent any
time fishing at all out o f the approximate 3,000,000 visitors for an average of 0.85% o f all
visitors. Rounding off, only about 1% o f all visitors would have an interest in fishing at all.
99% o f all visitors will spend none o f their time fishing. To account for this, the average
visitor is a composite o f the average participant in the internet experiment and a person
who never fishes. 99% o f the average visitor is a person who spends all o f his time driving
around the park. 1% o f the average visitor is a person who spends a positive amount o f
133
time at both activities. A value o f seeing the core attractions o f the park for the 99% of
people who never fish was set such that the average visitor would spend 4.14 minutes per
day fishing which is exactly what the average actual visitor to Yellowstone National Park
spent fishing. This composite average visitor is built with the guiding principle that people
in the park are currently maximizing their utility. Assuming our average visitor is a better
representation than reality assumes actual visitors to the park do not know how to
maximize their own utility. This composite o f 99% people who only drive around the park
and 1% o f people who divide their time between the two activities is used to calculate Tf*
and Tx* for the simulations.
The number o f fish caught, birds o f prey or grizzly bears seen or the amount of the
public good seen is given by the following general equation:
seen (caught) = a; (Tj)1,7(I)2, i indexing species e (c, I, g, b, x), i being those species
populations, and j indexing activities (either fishing or enjoying park public good) e (x, f)
156 lake trout were caught during the 206,995 hours fished. To estimate the a for
catching lake trout (an), 3,000,000 visitors, the average visitor spending 4.14 minutes
fishing, caught 156 lake trout. With the estimate of the lake trout population being 2,500,
this gives a ,t = 4.089 X 10'12 from 156 caught = 3,000,000(au)(4.14)1/2 (2,500)2
16,615 cutthroat trout were caught during the 206,995 hours fished. To estimate
ctct, 3,000,000 visitors, the average spending 4.14 minutes fishing, caught 16,615 cutthroat
134
trout. With the estimate o f catchable size cutthroat trout being 2,500,000, etc = 4.355 X
l c r 16.
Scientists studying the bird o f prey population saw a total o f 444 birds in 2,400
hours. This averages out to 4 every 24 hours. Assume the average visitor is 1% as
successful seeing birds o f prey since they are not specifically looking for birds o f prey and
since they do not have the expertise to know exactly where to look. This leaves the
average visitor seeing 0.04 birds o f prey every 24 hours. To estimate at,, every 1440
minutes, a visitor can see .04 birds o f prey. With the estimate o f the bird o f prey
population being 660, at, = 2.42 X 10'9.
Scientists studying the grizzly bear population had a total o f 132 sightings over
1228 hours. This averages out to 18 grizzly sightings every 24 hours. Once again, assume
the average visitor will be 1% as successful seeing grizzly bears, this leaves the average
visitor seeing 0.18 grizzly bears every 24 hours. To estimate otg, every 1440 minutes a
visitor can see 0.18 grizzly bears. With the estimate of the grizzly population around
Yellowstone Lake being 50, otg = 1.897 X 10-6.
The number o f lake trout that can be netted is a function o f both the lake trout
population and time. It takes the form:
# o f lake trout netted = a lta (mn)l/2 (LT)2
In 1996, 580 lake trout were netted out o f Yellowstone Lake at a cost of
$300,000. With the iake trout population estimated to be 2,500, a ^ = 1.694 X 10'7.
135
The park public good in the internet experiment was seeing the core attractions of
the park, Old Faithful, Upper and Lower falls, etc. To quantify the park public good, a
proxy for the public good needed to be found that would help people see the core
attractions o f the park. Roads in the park was used as a proxy since improving the roads
helps visitors get around the park more quickly, thus enabling visitors a better chance o f
seeing the core attractions. The cost estimates for roadwork were taken from the National
Park Services webpage (Roads, 2000).
136
Table 9: Cost of Road Work in Yellowstone National Park

Type o f W ork
Cost
Crack Sealing
$1,500/mile
Surface Patching
$ 15,000/mile
Asphalt Pavement Overlay
$10,333/mile
(from $ 155,000/year & 15mi/year)
Rehabilitation & Repair o f Bridges
$619/mile
(from $ 192,000/year)
Striping
$571/mile
(from $100,000/year (175 mi/year)
Ditch & Culvert Maintenance
$ 1,000/mile
Total Cost to Maintain Roads
$29,023/mile (total o f $8,997,130/year)
137
The total of $8,997,130 was rounded off to $9,000,000 for annual costs to
maintain roads in their current condition''1. The estimate on the total cost to completely
renovate all the roads in Yellowstone National Park was given at $280 million. The cost to
renovate 1 mile is $280 million/310 miles (total miles o f paved road in Yellowstone
National Park), which is $903,226/mile. This is rounded off to $900,000/mile to renovate
roads in Yellowstone National Park.
With 310 miles o f roads in the park, the public good is given in increments from 0
up to 620 - twice the current level (X can take values from 0 to 620). The current
condition of the roads is assumed average and in the middle o f this range at 310 (X =
310). Roads can deteriorate to the point where they are no longer passable, this is
assumed to happen at 0 (X = 0), when all 310 miles o f roads have deteriorated. If 1 mile
of road has deteriorated, X will fall to 309. If the roads for the entire park are in perfect
condition, newly paved, they would all be in good shape and the good would be at 620 (X
= 620). X can range from a minimum of 0 to a maximum o f 620. It costs $9,000,000
annually to maintain roads at their current condition, which means the roads deteriorate at
about 10 miles a year (or 3.5% currently).
Currently the park is spending $300,000 annually killing lake trout. The total
budget available for killing lake trout and improving roads comes from the $300,000
currently spent plus the roads budget. Yellowstone got $280 million appropriated over the
next 18 years to repair the roads in the park. This is the first appropriation o f this sort in
30 years. Averaging this budget out over 30 years gives $9,333,333 annually for roads.
The park also has $2,298,000 in recurring annual funds for a total o f $11,631,333. A total
138
o f 52.57 full time equivalent workers (FTE) are paid out o f this budget. At $36,000/year
for each o f the FTEs that is $1,892,530 for salaries. Assuming salaries and the number of
FTEs are fixed, this $1,892,530 needs to be paid every year for employees. Subtracting
this yields a total budget o f $9,738,803, which is rounded off to $9,740,000. This plus the
$300,000 currently spent killing lake trout is available for roads and killing lake trout for a
total o f $10,040,000. The total budget available for killing lake trout and improving the
roads is $1 0 ,0 4 0 ,0 0 0 ^ .
For each o f the simulation runs, the model was run twice - once with the full
model, including feedbacks between the economic system and ecosystem, and once
without feedbacks between the two systems. In the second case, the average visitor is
assumed to not respond to the changes in the ecosystem. If the cutthroat trout population
fell, the average visitor will still spend the same amount o f time fishing as he did before the
cutthroat trout population declined. These two runs are done to determine the size of the
impact from incorporating feedbacks. We run one with no change in human behavior. We
assume the average visitor will always spend 206,995 hours fishing. We then run the
model with human behavior changing allowing the average visitor to change his behavior
as the conditions of the park change. Will we get different results if we assume the average
visitor does not change his behavior? How large o f a difference does accounting for these
feedbacks make? The importance o f accounting for feedbacks is summarized in Table 9.
139
Table 10: Resulting cutthroat trout populations with and without feedbacks
No Feedbacks
Feedbacks
Best-case scenario
2,700,000
3,400,000
Worst-case scenario
900,000
Policy Baseline
1,900,000
2,300,000
140
Simulation Run 1: Best-case scenario
The first simulation run is the best-case scenario - if lake trout were completely
taken out o f Yellowstone Lake immediately and the procedure was costless. It is accepted
lake trout cannot be completely eliminated from Yellowstone Lake without also
eliminating cutthroat trout from Yellowstone Lake. We use this first simulation run to
determine an upper bound on how well off the system could become. We can use this to
determine how much o f the lost utility we can gain back by action on the part o f the
National Park Service. Since lake trout have been eliminated immediately in this case, the
expenditures killing lake trout is obviously nothing (mu = 0). The total available budget for
killing lake trout and improving roads will go to improving roads (mx = mi). Roads will be
in the best repair they can be given current budgets. Cutthroat trout will flourish with no
impending threat o f lake trout. So, while this simulation run does not represent a realistic
outcome, it does serve an important purpose - determining the upper bound o f the system.
No Feedbacks (Figure 3)
Since lake trout are a significant factor in determining the steady population of
cutthroat trout, eliminating lake trout from the system removes a constraint on the
cutthroat trout population. Their population can grow back to what they were before the
introduction o f lake trout into the system. Their population o f 2,500,000 grows to
2,741,762 stabilizing after approximately 250 years and remaining constant for the rest o f
the time horizon up to 1,000 years50"1".
141
With the full budget available going to increase the public good, the condition o f
the roads increases to 591 with an upper bound o f 620. Roads in 1000 years are almost as
good as they can get. Lake trout are assumed to be permanently eliminated from the
142
Figure 3: System Without Lake Trout (No Human Response)
1: Cutthroat Trout
2: Lake Trout
3: T F
2741762.42
1.00
5.14
2620881.21
0.00
4.14
2500000.00
-
1.00
3.14
0.00
250.00
500.00
Years
750.00
1000.00
9:11PM 08/21/2000
system and never return. W ith no feedbacks, time spent fishing is assumed constant.
In addition to the condition o f the species in Yellowstone Lake, we can also
calculate the present value o f Yellowstone National Park by summing the discounted value
o f the utility for the average visitor. The net present value o f Yellowstone National Park in
this first case is approximately $380,264,000.
Feedbacks (Figure 4)
Just as with no feedbacks, the elimination of lake trout removes a constraint on the
cutthroat trout population. Their population grows just as with no feedbacks in the
system. Two effects are entering into the average visitors time allocation. First, the public
good is increasing. Roads are again improving since the entire budget is being used to help
their condition and after 1,000 years the public good is increased to 591. With the
condition o f roads improving, people have a better chance to see the core attractions of
the park. This better chance o f seeing the attractions gives the average visitor an incentive
to switch activities - move from fishing to enjoying the rest of the park. The second effect
comes from the increase in the cutthroat trout population. As the cutthroat trout
population increases, the average visitor has a better chance o f catching a cutthroat trout.
The improvement in being able to catch a cutthroat trout gives the visitor an incentive to
switch activities - move from enjoying the rest o f the park to fishing. These two effects
are counteracting each other. Whichever effect is greater will dominate and change the
average visitors time allocation.
144
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission
Figure 4: System Without Lake Trout (Human Response)
1: Cutthroat Trout
1:
2.
4: X
1.00
4.29
590.70
1:
2950061.50
1:
3: TF
3400123.00
3:
4:
2:
3:
4:
2: Lake Trout
0. 00,
2.55
450.35
2500000.00
2:
3:
4:
1.00
0.81
310.00
0.00
Species
250.00
500.00
Years
750.00
1000.00
11:28 AM 08/23/2000
Initially the second effect dominates. During the first 50 years, increases in the
cutthroat trout population induce the average visitor to spend more time fishing. Time
spent fishing increases and pressure on cutthroat trout also increases from the increased
number of fishermen at Yellowstone Lake. However, as the population o f cutthroat trout
starts to stabilize, the park public good continues to increase. An increasing park public
good starts to overcome the effect o f larger initial cutthroat trout populations. Eventually
the first effect dominates. People start switching from fishing toward enjoying the rest o f
the park. With a decrease in time spent fishing, pressure on cutthroat trout decreases and
the cutthroat trout population continues to increase. The first effect still dominates though
and even with the cutthroat trout population increasing, time spent fishing continues to
decline. After 1,000 years, the population o f cutthroat trout has increased to 3,400,123.
Ignoring the feedbacks makes a difference in this first case. Time spent fishing
does change for the average visitor. With the public good increasing, a smaller proportion
o f time is spent fishing. N ot only does time spent fishing change, but also it has a profound
impact on the cutthroat trout population. The cutthroat trout population increases to just
over 2,700,000 with no change in human behavior, while they increase to over 3,400,000
with the change in behavior. However, ignoring the feedbacks does not make a large
difference in the value o f the park. The approximate value o f the park using feedbacks is
still approximately $380,269,000.
Simulation Run 2: Worst-case scenario
146
The second simulation run is the worst-case scenario - if lake trout are introduced
but nothing is done about it. W e use this second simulation run to determine a lower
bound on how bad the system can get. This is used to determine how much utility can be
lost and how the populations o f lake trout and cutthroat trout can be affected from the
introduction o f lake trout into Yellowstone Lake. Since the National Park Service takes
no action, expenditures killing lake trout are nothing (mn = 0). Once again, the total
available budget for killing lake trout and improving roads will go to improving roads (mx
= nit). Roads will still be in their best repair, but now lake trout will drive down the
cutthroat trout population.
Allowing the lake trout population to run freely has large impacts on the cutthroat
trout population. Just as in the first simulation run, all money is spent improving the rest of
the park. With no money dedicated to killing lake trout, their population drastically
increases in the first 25 years. Their population increases from the initial 2,500 up to
12,245. During this time, the cutthroat trout population is greatly lowered. A lower
cutthroat trout population combined with a higher lake trout population leads to density
dependence starting to take effect. Lake trout are spending a larger portion o f their time
finding cutthroat trout for survival and do not spawn as frequently. When this happens, the
lake trout population is taken under control. After this initial period, both the lake trout
and the cutthroat trout population are driven down. After approximately 500 years, the
147

(No Human Response)
1: Cutthroat Trout
2500000.00
12245 03
5.14
2: Lake Trout
3: TF
\
\
1690494.59
7372.51'
4.14
2 3-
880989.18
2500.00
3.14
0.00
250.00
500.00
Years
750.00
1000.00
9:17 PM 08/21/2000
populations o f both species reach a new equilibrium. Lake trout population stabilizes at
7372. The cutthroat trout population stabilizes at 880,989. Once again, since no money is
dedicated to killing lake trout, the entire park manager budget is spent improving the park
public good. The roads continue to improve to a maximum level o f 591. Almost all o f the
roads are newly paved.
A very surprising result is the estimated value o f the park. Even with the
introduction o f lake trout into the system, and with the decline in cutthroat trout
populations, the value o f the park remains almost constant at approximately
$380,014,000. Since the average visitor has a large preference for seeing the core
attractions o f the park, since the economic behavior is similar in the first 20 years both
with and without lake trout, since beyond the first 20 years with a 5% discount rate all
gains are discounted away and since the average visitor has a better chance o f seeing the
core attractions of the park than seeing any other species they are interested in, the total
value remains almost constant. The fishery is a very small component o f the parks overall
value. What is lost from the declining species is made up for by the increase in the park
public good.
The early portion o f the model with feedbacks is similar to without feedbacks. The
lake trout population increases drastically up to a peak o f 13,179. This peak is early, just
as without feedbacks. Also similar is the depletion of the cutthroat trout population.
However, one major and important difference enters the model. With the lake trout
149
population soaring and with the cutthroat trout population declining, these fishermen are
catching an increasingly higher proportion o f lake trout. Since fishermen come to
Yellowstone Lake to catch cutthroat trout and since they view lake trout as an economic
bad, they spend less and less time fishing. However, when they fish less, they are catching
less lake trout. This reduced pressure on lake trout allows their population to stay higher
than if people continued to fish. The lake trout population is higher with feedbacks for the
first 120 years. However, since their population is staying higher, they are feeding on
higher numbers o f cutthroat trout. This increased pressure on cutthroat trout continues to
drive down the cutthroat population all the way to nothing. Without cutthroat trout to
feed upon, lake trout can no longer spawn and their population declines as well. After
1,000 years, both populations have been driven down to zero. With no trout left to catch
and with the park public good increasing, less and less time is spent fishing. The only
reason people continue to fish is to have a better chance of seeing birds o f prey and grizzly
bears. With no trout to feed upon, grizzly bears and birds o f prey will likely see their
populations decline. This model assumes their populations are constant, but it is doubtful
this could be the case if trout were completely eliminated from Yellowstone Lake.
Including the feedbacks in this case leads to severe changes in the ecosystem.
Without feedbacks, trout populations stabilize and the fishery in Yellowstone Lake is
altered, but reaches a new equilibrium with positive populations for both species. When
the average visitor continues to fish with declining cutthroat trout numbers, he is playing
an important role. He is putting necessary pressure on the lake trout population - keeping
the population under control. Once we allow for the average visitor to alter his behavior,
150

(Human Response)
1: Cutthroat Trout
1:
2:
3:
4:
1:
2:
3:
4:
1:
2:
3:
4:
2: Lake Trout
3:TF
4:X
2500000.00'
13179.18
4.14
590.70
1250000.00
6589.59,
2.08
450.35
0.00
8.46e-005
0.03
310.00
0.00
Species
250.00
500.00
Years
750.00
1000.00
11:23 AM 08/23/2000
he reduces the amount o f time he fishes, reducing the pressure on lake trout. This reduced
pressure on lake trout leads to a collapse o f the cutthroat population. These simulations
indicate a complete collapse o f the fishery in Yellowstone Lake is possible with humans
changing their decisions on how to allocate their time at Yellowstone National Park.
Incorporating these feedbacks leads to drastically different results.
Once again, the feedbacks dont drive the value o f the park. The value remains
almost the same at $380,111,000. Even with the average visitor changing his behavior, the
first 10-20 years looks similar. The change in the system does not come about until much
later when economic gains are being discounted toward zero.
Simulation Run 3: Baseline case
The third simulation run is the baseline case - lake trout are introduced and the
National Park managers continue along their current path. This baseline case determines
business as usual. This baseline case is used to calculate how much o f the lost utility from
the worst-case scenario can be recouped and how much the cutthroat trout population will
be helped by the current action being taken at the park. Currently, the park managers are
dedicating $300,000 to the lake trout problem in a recurring budget. How much will this
$300,000 do?
152
Spending a positive amount o f money killing lake trout does have a large impact
on the system. The system does reach equilibrium. The lake trout population increases
drastically in the first IS years. Even though money is being spent killing them, they are
breeding faster than we can kill them off. While lake trout are increasing in number,
cutthroat trout are decreasing in number. After an initial surge, the lake trout population
declines with the fall in the cutthroat trout population. The lake trout population stabilizes
at about 5,000 while the cutthroat trout population stabilizes at about 1,900,000. The
fixed budget o f $300,000 killing lake trout has a positive and significant impact. The
budget decreases the stable lake trout population from over 7,300 without any budget
dedicated to killing them to about 5,000 with a constant budget o f $300,000. That
reduction in lake trout has a profound impact on the viable cutthroat trout population as
well. A stable cutthroat trout population increases from less than 900,000 to almost
1,900,000. With a fixed budget spent killing lake trout, less money can be spent improving
the park public good. The roads continue to improve, but improve to 364 after 1,000
years as opposed to 591 when the entire budget is allocated to improving the roads.
We finally notice a difference in the discounted value o f the park. With $300,000
dedicated to killing lake trout, and with cutthroat trout populations declining even with the
money spent to control lake trout, the park public good suffers. The increase in the park
public good is slower as less money is dedicated to improving them. Roads are in slightly
worse condition, which lowers the chance people will be able to see the core attractions of
the park. Since the core attractions are directly driving the vast majority o f people coming
to the park, the value o f the park will now decline. The value o f the park now falls to
153

(No Human Response)
1: Cutthroat Trout
2: Lake Trout
3: T F
2500000.00'
5880.77
5.14
2199353.29
4190.38'
4.14
1898706.59
2500.00
3.14
0.00
3
Species
250.00
500.00
Years
750.00
1000.00
9:21 PM 08/21/2000
$372,234,000 with this constant budget spent killing lake trout. We are worse off
spending $300,000 killing lake trout since we have less money improving the roads"*.
The average visitor has a strong preference for seeing the core attractions o f the park over
fishing. A large budget spent killing lake trout will hurt the condition o f the roads and thus
hurt the average visitor.
Once again, including feedbacks by the average visitor to changes in the park has a
large impact. The lake trout population increases quickly, driving down the cutthroat trout
population, just as before. Also, just as before, lake trout and cutthroat trout populations
continue to fall after this initial period. However, during this period, the public good
continues to improve. This improvement, combined with the decline in the cutthroat trout
population, leads to a decline in the time spent fishing by the average visitor. The time
spent fishing continues to decline, which reduces pressure on both the lake trout and
cutthroat trout populations. After 1,000 years, the lake trout population is approaching
5,700 and the cutthroat trout population is approaching 2,200,000. However, both the
lake trout and cutthroat trout populations are continuing to slowly increase with the
decrease in time spent fishing. Even after 1,000 years, the system has not reached a new
equilibrium steady state.
Once again the feedbacks being accounted for, a much different outcome is
realized. With the decline in time spent fishing, both lake trout and cutthroat trout
155

(Human Response)
1: Cutthroat Trout
1:
2:
3:
4:
1:
2:
3:
4:
1:
2:
3:
4:
2: Lake Trout
3: T F
4: X
2500000.00'
5680.79
4.14
364.18
2271303.91
4190.39,
2.77
337.09
2042607.81
2500.00
1.41
310.00
0.00
Species
250.00
500.00
Years
750.00
1000.00
11:21AM 08/23/2000
0
populations are higher than with a constant time spent fishing. A larger amount o f time
spent fishing leads to an important pressure on the fish populations. Incorporating the
responsiveness o f the average visitor to his surrounding conditions has a substantial effect
on the end result.
Also, once again these feedbacks do not have an effect on the value o f the park.
The average visitor is still driven by seeing the core attractions o f the park. The value of
the park is still $372,272,000 - the same as without feedbacks.
Simulation Run 4: Optimization Optimal case
This simulation run determines what the system looks like when the decision on
how much money from the managers budget is done to maximize the average visitors
utility. Lake trout are introduced and the park managers take into account how the
average visitor will respond before deciding how much money to spend killing lake trout.
The discounted stream of benefits to the average visitor is maximized depending how the
visitor will respond to the current conditions at the park. This represents the best the park
service can do to improve the welfare o f the average visitor short o f killing off all lake
trout to return the system to its pre-lake trout introduction state.
Without feedbacks incorporated, time spent fishing remains constant. The National
Park Service manages the park to maximize the discounted utility o f the visitor given the
157
average visitor will not change his behavior in response to changes in the ecosystem. In
the first few years, the park service has a process o f pulse fishing, described before (also
see Spulber, 1983). The park service spends a large amount o f money in the controlling
lake trout followed by a year where they spend no money at all and allow the lake trout to
multiply. When lake trout numbers get larger, they are more able to catch a larger number
with the same amount o f money. In the second pulse, with the specific functional forms,
the managers are able to kill the entire lake trout population off. With no bounds on how
many lake trout can be killed in any one year, the optimal path is to wait until the lake
trout are vulnerable and then wipe them out completely. It is assumed lake trout can not
be completely killed without killing off cutthroat trout as well. As a result, bounds on the
number o f lake trout that can be killed off in one period can be established and is for the
last run o f simulations. However, this provides an interesting point not clear in the
previous runs - there is some economic gain to be had by killing off lake trout. Scenario 3
showed that a constant budget o f $300,000 fighting lake trout was not optimal. Spending
a constant $300,000 killing lake trout hurt the average visitor. This gave the indication no
money should be spent killing lake trout or a very small budget should be allocated to do
so. Now we have evidence o f an economic gain from killing lake trout. While it only took
two years o f positive expenditure to kill the lake trout, an unrealistic outcome, those
losses in 2 years are made up for by the gains from fishermen. This is for the simple case
where the average visitor does not change his behavior when faced with a changing
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission
Figure 9: System With Optimal National Park Service Effort

(No Human Response)
1: Cutthroat Trout
2: Lake Trout
3: T F
2710631.01
4166.53
5.14
Ul
vO
2597902.29
2093.27'
4.14
2485173.57
0.00
3.14
0.00
3
Species
25.00
50.00
Years
75.00
100.00
8:20 PM 08/23/2000
ecosystem. Will this hold when we move to incorporating these important feedbacks?
What will happen when killing off lake trout is eliminated as a possibility?
Adding in feedbacks yields several interesting results. The first run o f simulations is
done with no limit on the number o f lake trout that can be killed in any one year. Once
again, we get a similar outcome as with no feedbacks. The park manager spends money on
pulse fishing o f lake trout. After two pulses, lake trout have been eliminated from
Yellowstone Lake. The cutthroat trout population thrives without lake trout feeding on
them and increases. However, just as with feedbacks before, as the park public good starts
to increase, the optimal amount o f time spent fishing by the average visitor declines. Even
when the cutthroat trout population increases, the incentive to fish more that comes from
a larger cutthroat population does not overwhelm the increased incentive to see the park
public good. Roads improve and the average visitor slowly stops fishing.
In order to stop lake trout from being eliminated, since evidence suggests we will
not be able to completely eliminate them, we start limiting the number of lake trout that
can be killed in one year. When this is done, the outcome starts to change. We still get
pulse fishing, but the park service cant eliminate lake trout from the system in two pulses.
The pulse fishing continues until the lake trout population can be killed. Once again lake
trout are eliminated from the ecosystem and cutthroat trout flourish. However, as the
160
Figure 10: System With Optimal National Park Service Effort

(Human Response)
1: Cutthroat Trout
1:
2.
2500000.00- m r / 2
12060.96
VC
4.75
1:
1708392.86
7280.48
3.16
1:
916785.72
2500.00
1.57'
2:
2:
0.00
Species
2: Lake Trout
30.00
3:TF
60.00
Years
90.00
120.00
9:43 PM 08/23/2000
public good increases, the optimal amount o f time spent fishing decreases again. The
average visitor decreases the amount o f time he dedicates to fishing until he is no longer
fishing at all.
We need to put further constraints on the number o f lake trout that can be netted
in any one year to insure lake trout wont be completely killed off. Putting further
constraints in, eventually these constraints become binding and lake trout can no longer be
killed off completely. When this happens, having a budget dedicated to killing lake for an
introductory period is optimal. However, after an introductory period where holding down
lake trout is done, spending money killing lake trout is abandoned and lake trout are
allowed to roam free. Lake trout populations once again grow, cutthroat trout populations
increase until critical mass is found at which time lake trout births decline and both species
decline. Without the average visitor altering his behavior, fishermen provide an important
service - killing lake trout. In this case, both lake trout and cutthroat trout populations can
survive. However, with the average visitor changing his behavior, less time is spent
fishing. Less pressure is put on lake trout and they end up killing off cutthroat trout. Both
species will die.
If we further limit the number o f lake trout that can be killed in one period, the
length of time spent controlling lake trout diminishes. Eventually, no money is spent
controlling lake trout and the manager avoids this fund altogether. No money is ever spent
killing lake trout and the system crashes after 200 years.
When we change the ecosystem to include both the average visitor and the national
park service manager optimizing, one o f two outcomes arises. Either lake trout are
completely killed o ff in the first few years or a budget to control lake trout is created for
162
the first few years until the added value o f controlling lake trout is not worth the cost and
the system is allowed to crash. A bang-bang solution arises - either kill lake trout o ff in a
few years or spend no money killing them.
Steady State Solutions
We now inspect the steady state solutions that will arise from the optimal path o f
expenditures killing lake trout. We know what the system looks like in the first few years,
we either kill lake trout or do nothing. What are the steady state solutions from these
outcomes? Since we have an optimal outcome as one o f two cases, we will have the
steady state solutions also one o f only two outcomes. Either lake trout can be eliminated
from Yellowstone Lake or they cannot. If they can, they are eliminated early and no
budget is needed afterward. The steady state solution is a zero budget killing lake trout
and all expenditures are used on the park public good. Cutthroat trout are allowed to
grow without threat o f lake trout predation. The roads in Yellowstone National Park are
improved with available funds going to that purpose. If lake trout cannot be eliminated
from the ecosystem, the steady state solution is once again for a zero budget dedicated to
killing lake trout. The park manager eventually allows the ecosystem to reach its own
equilibrium without interference. A permanent fixed budget spent killing lake trout is not
optimal.
Comparative Statics
163
The initial purpose o f a comparative static analysis was to determine how sensitive
the optimal amount of money spent was to various parameter values. How sensitive was
the outcome o f the model to the initial conditions? However, when parameter values were
allowed to change by as much as 60% up or down, similar outcomes were arising. A
permanent and positive fixed budget spent killing lake trout could not be found. The
steady state solution was still to eliminate the budget spent killing lake trout. A permanent
steady state solution with a fixed budget was not in the set o f optimal paths.
Since the permanent fixed budget was not found, changes to that budget cannot be
determined. The hypothetical permanent fixed budget does not exist in these simulations.
All outcomes, whether lake trout can or cannot be killed, lead to the same conclusion - a
fixed budget spent killing lake trout is not optimal.
This disturbing outcome needs to be taken with caution for three reasons. First,
with a social discount rate of 5%, activity beyond the first 20 years has no impact on the
outcome o f the model. Using a 5% discount rate assumes we are only interested in the
enjoyment o f Yellowstone National Park for our own generation. Second, existence values
are assumed to be zero. People who come to the park and drive around to see the core
attractions may care about preserving the native species o f the park. They may not get
enjoyment out o f fishing, but they may care about preserving cutthroat trout. Finally, birds
o f prey and grizzly bears may be affected by the elimination o f cutthroat trout as a species.
To see if a significant wedge can be created between the value o f Yellowstone
National Park with and without lake trout being introduced, three changes are made to the
current model. The social discount rate is reduced initially from 5% to 3% and then from
5% to 1%. By decreasing the discount rate, we allow for future generations to be
164
considered in our decisions on what to do with the ecosystem. Second, assume a positive
but small existence value on cutthroat trout o f SI per visitor to Yellowstone National
Park. Finally, let grizzly bears and birds o f prey populations decrease with the cutthroat
population. Assume a 5% decrease in cutthroat trout populations will be followed by a 5%
decrease in grizzly bear and bird o f prey populations. Making these changes, can we find a
significant wedge between the value of Yellowstone National Park with lake trout and
without lake trout?
Allowing for all o f these three changes, the total economic value o f Yellowstone
increases. W e compare the best-case and worst-case scenarios when we allow humans
feedbacks with no budget allocated to killing lake trout. If lake trout are never introduced,
we have an economic value o f Yellowstone National Park o f $2,336 billion. Now, the
introduction of lake trout into the ecosystem reduces the value o f the park by $74
million00'.
We have allowed for three changes in the system. We reduced the discount rate
from 5% to 1%. We added an existence value o f $1 per visitor. And we allowed birds o f
prey and grizzly bear populations to fall in direct proportion to the decline in cutthroat
trout populations. Before moving forward, lets first determine which changes have made
the largest impact on the size o f the wedge. The wedge between the best-case and worstcase outcomes has now risen to $74 million. Where is this $74 million coming from? Is
one o f the three changes responsible for a significant share o f this alone? Table 10
summarizes the results.
165
Table 11: Amount of wedge created by relaxing assumptions

Assumptions) changed
Wedge created
None (5% discount rate, no existence value,
$158,000
grizzly bears imd birds of prey populations

constant)
3% discount rate
$321,000
1% discount rate
$1,307,000
$ 1 Existence Value
$170,000
Grizzly bears and birds o f prey allowed to
$1,630,000
fall in direct proportion to cutthroat trout

3% discount rate and $1 existence value
$1,155,000
1% discount rate and $ 1 existence value
$57,000,000
1% discount rate and grizzly bears and birds
$18,734,000
o f prey populations allowed to fall in direct

proportion to cutthroat trout
1% discount rate, grizzly bears and birds o f
$74,000,000
prey populations allowed to fall in direct

proportion to cutthroat trout, and $ 1
existence value
To answer these questions, each o f the three changes are instituted individually to
determine if any one o f the three is most important. Before any changes are made, the
wedge5000 is $158,000. The first change is allowing the discount rate to change. To see if
small changes in the discount rate will alter the outcome, the discount rate is allowed to
decrease to 3% initially. The wedge created now is $321,000. When we allow the discount
rate to fall to 1%, the wedge increases to $1,307,000. Allowing for a $1 existence value
creates an $170,000 wedge. Allowing grizzly bears and birds o f prey populations to fall in
direct proportion to cutthroat trout populations creates a wedge o f $1,630,000. Initially, it
appears the discount rate and the fluctuation of populations are the most significant
determinants, but those two alone create a wedge o f $1,307,000 and $1,630,000. Those
are each less than 2% of the total wedge created by all three. Where is the additional
damage coming from? When we allow the discount rate to fall to 1% and grizzly bear and
birds o f prey populations to fall, still having a $0 existence value, we get $18,734,000 o f a
wedge - still only 25% of the wedge. What drives the difference in wedge is the
combination of a 1% discount rate which allows for future generations to be weighted
more equally with current generation and a $1 existence value. These two changes
together create a $57,000,000 wedge - a full 73% of the total wedge! This combination
creates the large damages from introducing lake trout into Yellowstone Lake. It is not the
fluctuation of the grizzly bear and bird o f prey populations that is driving the results001. A
small $1 existence value in conjunction with a 1% discount rate yields most of the wedge.
By making all three o f these changes to the model we create a significant wedge
between the value o f the park with and without lake trout, but can a positive fixed budget
167
spent killing lake trout be defended even with this large wedge? What is the smallest fixed
budget that will insure the cutthroat trout population will be maintained? Table 11
summarizes these results.
We compare the first-best scenario to several positive fixed budgets spent killing
lake trout to see what the benefits o f the fixed budget are. A fixed budget of $1,000 spent
killing lake trout each year keeps cutthroat trout alive for over 200 years and gets back
61% o f the $74 million lost when nothing is done. With a fixed budget o f $5,000,
168
Table 12: Fixed budgets, total value of the park, length of survival and level o f steady
state cutthroat trout population
Fixed Budget
Total discounted
Length o f cutthroat
Steady state
value o f YNP
trout survival
population o f
cutthroat trout
$0
$2,262 billion
200 years
$1,000
$2,307 billion
600 years
$5,000
$2,316 billion
800 years
$15,000
$2,310 billion
Infinite
900,000
$30,000
$2,301 billion
Infinite
1,400,000
$300,000
$2,128 billion
Infinite
2,300,000
169
cutthroat trout are maintained for 800 years and we get back 73% o f the $74 million lost
when nothing is done. A $15,000 budget keeps cutthroat trout alive as a species.
Maintaining a fixed budget o f $15,000 also gets back $48 million o f the $74 million lost
when nothing is done. N ot only does $15,000 keep cutthroat trout alive, but also it is
better than letting the system reach its own equilibrium. With a low discount rate and a
small but positive existence value, a fixed budget dedicated to maintaining cutthroat trout
as a species can be justified. The baseline case is still doing m ore economic damage than
doing nothing. $208 million is lost when $300,000 is spent each year. Now that we have
found a case where a positive fixed budget can be justified, can a $300,000 budget be
justified? What is being assumed when a budget larger than $15,000 is assumed?
Since there is no reason to assume grizzly bear or birds o f prey populations would
fall more quickly than the cutthroat trout population and evidence suggests they would
actually fall more slowly than cutthroat trout population5COU,,, we continue to assume
grizzly bear and birds o f prey populations fall at the same rate as the cutthroat trout
population. Making this assumption any stronger is unreasonable. We also keep the
discount rate at 1%. This is lower than the risk-free rate o f interest and reducing it any
further would be ignoring intertemporal differences in income. Instead, how we allow for
a stronger case to be made for a large budget killing lake trout is by increasing the
existence value for cutthroat trout and by allowing that existence value to be a pseudo
existence value (following the use o f a pseudoextinction) - where the value is contingent
not on the species having a positive population, but instead having the population be
beyond some threshold (Pseudo, 2000), (Novacek and Wheeler, 1992). In this case, the
pseudo existence value for cutthroat trout will be positive if the cutthroat trout population
170
is larger than X and will be zero if the cutthroat trout population is smaller than X. W e can
now increase the size o f the wedge and increase the optimal fixed budget so it is larger
than $5,000. The question now becomes, how large does the pseudo existence value need
to be and how large does X need to be to have a $300,000 fixed budget be better than a
$0 fixed budget?
Maintaining a $1 existence value and allowing the threshold value for the pseudo
existence value to change, a $300,000 fixed budget is not better than a $0 fixed budget
until the threshold is 1,800,000. With a threshold o f 1,800,000 for the pseudo existence
value, a fixed budget o f $300,000 will yield a net gain o f $302,000 to the discounted
present value o f Yellowstone National Park. We have now found a combination where a
S3 00,000 fixed budget does better than a $0 fixed budget, but can we find optimal fixed
budgets that are significantly larger than $5,000cuv?
By creating conditions that are most favorable for a large scale lake trout control
program, we can find significantly large fixed budgets that are optimal. In order to find a
large optimal fixed budget, we need to assume:
1) a 1% discount rate
2) Grizzly bear and birds o f prey populations decline in direct proportion to cutthroat
trout populations
3) A $20 existence value
4) Existence values take the form o f a pseudo existence value
5) The threshold for the pseudo existence value on cutthroat trout is 1,800,000
Under these severe conditions, the optimal fixed budget is $170,000. While this is still
significantly less than $300,000, it is much larger than $5,000. In order to get an optimal
fixed budget close to $300,000, we need to assume conditions 1, 2, 4, and 5 and the
pseudo existence value is $1,000,000 instead o f $1 or $20.
Although it is possible to find conditions where a fixed budget is optimal, supporting a
$300,000 fixed budget is difficult. The only way to support a $300,000 fixed budget given
this system is to assume a 1% discount rate, a direct and linear relationship between the
populations o f cutthroat trout, grizzly bears and birds o f prey, a pseudo existence value
instead o f an existence value, a threshold for the pseudo existence value of 1,800,000, and
a $1,000,000 pseudo existence value. While these assumptions lend support for a
$300,000 fixed budget, these assumptions are extreme and potentially unreasonable.
172
Chapter VII: Conclusion
This research creates an integrated system approach incorporating both an

economic system and an ecosystem in the same model. However, since ecosystems and
economic systems are dependent upon each other, simply modeling both systems does not
capture the behavior o f both systems. To more fully explain the situation in Yellowstone
National Park, the model contains both a representation o f the ecosystem in and around
Yellowstone Lake, a representation o f the economic system in the park, and also makes
explicit the links between the two systems. A depiction o f an economic system-ecosystem
problem such as this addressing all three in the same model answers two key questions;
first, does incorporating the links between ecosystems and economic systems yield
significantly different results than ignoring the links? And second, is there any economic
reason for man to intervene in the Yellowstone Lake ecosystem?
To determine the effect o f integrating the economic system and the ecosystem, the
model is run both with and without these explicit links. This research suggests ignoring
these links leads to significantly different results. For all cases explored the steady state
population o f cutthroat trout is different depending on whether the links are incorporated
or not. For one case in particular, ignoring these feedbacks between the systems suggests
cutthroat trout and lake trout can survive together while incorporating the feedbacks leads
to the collapse o f the ecosystem. While the divergence o f outcomes is not this severe in all
cases, the message is clear - ignoring these links between the systems leads to significantly
different results than incorporating them does.
173
Using this integrated approach, what can we learn about the specific case o f lake
trout in Yellowstone Lake? The results from this research can be used as a policy input for
the National Park Service. One main result o f this model is functional relationships
determining different choices on how the NPS spends its money and how these different
allocations might alleviate pressure on the native cutthroat trout population. National Park
Service managers, when determining what action to take in the Yellowstone Lake
ecosystem, can consider these functions.
While these results indicate the National Park Service has adopted an approach (a
fixed budget allocated to fighting lake trout in perpetuity), that is not optimal in long run
equilibrium, this is given many specific assumptions. First, it is assumed the only reason to
preserve cutthroat trout is to increase the economic value of Yellowstone National Park.
If the visitors to Yellowstone National Park would prefer to see money spent improving
roads, we will improve roads and ignore the lake trout presence in Yellowstone Lake.
Preserving native species in Yellowstone Lake may be a guiding principle o f the National
Park Service. If the National Park Service needs to preserve all native species in the park
regardless o f budget issues, we have a second reason to keep viable populations o f
cutthroat trout. In this case, we might instead ask how much it would cost to keep
cutthroat trout populations viable. However, the fixed budget o f Yellowstone National
Park indicates preserving a viable cutthroat trout population will not be done regardless o f
cost. Second, it is assumed the economic reasons examined here are complete. We assume
existence values are zero - visitors only value cutthroat trout if they are able to catch
them. If visitors want to preserve the ecosystem not for their own use, but for the
174
knowledge we have maintained the ecosystem, we need to incorporate these non-use

values as well.
Given these assumptions are correct, we have found an integrated solution. The
values o f our average visitor indicate the lake trout should either: be killed off as quickly '
as possible, or if that is not possible without also killing o f cutthroat trout, lake trout
should not be controlled as a permanent solution - a permanent fixed budget is not
optimal. We should eventually allow Yellowstone Lake to move to its own steady state,
even if that includes the elimination o f cutthroat trout from the lake. The value o f wellmaintained roads is higher than the value from being able to catch cutthroat trout. While
this result is disturbing, given the assumptions in the model, the current economic
evidence is clear - no money should be spent killing lake trout as part o f a permanent fixed
budget until the roads around the park are in perfect condition.
However, these strong and disturbing results can be tempered by relaxing a few
assumptions o f the model. When three changes are made: 1) the discount rate is reduced
from 5% to 1%, 2) grizzly bear and birds of prey populations are allowed to decline in
direct proportion to the decline in the cutthroat trout population and 3) the average visitor
has a positive existence value, the results also change. A significant wedge now exists
between the value o f the park with and without lake trout. With this significant wedge, we
now have a positive fixed budget yielding an increase in the welfare o f the average visitor
to the park.
Sensitivity analysis indicates which o f these three changes has the largest impact on
the size of the wedge. While none o f these three have a significant impact on the size when
considered alone, the combination o f two o f them account for most o f the wedge. A lower
175
discount rate combined with a small existence value creates a large disparity between the
value o f the park with and without lake trout.
Given a fixed budget will be used, we determine the optimal level o f that fixed
budget. Even with this significant wedge, the optimal fixed budget is much lower than the
current fixed budget the National Park Service is using. In order to determine what
conditions are necessary for a large fixed budget, we further relax the assumptions on the
existence value. By allowing for the use o f a pseudo existence value and allowing the size
o f the existence value to increase, we find conditions where a large fixed budget is
optimal. If the pseudo existence value is contingent on maintaining a large viable
population o f cutthroat trout (1,800,000) and the existence value is $20, the best fixed
budget increases by a factor o f 30. This is roughly half o f the current budget spent killing
lake trout. In order to get an optimal fixed budget equal to the current budget the
existence value needs to be greater than $1,000,000.
The initial results suggest a fixed budget to control lake trout is not optimal.
Relaxing some o f the assumptions o f the model allow us to find a fixed budget that does
increase the utility of the average visitor, but this is still far from the current budget
allocated to killing lake trout. The assumptions o f this model can be further relaxed to find
an optimal fixed budget that is close to the current budget, but the conditions necessary to
yield this outcome are extreme and potentially unreasonable.
176
Appendix I: Internet Experiment Screen Captures
The following pages are the screen captures o f the internet experiment as it
appeared for the participants in the experiment. The full instructions are given from
beginning to end. It should be noted the java screen captures for the practice round were
taken from Internet Explorer using Microsoft Paint. To run a practice round and to see
exactly how these instructions look to participants, the survey up through the practice
round can be found at : http .//august.uwvo.edu
177
T h e Y e llo w sto n e I n t e r a c tiv e S u rv e y

fro a tte
O a h r e r s ity o f W y o m ia f
D e p a r t i a c a t o f E c o n o m ic s fe P ia a a c *
Welcome. To begin. sa ta d a monitor size.
A new window wte open to begin the Interactive Survey. If the

window is not positioned com edy vrtien i appears, drag it to a better position. Please Note: This survey
requires that you use an up to date browse r (Netscape* 08 or higher, internet Explorer* or higher). Until
Netscape releases its NTS browse r, we recommend Internet Explorer for this survey (Some minor bugs have
appeared on N4.S. For cicfc here for d atait.).
The Yellowstone Interactive Survey, Website and Applets were designed by D avid Francis
178
INTRODUCTION.
You are about to participate in a 7-Step Survey for ffie Department of Economics and Finance at the University of Wyoming. "The purpose of diis
survey is to obtain information on how people view the wOdkfe in the Yelowstone area. If you M ow the instructions carefoty. you should earn a
considerable amount of money for your participation.
How much money you earn depends on how wed you perform. Thus, read the instructions carefody to earn th e most money. The survey should
take between 20 & 30 minutes. After you complete the surrey, you wffi be asked to M out a questionnaire. You must complete the questionnaire in
order to be paid.
Technical Note: This o nine survey is a Java applet and thus requires your browser to run a foirty recent version of Java. This applet h as been
tested on Internet Explorer 4.0 and later. On anything earfier than these versions, you may experience difficulties. We recommend upgrading
your browser:
C o n tin u e 1 ^
179
STEP 1: OPTIONS AND SITUATIONS

OPTIONS
Options are uncertain outcomes. Each option h as an outcome and the Hcefihood of realizing that outcome. You sal face two types of optionsMONEY and WILDLIFE.
MONEY OPTION: An example of a money option is having a 50% chance of winning S10 and a 50% chance of losing $5.
WILDLIFE OPTION: An example of a wildlife option is having a 50% chance of seeing a grizzly bear.
SITUATIONS
There are two situations: 1 and 2. The screen is split dovm the middle with Situation 1 on the left side of the screen and Situation 2 on the right
side of the screen. Though the two situations are presented together, they are separate. In both situations, you are presented two options. Thus,
the layout of the options and situations writ be:
SITUATION 1
Option A1
Option B1
SITUATION 2
Option A2
Option B2
1
l
^ I G o B ack
C o n tin u e !^
180

SITUATION 2
The two options in situation 2 are wOdBfe options. The wikJSfc options wil contain one or more of the foaowing animals:
WILDUFE CATEGORIES
AND SYMBOLS
IMAGE
DESCRIPTION
Birds of Prey
Indudina Birds of Prey m eans that you may se e an Osprey or a

PeScan. which prey on trout We use *B* to represent the Birds of Prey.
(B)
Including Cutthroat Trout m eans that you may catch a Cutthroat Trout.
wMch are the native trout species in YeSowstone Lake. We use *CT* to
represent (he Cutthroat Trout.
Including Lake Trout m eans that you may catch a Lake Trout, which are
non-native to YeSowstone Lake. We u se *LT to represent the Lake
Trout.
C utthroat Trout
(CT)
Lake Trout
(LT)
Grizzly B ears
Including Grizzly Bear m eans that you may se e a Grizzly Bear without
harm. We use "GB* to represent the Grizzly Bear.
(G)
Including Core Attractions m eans that you may se e 'roadside' sites,

such as. Old Faithful. YeSowstone Falls, etc.. We use *CA* to represent
the Cote Attractions .
Core A ttractions
(CA)
Go B a c k
C o n tin u e
181

SITUATION 2
The two options in situation 2 are widkfe options. The widMe options wM contain one or more of the (Mowing animals:
WILDLIFE CATEGORIES
AND SYMBOLS
DESCRIPTION
IMAGE
Birds of Prey
Including Birds of Prey m eans that you may see an Osprey or a

Pefican, which prey on tro u t WO u se *B* to represent the Birds of Prey.
(B)
Including Cutthroat Trout m eans that you may catch a Cutthroat Trout,
which are the native trout species in Yellowstone Lake. We u se *CT to
represent the Cutthroat Trout
Including Lake Trout m eans that you may catch a Lake Trout, which are
non-native to Yellowstone Lake. We use XT* to represent the Lake
Trout
C utthroat Trout
(CT)
Lake T rout
(LT)
Grizzly Bears
Including Grizzly B ear m eans that you may see a Grizzly Bear without
harm. W e use *GB" to represent the Grizzly Bear.
(G)
Including Core Attractions m eans that you may see 'roadside' sites,
such as. Old Faithful. YeSowstone Fads. etc.. We use *CA* to represent
the Core Attractions.
Core A ttractions
(CA)
Go B ack
C o n tin u e
182

WILDLIFE CATEGORIES AND SYMBOLS
REFERENCE SHEET
A reference sheet to help you remember what the wMBfe abbreviations represent is available on your browser. When you are running the survey,
a link to this reference sheet is located just below the survey.
^ 6 0
B ack
C o n tin u e
183

WILDLIFE CATEGORIES AND SYMBOLS
NUMBER OF SIGHTINGS AND/OR CATCHES.
W e show th s num ber of sa c h wildlife sighting o r catch In a n option by tb s number listed prior to th e wildlife symbol.
Example: 2G
m eans that you may se e two grizzly beam.
Example: 3CT. 1LT
m eans that you may catch three cutthroat trout and one lake trouL
^ G o B ack
C o n tin u e
184

OPTIONS IN SITUATION TWO
Hera is an example of hoar the options are ihspiayed in situation 2.
A2: 80% 1CT

B2: 39% 1B.1CA

Option A2 has an 80% chance of catching one Cutthroat Trout
Option B2 has a 39% chance of seeing one Bird of Prey and the Core Attractions
^ I G o Back
C o n tin u e
18S

OPTIONS IN SITUATION TWO
Another example:
A2: 66% 1CA

B2: 28% 1G.128

Option A2 has an 86% chance of seeing the Core Attractions
Option B2 has a 28% chance of seeing one Grizzly Bear and two Birds of Prey
^ I G o B ack
C o n tin u e
186

The screen win tie split down the middto. Situation i is on Vie left; situation 2 is on the right. The two situations are presented simultaneously but
are separate. The presentation of both situations looks R e:
SITUATION 1
SITUATION 2
A1: 88% S.00 12% * 25
B1: 25% 9.00 75% * 7$
Go B a c k
A2: 84% 1CT.2LT

82: 35% 1B.1CA.1G
C o n tin u e
187

BEGINNING MONEY BALANCE
FOR SITUATION 1:
You are given an amount of money. You may use part or al of your money to buy options. If you purchase an option, your money balance wil
decrease by the amount of the purehase price and you w i mm (he option. Once you own an option, it may be bought from you increasing your
money balance by the selling price. You keep any unspent portion of your beginning balance.
FOR SITUATION 2:
You are not given money and no buying or seBng wS take place in situation 2. Recal. situation 1 and 2 are separate.
SITUATION 1
A l: 82% 5.25 18%

81: 25% 9.00 75%
] 25
\ 75
SITUATION 2
A2: 71% 1CT.2LT
B2: 18% 1B.1CA.1G
i
!
i
Balance: 10.00
Go B a c k
C o n tin u e
188
STEP 2: BINDING CONTRACTS FOR CHOICES

INDICATING YOUR PREFERENCE
You are first asked to state which option you prefer in each situation.
Beginning with situation 1, you are asked "WHICH OPTION WOULD YOU PREFER A1 or B17* In other words, if you had to choose one of the
two options to face, which would it be? Indicate the option you prefer by typing either *A1* or *81*
By typing in your preferred option, you agree to a binding contract For example, suppose you indicate that you prefer option A1. If you are holding
option 81. you may have to trade the option you hold (81) far the option you prefer (A1) accept A1 and give up B1.
This will be repeated for situation 2, where you wR indicate wrtch option you prefer - A2 or B2. Indicate the option you prefer by typing either *A2*
or *B2." In situation 2. you are not agreeing to a binding contract by typing in your preferences.
^ G o B ack
C o n tin u e 1 ^
189
STEP 3: BINDING CONTRACTS FOR VALUES

INDICATING YOUR VALUES
Next you are asked how much you value each option. Your valuation of each option should b e th e d o la r and cent amount that you would be writing
to buy or sell the option, in other words, how much you are writing to pay to face (he option OR how much you are willing to receive to give up
facing the option.
Beginning in situation 1. you are asked "WHAT IS YOUR VALUE FOR OPTION A17* Indicate your value by typing the amount using d o lar and
cents (EX. 6.29). Then you are asked "WHAT IS YOUR VALUE FOR OPTION B IT Again, indicate your value by typing the amount using dollars
and cents.
By entering a dollar amount, you agree to a binding contract. For example, suppose you indicate that your value for option At is JX.XX. The
computer market may buy or sell option At for SXXX.
This will be repeated for situation 2. in which you writ b e asked your value for options A2 and 8 2 . Indicate your value of facing the wildlife option by
typing the amount using dollar and cents. In situation 2. you are not agree ing to a binding contract by typing in a dollar am ount
^ |G o B ack
C o n tin u e
190

After you indicate:
1.
which option you prefer in each situation, and
2.
your value for each option,
the computer market may buy. se l and/or trade options with you in situation 1 according to your binding contracts.
Go B ack
C o n tin u e
191
STEP 4: BUYING, SELUNG AND TRADING OPTIONS

For example, suppose you agreed to the fodowing binding contracts for situation 1:
you preferred option A 1 to B1
your value for option A1 is SX.XX
your value for option B1 is SY.YY
The computer market may do one or more of the foeowring:
buy or sen option B1 for your value of SY.YY
buy or sen option A1 for your value of SXXX
trade option A1 for option B1 (give up A t for your B1)
Go B ack
C o n tin u e
192

The com puter market win only act according to your binding contracts. Thus, the computer market only buys and sobs at your indicated values,
and only trades according to your preferences.
The com puter market (mill buy. sea and/or trade math you only if it is beneficial. If your sefbng price is too high, the market will not buy from you. if
your buying price is too low. the market rii not seB to you.
The computer market wiH only buy. sob and/or trade in situation 1. Thera is no buying. seCng and trading in situation 2.
Go B a c k
C o n tin u e
193

YOUR HOLDINGS OF OPTIONS
If the computer decides to sell you an option, the transaction win be indicated on the screen. For example, suppose the market sells you Option At
for 4.00. The following m essage wN a p p e a r T H E MARKET SELLS YOU OPTION A1 FOR 4.00." Also, the screen will indicate your money
balance decreased by the purchase price to $6.00 and that you now hold Option A.
Such as:
SITUATION 1
SITUATION 2
A1: 85% 5.25 15% '
A2: 75% 1CT.2LT

B2: 22% 1B.1CA.1G
81: 35% 9.00 65% ?5

Balance: -4.00 Holding: A
There are no transactions, and thus no balance or holding, in situation 2
Go B ack
C o n tin u e
194
STEP 4: BUYING. SELUNG AND TRADING OPTIONS

YOUR BEST STRATEGY
It is in your best interest to be accurate in your PREFERENCES and VALUES, that is. the best thing you can do is to b e honest.
If your preferences are incorrect, you are passing up opportunities that you prefer and face situations that you do not prefer. Suppose you prefer
option A1 to B1. but you indicate that you prefer option B1 over option A l. the com puter market may trade A1 for 81 even though you would rather
keep A1.
If your values are incorrect you are passing up opportunities that you prefer. For example, suppose you overstate your value for an option, the
computer market may sett you the option for the overstated price. Thus, you may pay a price more than you wish. If you understate your value for
an option, the computer market may buy the option for the understated price. Thus, you may sell for a price lower than you wish. Again, the best
strategy is to be honest and accurate in your preferences and valuations.
^1 Go B a c k
C o n tin u e
195
STEP 5: PLAYING THE OPTIONS

PLAYING THE OPTIONS
After any transactions in situation 1, you may or may not be holding an option in situation 1. If you hold an option, the outcome wilt be determined
at this time. The outcome wil be determined by a random draw.
For example, suppose you hold the (Mowing option:
78% 4.75
22% -1.00.
The random draw will determine the outcome where you have a 78% chance of winning $4.75 and a 22% chance of losing $1.00.
Go B ack
C o n tin u e
196
STEP 6: END OF ROUND

ENDING MONEY BALANCE
After the outcomes of the options held in situation 1 are determined from the random draws, your money balance will be adjusted by the am ount of
your earnings or losses.
Thus, your ending balance wiMbe:
the beginning balance.
LESS the amount spent on buying options.
PLUS the amount received from seBng options.
PLUS the earnings received from any wiinninQ option.
LESS the losses Incurred from any losing option.
The ending balance for situation 1 is presented on the screen. This concludes the first round of the experiment. Additional rounds will follow. The
subsequent rounds well be identical, but w have a new beginning balance in situation 1 and different options in both situations. There will be 10
rounds.
Go B ack
C o n tin u e
197
STEP 7: END OF SURVEY

TOTAL EARNINGS FROM SURVEY
Your total earnings win be the sum of the ending balances for all rounds.
^ G o B ack
C o n tin u e 1 ^
198

SUMMARY
1.
You are presented two separate situations simultaneously (situation 1 & 2). Each situation win present two options (option A and B).
2.
You first indicate which option you prefer in each situation (A or B).
3.
You then indicate your value for the two options in both situations.
4.
The computer market may buy. sefi or trade with you in situation 1 according to your indicated preferences and values.
5.
The outcome of any option you may own in situation 1 is determined with your money balance being adjusted according to your winnings
or tosses.
6.
End of round, next round wfl repeat with a new initial money balance in situation 1 and new options for both situations.
7.
A fte r
completion of the final round, your balance from each round wM be totaled and converted to real cash this is your earnings for the
survey.
Go B a c k
C o n tin u e
199

EXAMPLE
Next, you can practice one round of the survey. This practice round win not affect your earnings. Rather, it should help your understanding by
answering questions the instructions alone did not make dear.
Click h e r e to start the practice round.
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212
Appendix II: Stella Model Code
The following is the mathematical code that describes the graphical representation
o f the Stella model presented in Chapter VI and is the basis for the simulations run in this
paper. The code is listed for each simulation run in Chapter VI.
Simulation Code for Run 1-A: Figure 3
Birds_of_Prey(t) = Birds_of_Prey(t - dt) + (B_Births - B_natural_deaths) * dt

INIT Birds_of_Prey = 640
INFLOWS:
B B irth s = Birds_of_Prey*B_Birth_rate
OUTFLOWS:
B_natural_deaths = Birds_of_Prey*B_natural_death_rate
Cutthroat Trout(t) = Cutthroat_Trout(t - dt) + (CT_births - CT_killed_LT - CT_catch CT_natural_deaths - CT_killed_B - CT_kilIed_G) * dt
INIT Cutthroat_Trout = 2500000
213
INFLOWS:
C T births = CutthroatJTrout*CTJbirth_rate
OUTFLOWS:
CTJdlledLT = 3*Lake_Trout
CTcatch =
3000000*.0000000000000004355*SQRT(T_F)*Cutthroat_Trout*Cutthroat_Trout
CT_naturaI_deaths = Cutthroat_Trout*CT_natural_death_rate
C T k i l l e d B = 18*Birds_of_Prey
C T k i l l e d G = 50*GrizzlyB ears
Grizzly_Bears(t) = Grizzly_Bears(t - dt) + (G_births - G_natural_deaths) * dt
INIT Grizzly Bears = 50
INFLOWS:
Gbirths = Grizzly_Bears*G_birth_rate
OUTFLOWS:
G n atu rald eath s = GrizzIy_Bears*G_natural_death_rate
Lake Trout(t) = Lake_Trout(t - dt) + (LT births - LT_kiIled - Human_LT_catch LT natural deaths) * dt
INIT Lake_Trout = 0
INFLOWS:
LT_births = Lake_Trout*LT_birth_rate*DDFIt
214
OUTFLOWS:
L T killed = SQRT($_LT)*Lake_Trout*Lake_Trout*.0000001694
H u m a n L T c a tc h = 3000000*.000000000004089*SQRT(T_F) *Lake_Trout *Lake_Trout
L T n a tu ra ld e a th s = L a k e T rout* L T n a tu ra ld e a th ra te
Sum_of_Discounted_Utility(t) = Sum_of_Discounted_Utility(t - dt) + (du) * dt
INIT Sum_of_Discounted_UtiIity = 0
INFLOWS:
du = SUM(Total_Utility*EXP(-r*TIME))
X(t) = X(t - dt) + (X gained - X Jo st) * dt
INIT X = 310
INFLOWS:
X_gained = .0000116667*SQRT($_X)*XA.994
OUTFLOWS:
X Jo st = .035 *X
S_LT = 0
$_T = 10040000
$_X = S T - S L T
Birds_viewed = SQRT(T_F+.5 *T_X)*Birds_of_Prey*Birds_of_Prey*.00000000242
B_Birth_rate = .06
B n a t u r a l d e a t h r a t e = .06
BUtility = Birds_viewed* 1.31
215
CT_birth_rate = .042*DDFct
CT_naturaI_death_rate = .0277
C T U tility = CT_catch*2.22/3000000
D D F ct= 1581/SQRT(Cutthroat_Trout)
DDFlt = .01 CutthroatJTrout/CTJdlledJLT
G_birth_rate = 0.06
G_natural_death_rate = 0.06
G_Utility = G_viewed*0.28
G v ie w ed = SQRT(T_F+.5*T_X)*Grizzly_Bears*Grizzly_Bears*.000001897
LT_birth_rate = .5
LT_natural_death_rate = 0.02
L T U tility = Human_LT_catch*-.013/3000000
r = .05
Sx = ,00000006855*SQRT(T_X)*X*X
T otal_Utility = (B_UtiIity+CT_Utility+G_UtiIity+LT_UtiIity+X_Utility) *3000000
T_F = 4.14
T_t = 1440
T_X = T_t-T_F
X_Utility = Sx*23.75
Simulation Code for Run 1-B: Figure 4
216
Birds_of_Prey(t) = Birds_ofPrey(t - dt) + (B_Births - B_natural_deaths) * dt

INFLOWS:
B_Births = Birds_of_Prey*B_Birth_rate
OUTFLOWS:
B n a tu ra ld e a th s = Birds_of_Prey*B_natural_death_rate
Cutthroat_Trout(t) = Cutthroat_Trout(t - dt) + (CT_births - CT_killed_LT - CT_catch CT_natural_deaths - CT_killed_B - CT_killed_G) * dt
INFLOWS:
C T births = Cutthroat_Trout*CT_birth_rate
OUTFLOWS:
CT_killed_LT = 3*Lake_Trout
CT_catch =
C T n atu rald e ath s = Cutthroat_Trout*CT_natural_death_rate
C T k ille d B = I8*Birds_of_Prey
217
CTkil ledG = 50*Grizzly_Bears

Grizzly_Bears(t) = GrizzIy_Bears(t - dt) + (GJbirths - G_natural_deaths) * dt
INFLOWS:
Gbi rt hs = Grizzly_Bears*G_birth_rate
OUTFLOWS:
G_natural_deaths = Grizzly_Bears*G_natural_death_rate
Lake_Trout(t) = Lake_Trout(t - dt) + (LT_births - LT_kilIed - Human_LT_catch LT_naturaI_deaths) * dt
INIT Lake_Trout = 0
INFLOWS:
LT_births = Lake_Trout*LT_birth_rate*DDFlt
OUTFLOWS:
LTkilled = SQRT($_LT) *Lake_Trout *Lake_Trout *.0000001694
HumanLTcatch = 3000000*.000000000004089*SQRT(T_F)*Lake_Trout*Lake_Trout
LT_natural_deaths = Lake_Trout*LT_naturaI_death_rate
Sum_of_Discounted_Utility(t) = Sum_of_Discounted_Utility(t - dt) + (discoutned_utility)
* dt
INIT Sum_of_Discounted_Utility = 0
218
INFLOWS:
discoutnedutility = SU M (TotaIJJtility *EXP(-r*TIME))
X(t) = X(t - dt) + (Xjgained - X Jo st) * dt
INIT X = 310
INFLOWS:
Xjgained = .0000116667*SQRT($_X)*XA 994
OUTFLOWS:
X J o st = .035*X
$_LT = 0
$_T = 10040000
S_X = $_T-$_LT
B irdsview ed = SQRT(T_F+. 5 *T_X)*Birds_of_Prey*Birds_of_Prey*.00000000242
B B ir th r a te = .06
B_natural_death_rate = .06
B JJtility = Birds_viewed* 1.31
CT_birth_rate = ,042*DDFct
CT_natural_death_rate = .0277
C T JJtility = C T c a tc h *2.22/3000000
DDFct = 1581/SQRT(Cutthroat_Trout)
DDFlt = .01 *Cutthroat_Trout/CT_kilIed_LT
G_birth_rate = 0.06
219
G U tility = G_viewed*0.28
G v iew ed = SQRT(T_F+.5*T_X)*Grizzly_Bears*Grizzly_Bears*.000001897
LT_birth_rate = .5
L T U tility = Human_LT_catch*-.013/3000000
r - .05
Sx = .00000006855*SQRT(T_X)*X*X
T otaJU tility = (B_UtiIity+CT_Utility+G_Utility+LT_Utility+X_Utility)*3000000
T_F = (T_t-T_t/(1+(.000000000000000946*Cutthroat_Trout*Cutthroat_Trout.000000000000053 l57*Lake_Trout*Lake_Trout+.000000003*Birds_of_Prey*Birds_of_
Prey+000000531*Grizzly_Bears*Grizzly_Bears)A2/(.0000000015*Birds_of_Prey*Birds_
of_Prey+.0000002655*Grizzly_Bears*Grizzly_Bears+.000001628*X*X)A2))
T_t = 1440
T_X = T_t-T_F

220
INFLOWS:
OUTFLOWS:
Cutthroat_T rout(t) = Cutthroat_Trout(t - dt) + (CTJrirths - CT_kilIed_LT - C T catch C T n atu rald eath s - CT_killed_B - CT_killed_G) * dt
INFLOWS:
CTbirths = Cutthroat_Trout*CT_birth_rate
OUTFLOWS:
CTc a t c h =
CT natural deaths = Cutthroat_Trout*CT_naturaI_death_rate
CT_killed_B = 18*Birds_of_Prey
CT_killed_G = 50*Grizzly_Bears
GrizzIy_Bears(t) = GrizzIy_Bears(t - dt) + (G births - G_natural_deaths) * dt
221
INFLOWS:
G b irth s = Grizzly_Bears *G_birth_rate
OUTFLOWS:
G n a tu ra ld e a th s = GrizzIy_Bears*G_natural_death_rate
Lake Trout(t) = Lake_Trout(t - dt) + (LT_births - L TIdlled - H u m a n L T c a tc h LT_natural_deaths) * dt
INIT Lake_Trout = 2500
INFLOWS:
L T b irths = Lake_Trout*LT_birth_rate*DDFIt
OUTFLOWS:
LT_kilIed = SQRT($_LT)*Lake_Trout*Lake_Trout*.0000001694
HumanLTcatch = 3000000*.000000000004089*SQRT(T_F)*Lake_Trout*Lake_Trout
LTnaturaldeaths = Lake_Trout*LT_naturaI_death_rate
INFLOWS:
du = SUM(Total_UtiIity*EXP(-r*TIME))
X(t) = X(t - dt) + (X ^gained - X Jo st) * dt

INIT X = 310
222
INFLOWS:
X_gained = .0000116667*SQRT($_X)*XA.994
OUTFLOWS:
X J o s t = .035*X
$_LT = 0
$_T = 10040000
$_X = S T - S L T
B irdsview ed = SQRT(T_F+.5*T_X)*Birds_of_Prey*Birds_of_Prey*.00000000242
B_Birth_rate = .06
B n a tu r a ld e a th r a te = .06
B JJtility = Birds_viewed* 1.31
CT_Utility = CT_catch*2.22/3000000
DDFlt = .01*Cutthroat_Trout/CT_killed_LT
G_birth_rate = 0.06
G JJtility = G_viewed*0.28
G v iew ed = SQRT(T_F+.5*T_X)*Grizzly_Bears*Grizzly_Bears1,t.000001897
LT_birth_rate = .5
L T U tility = H um anJJT_catch*-.013/3000000
223
r = .05
Sx = .00000006855*SQRT(T_X)*X*X
T otaIJJtility = (B_Utility+CT_Utility+G_Utility+LT_Utility+X_UtiIity)*3000000
T_F = 4.14
T_t = 1440
T_X = T_t-T_F
Birds_of_Prey(t) - Birds_of_Prey(t - dt) + (B_Births - B_natural_deaths) * dt

INFLOWS:
OUTFLOWS:
224
Cutthroat_Trout(t) = Cutthroat_Trout(t - dt) + (CT_births - C T k ille d L T - CT_catch CT_natural_deaths - CT_killed_B - CT_killed_G) * dt

INFLOWS:
OUTFLOWS:
C T k i l l e d L T = 3*Lake_Trout
CTca t c h =
3000000*.00000000000000043 55*SQRT(T_F)*Cutthroat_Trout*Cutthroat_T rout
CT_natural_deaths = Cutthroat_Trout*CT_natural_death_rate
Grizzly Bears(t) = Grizzly_Bears(t - dt) + (G_births - G_natural_deaths) * dt
INFLOWS:
Gbirths = Grizzly_Bears*G_birth_rate
OUTFLOWS:
Gnat ural deat hs = Grizzly_Bears*G_natural_death_rate
2 25
Lake Trout(t) = Lake_Trout(t - dt) + (LTbirths - LTkilled - Human LT catch LT_naturaI_deaths) * dt

INIT Lake Trout = 2500
INFLOWS:
L T b irth s = Lake_Trout*LT_birth_rate*DDFlt
OUTFLOWS:
L T killed = SQRT($_LT)*Lake_Trout*Lake_Trout*.0000001694
H u m a n L T c a tc h = 3000000*.000000000004089*SQRT(T_F)*Lake_Trout*Lake_Trout
L T n a tu ra ld ea th s = Lake_Trout*LT_natural_death_rate
* dt
INFLOWS:
discoutned_utility = SUM(TotaI_UtiIity*EXP(-r*TIME))
X(t) = X(t - dt) + (X gained - X_lost) * dt
INIT X = 310
INFLOWS:
X^gained = .0000116667*SQRT($_X)*XA.994
OUTFLOWS:
X J o st = .035 *X
226
$_LT = 0
S T = 10040000
$_X = $_T-$_LT
B irds_viewed = SQRT (T_F+. 5 *T_X)*Birds_ofPrey *Birds_of_Prey *.00000000242
B B i r t h r a t e = .06
BUtility = B irdsview ed* 1.31
DDFlt = .01 *Cutthroat_T rout/CT_ki!led_LT
G b i r t h r a t e = 0.06
GUtility = G_viewed*0.28
G v ie w e d = SQRT(T_F+.5*T_X)*Grizzly_Bears*Grizzly_Bears*.000001897
L T b i r t h r a t e = .5
LTUtility = Hum an_LT_catch*-013/3000000
r = .05
Sx = 00000006855*SQRT(T_X)*X*X
T otal_Utility = (B_Utility+CT_Utility+G_Utility+LT_Utility+X_Utility) *3000000
227
T_F = (T_t-T_t/(1+(.000000000000000946* C u tth ro a tT rout*Cutthroat_T rout000000000000053 l57*Lake_Trout*Lake_Trout+.000000003*Birds_of_Prey*Birds_of_

Prey+.000000531 *Grizzly_Bears* Grizzly_Bears)A2/(.0000000015*Birds_of_Prey*Birds_
of_Prey+.0000002655*GrizzIy_Bears*Grizzly_Bears+.000001628*X*X)A2))
T J = 1440
T_X = T_t-T_F
X JJtility =Sx*23.75
Birds_of_Prey(t) = Birds_of_Prey(t - dt) + (B Births - B_natural_deaths) * dt

INIT Birds_of_Prey 640
INFLOWS:
BB irth s = B ird s o f_Prey *B_B irth_rate
OUTFLOWS:
Bn a tu ra ld e aths = Birds_of_Prey*B_natural_death_rate
Cutthroat Trout(t) = Cutthroat_Trout(t - dt) + (CT_births - CT_killed_LT - CT catch CT_natural_deaths - CT_killed_B - CT_killed_G) * dt
228
INFLOWS:
CT births = Cutthroat_Trout*CT_birth_rate
OUTFLOWS:
C T k i l l e d L T = 3*Lake_Trout
C T c a tc h =
GrizzlyBears(t) = Grizzly_Bears(t - dt) + (G_births - G_natural_deaths) * dt
INIT GrizzlyBears = 50
INFLOWS:
G_births = Grizzly_Bears*G_birth_rate
OUTFLOWS:
G_natural_deaths = GrizzIy_Bears*G_naturaI_death_rate
LakeTrout(t) = Lake_Trout(t - dt) + (LT_births - LTJcilled - H u m a n L T c a t c h LT_natural_deaths) * dt
229
INFLOWS:
LTbirths = Lake_Trout*LT_birth_rate*DDFlt
OUTFLOWS:
LT killed = SQRT($_LT)*Lake_Trout*Lake_Trout*.0000001694
H u m a n L T c a t c h = 3000000*.000000000004089*SQRT(T_F)*Lake_Trout*Lake_Trcut
LT_natural_deaths = L a k e T rout*LT_natural_death_rate
INFLOWS:
du = S UM(T otal_Utility *EXP(-r*TIME))
X(t) = X(t - dt) + (X gained - X_lost) * dt
INIT X = 310
INFLOWS:
X_gained = .0000116667*SQRT($_X)*XA.994
OUTFLOWS:
X J o st = ,035*X
$_LT = 300000
S_T = 10040000
S_X = S T - S L T
Birds_viewed = SQRT(T_F+.5*T_X)*Birds_of_Prey*Birds_of_Prey*.00000000242
230
B B i r t h r a t e = .06
B_Utility = Birds_viewed* 1.31
C T b i r t h r a t e = .042*DDFct
DDFIt = .01 CutthroatJTrout/CT_killed_LT
G_birth_rate = 0.06
G n a t u r a l d e a t h r a t e = 0.06
G_viewed = SQRT(T_F+.5*T_X)*Grizzly_Bears*Grizzly_Bears*.000001897
LT_birth_rate = .5
LTUtility = Human_LT_catch*-.013/3000000
r = .05
Sx = .00000006855 *SQRT(T_X)*X*X
T otalU tility = (B_Utility+CT_Utility+G_Utility+LT_Utility+X_UtiIity)*3000000
T_F = 4.14
T_t = 1440
T_X = T_t-T_F
231

INFLOWS:
OUTFLOWS:
B n atu rald eath s = Birds_of_Prey*B_natural_death_rate
Cutthroat Trout(t) = Cutthroat_Trout(t - dt) + (CT_births - CT_killed_LT - CT_catch CT natural deaths - CT_kiIIed_B - CT_killed_G) * dt
INIT Cutthroat Trout = 2500000
INFLOWS:
OUTFLOWS:
232
C T c a tc h =
3000000*.0000000000000004355* SQRT (T_F)*Cutthroat_T rout*Cutthroat_T rout
CT_killed_B = 18*Birds_of_Prey
C T k i l l e d G = 50 *GrizzlyB ears
Grizzly Bears(t) = Grizzly_Bears(t - dt) + (G_births - G na tura ld ea th s) * dt
INFLOWS:
G births = Grizzly_Bears*G_birth_rate
OUTFLOWS:
G natural deaths = Grizzly B ears *G natu ral death rate
Lake_Trout(t) = Lake_Trout(t - dt) + (LTJbirths - LT killed - Human LT catch LT_natural_deaths) * dt
INFLOWS:
OUTFLOWS:
LTkilled = SQRT($_LT)*Lake_Trout*Lake_Trout*.0000001694
Human_LT_catch = 3000000* .000000000004089* SQRT(T_F)*Lake_Trout*Lake_Trout
233
L T n a t u r a l d e a t h s = Lake_T rout *LT_naturaI_death_rate

* dt
INIT Sum_of_Discounted JJtility = 0
INFLOWS:
discoutned_utility = SUM(Total_UtiIity*EXP(-r*TIME
X(t) = X(t - dt) + (X_gained - X Jo st) * dt
INIT X = 310
INFLOWS:
X ^ ain e d = .0000116667*SQRT($_X)*XA.994
OUTFLOWS:
X J o s t = .035 X
S_LT = 300000
$_T = 10040000
$_X = S T - S L T
B irdsview ed = SQRT (T_F+. 5 *T_X) *Birds_of_Prey *Birds_of_Prey * .00000000242
B_Birth_rate = .06
CT_birth_rate = ,042*DDFct
C T n a t u r a l d e a t h r a t e = .0277
234
DDFlt = .01 *Cutthroat_Trout/CT_killed_LT
G_birth_rate = 0.06
GUtility = G_viewed*0.28
G v i e w e d = SQRT (T_F+. 5 *T_X) *G rizzlyBears *Grizzly_B ears *.000001897
LT_birth_rate = .5
r = .05
Sx = .00000006855 *SQRT(T_X)*X*X
T otal_Utility = (B_Utility+CT_Utility+G_UtiUty+LT_Utility+X_Utility)*3 000000
T_F = (T_t-T_t/( 1+(.000000000000000946*Cutthroat_Trout*Cutthroat_Trout.000000000000053157*Lake_Trout*Lake_Trout+.000000003 *Birds_of_Prey*Birds_of_
Prey+000000531*GrizzIy_Bears *Grizzly_B ears) A2/(.0000000015*Birds_of_Prey*Birds_
ofPrey+.0000002655*Grizzly_Bears*Grizzly_Bears+.000001628*X*X)A2))
T_t = 1440
T_X = T_t-T_F
235
Birds_of_Prey(t) = Birds_of_Prey(t - dt) + (B_Births - B n a t u r a l d e a t h s ) * dt

INIT B i r d s o f P r e y = 640
INFLOWS:
B B irth s = Birds_of_Prey*B_Birth_rate
OUTFLOWS:
B n a tu ra ld e ath s = Birds_of_Prey*B_natural_death_rate
Cutthroat Trout(t) = Cutthroat_Trout(t - dt) + (CT_births - CT_killed_LT - CT_catch CT_natural_deaths - CT_killed_B - CT_kilIed_G) * dt
INIT Cutthroat Trout = 2500000
INFLOWS:
C T b irths = Cutthroat_Trout*CT_birth_rate
OUTFLOWS:
C T catch =
3000000* .00000000000000043 55* SQRT(T_F)*Cutthroat_Trout*Cutthroat_Trout
C T n atu rald eath s = Cutthroat_Trout*CT_natural_death_rate
236
CT_killed_B = l8*Birds_of_Prey
C T k i l l e d G = 50 *Grizzly_B ears
Grizzly_Bears(t) = Grizzly_Bears(t - dt) + (G_births - G natural deaths) * dt
INIT GrizzIyBears = 50
INFLOWS:
G b i rt h s = Grizzly_Bears*G_birth_rate
OUTFLOWS:
G_natural_deaths = G rizzlyB ears *G n a t u r a i d e ath rat e
Lake Trout(t) = Lake_Trout(t - dt) + (LT births - LT_killed - Human LT catch LT natural deaths) * dt
INFLOWS:
OUTFLOWS:
LT_killed = SQRT($_LT)*Lake_Trout*Lake_Trout*.0000001694
Human_LT_catch = 3000000* .000000000004089*SQRT(T_F)*Lake_Trout*Lake_Trout
L T n a tu ra ldea ths = Lake_Trout*LT_natural_death_rate
Sum_of_Discounted_Utility(t) = Sum_of_Discounted_UtiIity(t - dt) +
(Discounted Utility) * dt
237
INFLOWS:
Discounted_Utility = SUM(T o talU tility *EXP(-r*TIME))
X(t) = X(t - dt) + (X^gained - X Jo st) * dt
INIT X = 310
INFLOWS:
X^gained = .0000116667*SQRT($_X)*XA.994
OUTFLOWS:
X J o s t = ,035*X
$_LT = $_T-S_T/( 1+((.000004164*Lake_TroutA2)*(((.0000000000000058*TJ?A.5*Cutthroat_Trout*TIME+.0000000000001063 *T_FA.5*Lak
e_T rout)*EXP(-r*TIME))+(-K 1*TEME+K1 *TIME*TIME*.02.005 *K 1*TIME*TIME*TIME+.001667*K2*TIME*TIME,001667*TIME*((.0000000000001063*T_FA.5*Lake_Trout+.0000000000000058*T_FA.
5 *Cutthroat_Trout*TIME)*EXP(-r*TIME))*TIME+(l .02 *TIME+. 005 *TIME*TIME)*(-.00000000000000193 *TJFA5 *Cutthroat_T rout.000000000000000177*T_FA.5 *Lake_Trout*TIME)*EXP(-r*TIME)*TIME)/(-1TIME*(33.2*Cutthroat_TroutA-.5+.0477)+.005*TIME*TIME-(33.2*Cutthroat_TroutA,5-.0277)*(-.02*TIME-.005*TIME*TIME)))+(((.0000000000001063 *T_FA.5 *Lake_Trout+.0000000000000058*T_FA.5 *Cutthroat_Tro
ut*TIME)*EXP(-r*TIME)*TIME*(l+33.2*Cutthroat_TroutA-5-
238
0277)*TIME)+3 *TIME*(-.00000000000000193 *T_FA.5*Cutthroat_Trout.000000000000000177*T__FA.5*Lake_Trout*TIME)*EXP(r*TIME)*TIME+3 *K 1*TlME*TIME+K2*TIME+33 2*Cutthroat_TroutA5*TIME*TIME*K2-.0277*TIME*TIME*K2)/(-l-33.2*Cutthroat_TroutA-.5*TIME-
.0077*TIME-33.2*Cutthroat_TroutA-.5*TIME-.0277*TIME)*(-.02*TIME.005*TIME*TIME)A2)/(.00002334*XA2*(.000003256*T_XA.5*X*TIME*EXP(r*TIME)+K5 *TIME)/(1+.035*TIME))A2)
$_T = 10040000
$_X = $_T-$_LT
Birds_viewed = SQRT(T_F+. 5 *T_X)*Birds_of_Prey*Birds_of_Prey*.00000000242
B_Birth_rate = .06
B_Utility = Birdsviewed* 1.31
C T b i r t h r a t e = 042*DDFct
C T JJtility = CT_catch*2.22/3000000
DDFIt = .01 *Cutthroat_Trout/CT_killed_LT
G_birth_rate = 0.06
G_UtiIity = G_viewed*0.28
G_viewed = SQRT(T_F+.5*T_X)*Grizzly_Bears*Grizzly_Bears*.000001897
K1 = 0 *
239
K2 = 0*
K5 = 0*
* set to a variety o f values, including set so the shadow values o f the species is equal to
zero at the end point for an optimal control model without an infinite life.
L T b i r t h r a t e = .5
r = .05
Sx = ,00000006855*SQRT(T_X)*X*X
TotalJJtility = (B_Utility+CT_Utility+G_Utility+LT_Utility+X_Utility)*3000000
T_F = 4.14
T_t = 1440
T_X = T_t-T_F
240

INIT B i r d s o f P r e y = 640
INFLOWS:
B B i r t h s = Birds_of_Prey*B_Birth_rate
OUTFLOWS:
B_natural_deaths = Birds_of_Prey*B_naturaI_death_rate
Cutthroat_Trout(t) = Cutthroat_Trout(t - dt) + (CT_births - CT_killed_LT - CT_catch CT_natural_deaths - CT_killed_B - CT_killed_G) * dt
INFLOWS:
C T b irth s = Cutthroat_Trout*CT_birth_rate
OUTFLOWS:
C T c a tc h =
3000000* .0000000000000004355*SQRT(T_F)*Cutthroat_T rout*Cutthroat_T rout
CT_kilIed_G = 50*Grizzly_Bears
Grizzly Bears(t) = Grizzly_Bears(t - dt) + (G_births - G_natural_deaths) * dt
241
INIT GrizzlyJBears = 50
INFLOWS:
G_births = G rizzIyB ears* G b i r t h r a t e
OUTFLOWS:
G n a t u r a l d e a th s = Grizzly_Bears*G_natural_death_rate
Lake_Trout(t) = Lake_Trout(t - dt) + (LTjbirths - LT_kilIed - Human_LT_catch LT_naturaI_deaths) * dt
INIT Lake_Trout = 2500
INFLOWS:
LTbirths = Lake_Trout*LT_birth_rate*DDFlt
OUTFLOWS:
LT_killed = SQRT($_LT) *Lake_Trout *Lake_Trout *.0000001694
Human_LT_catch = 3000000* .000000000004089* SQRT(T_F)*Lake_Trout*Lake_Trout
LT_natural_deaths = Lake_Trout*LT_naturaI_death_rate
Sum_of_Discounted_UtiIity(t) = Sum_of_Discounted_Utility(t - dt) +
(Discounted_Utility) * dt
INFLOWS:
242
Discounted_Utility = SUM(Total_UtiUty*EXP(-r*TIME
X(t) = X(t - dt) + (X^gained - X Jo st) * dt
INIT X = 310
INFLOWS:
X_gained = .0000116667*SQRT($_X)*XA.982
OUTFLOWS:
X J o st = ,035*X
$_LT = $_T-$_T/( 1+((.000004164*Lake_TroutA2)*(((0000000000000058*T_FA.5*Cutthroat_Trout*TIME+.0000000000001063*T_FA.5*Lak
e_Trout)*EXP(-r*TIME))+(-K 1*TIME+K 1*TIME*TIME*.02.005 *K 1*TIME*TIME*TIME+.001667*K2*TIME*TIME.001667*TIME*((.0000000000001063 *T_FA.5*Lake_Trout+.0000000000000058*T_FA.
5*CutthroatJTrout*TIME)*EXP(-r*TIME))*TIME+(l02*TIME+.005*TIME*TIME)*(-.00000000000000193*T_FA5*Cutthroat_Trout.000000000000000177*T_FA.5 *Lake_Trout*TIME)*EXP(-r*TIME)*TIME)/(-1TIME*(33.2*Cutthroat_TroutA-.5+.0477)+.005*TIME*TIME-(33.2*Cutthroat_TroutA.5-.0277)*(-.02*TEME-.005*TIME*TIME)))+(((.0000000000001063 *T_FA.5*Lake_Trout+.0000000000000058*T_FA.5^Cutthroat_Tro
ut*TIME)*EXP(-r*TIME)*TIME*(l+33.2*Cutthroat_TroutA-5.0277) *TIME)+3 *TIME*(-.00000000000000193 *T_FA.5 *Cutthroat_Trout.000000000000000177*T_FA.5*Lake_Trout*TIME)*EXP(r*TIME)*TIME+3 *K 1*TIME*TIME+K2*TIME+33.2*Cutthroat_TroutA-
243
.5 *TIME*TIME*K2-.0277*TIME*TlME*K2)/(-1 -33.2*Cutthroat_TroutA-. 5 *TIME0077*TIME-33.2*Cutthroat_TroutA-.5*TIME-.0277*TIME)*(-.02*TlME005*TIME*TIME)A2)/(.00002334*XA2*(.000003256*T_XA.5*X*TIME*EXP(r*TIME)+K5*TIME)/(l+.035*TIMEA2)

$_T = 10040000
$_X = $_T-$_LT
Birds_viewed = SQRT(T_F+.5*T_X)*Birds_of_Prey*Birds_of_Prey*.00000000242
B_Birth_rate = .06
C T b i r t h r a t e = ,042*DDFct
CT_naturaI_death_rate = .0277
DDFlt = .01 *Cutthroat_Trout/CT_killed_LT
G_birth_rate = 0.06
G v ie w ed = SQRT(T_F+.5*T_X)*Grizzly_Bears*Grizzly_Bears*.000001897
K1 = 0 *
K 2 = 0*
K5 = 0*
LT_birth_rate = .5
244
LT_naturaI_death_rate = 0.02
LT_Utility = Human_LT_catch*-,013/3000000
r = .05
Sx = 00000006855*SQRT(T_X)*X*X
TotalUtility = (B_Utility+CT_Utility+G_Utility+LT_Utility+X_Utility) *3000000
T_F = (T_t-T_t/( 1 +(.000000000000000946*Cutthroat_Trout*Cutthroat_Trout.000000000000053157*Lake_Trout*Lake_Trout+.000000003*Birds_of_Prey*Birds_of_
Prey+,000000531*Grizzly_Bears*Grizzly_Bears)A2/(.0000000015*Birds__of_Prey*Birds_
of_Prey+.0000002655*Grizzly_Bears*Grizzly_Bears+.000001628*X*X)A2))
T_t = 1440
T_X = T_t-T_F
245
References
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Notation Sheet
Notation Specific to the General Model Used in Chapter m
mz = Park expenditures to reduce the predator species population

mx = Park expenditures on non-lake public good
Tz = Time spent catching predator species
Ty = Time spent catching prey species
T \ = Time spent enjoying the park public good
Tt = Total time available in park
Z = Predator species population
Y = Prey species population
X = State o f the park public good
hz = harvest function for predator species
hy = harvest function for prey species
Vx = viewing function for the park public good
Z , Y , X = state equations representing population changes in ecological system (and the

park public good) over time
1/k = population o f predator species that can be supported by 1 prey species
Notation Specific to the Complete Yellowstone Lake Model
mu = National Park Service expenditures to reduce the lake trout population

mx = National Park Service expenditures on non-lake Yellowstone public good
mp = Total available National Park Service funds
Tf = Time spent fishing (by average visitor)
Tx = Time spent in Yellowstone, but not at Yellowstone Lake
Tt = Total time available in Yellowstone National Park
CT = Cutthroat trout population (in Yellowstone Lake)
LT = Lake trout population (in Yellowstone Lake)
B
= Population o f Birds of Prey (Ospreys and White Pelicans at Yellowstone Lake)
G = Grizzly Bear population (at Yellowstone Lake)

hct = harvest function for cutthroat trout
hu = harvest function for lake trout
Sb - viewing function for seeing birds of prey
Sg = viewing function for seeing grizzly bears
Sz = household production function for enjoying non-lake Yellowstone public good
r = social discount rate
t = time
U(hct,...) = average visitors utility function
C T ,L T ,B ,G , X = state equations representing population changes in ecological system
(and the park public good) over time
257
1/x = population o f lake trout that can be supported by one cutthroat trout
1/y = population o f birds o f prey that can be supported by one cutthroat trout (assuming G
= 0)
1/z = population o f grizzly bears that can be supported by one cutthroat trout (assuming B
= 0)
c = index for cutthroat trout

1= index for lake trout
g = index for grizzly bears
b = index for birds o f prey
x = index for the park public good
258
1 While
the size o f the budget has grown, the inflation adjusted budget has remained almost
constant over the last 20 years.
" While congestion is not the focus o f my work, it is explored in chapter 4.
1,1 In addition to existence values that are contingent on extinction, the existence value may
also be contingent on pseudo-extinction. Instead o f the existence value disappearing if the
species is completely extinct, the existence value would disappear if the species population
fell below some threshold.
,v It should be noted the amount o f money the manager spends on the species problem can
enter in the state equation for either species. The manager can either spend money helping
the prey species or hurting the predator species.
v This specific functional form (increasing returns to species populations and decreasing
returns to time spent at the activity) was taken to insure interior solutions o f the
individuals optimization model.
V1 We assume constant birds o f prey populations in order to solve the dynamic portion o f
the optimization model. For this reason, this first order condition, although correct in its
nature, is without purpose for analyzing this model.
vu Just as with birds o f prey, grizzly bear populations are assumed constant.
vm With grizzly bear populations assumed constant, the change in grizzly populations is
equal to 0 at all points in time.
LXWith bird o f prey populations assumed constant, the change in bird o f prey populations
is equal to 0 at all points in time.
* Standard procedure for solving this system requires a system be solved by row reduction
to eliminate all but 1 parameter in each equation. The row reduction technique requires
each parameter to be known in order to eliminate them from multiple equations. Since
these functions are changing as the species populations change, this can not be done for
this case unless an algorithm was found to systematically solve these functions as the
parameters change.
XI This specific functional form was taken to insure interior solutions for the managers
optimization model.
a does not necessarily have to equal V2 , as long as 0 < a < 1. For the simulations, a = V2 .
3a" Once again, grizzly bear populations are assumed constant. Therefore equation (39) is
assumed true at all points in time.
x,v Once again, birds o f prey populations are assumed constant. Therefore equation (40) is
assumed true at all points in time.
Either framing or order effects in the design o f the experiment could cause the spike in
the 8th round.
!CVI Assume no stocking o f cutthroat trout is done.
xvu Chris Nations
259
xv';>catchable size cutthroat trout account for approximately 5% o f the entire population.
Lake trout eat an average o f 50-60 cutthroat trout per year, o f which an average o f 3 will
be catchable size.
* osprey consume about 0.88 lbs o f fish per day and white pelicans consume about 2 lbs
o f fish per day. 88.5% o f their diet is cutthroat trout, which leaves 0.708 and 1.77 lbs o f
cutthroat trout eaten per day by osprey and white pelicans. Over the 4-5 months these
birds are by Yellowstone Lake, they will eat between 84.96 - 116.82 lbs and 212.4 265.5 lbs o f fish each year for osprey and white pelicans. With the average cutthroat trout
being 11 inches long and Vz lb, between 170 and 235 cutthroat trout for osprey and
between 425 and 530 cutthroat trout for white pelicans. With only 5% o f the cutthroat
trout population being catchable size, this leaves approximately 10 catchable size being
eaten by osprey and approximately 20 catchable size cutthroat trout being eaten by white
pelicans each year.
** *** osprey consume about 0.88 lbs offish per day and white pelicans consume about 2
lbs offish per day. 88.5% o f their diet is cutthroat trout, which leaves 0.708 and 1.77 lbs
o f cutthroat trout eaten per day by osprey and white pelicans. Over the 4-5 months these
birds are by Yellowstone Lake, they will eat between 84.96 - 116.82 lbs and 212.4 265 .5 lbs o f fish each year for osprey and white pelicans. With the average cutthroat trout
being 11 inches long and Vz lb, between 170 and 235 cutthroat trout for osprey and
between 425 and 530 cutthroat trout for white pelicans. With only 5% o f the cutthroat
trout population being catchable size, this leaves approximately 10 catchable size being
eaten by osprey and approximately 20 catchable size cutthroat trout being eaten by white
pelicans each year.
500 These values are given for current chances o f seeing each o f the species in the park after
netting out the fixed effects o f time and individual fixed effects.
The value o f seeing a grizzly bear may be artificially low from framing effects in the
experiment. After giving the participant information about the seriousness o f the lake trout
problem, the participant may be inflating the values o f catching a cutthroat trout and
lowering the values o f seeing a grizzly bear. This value may also be low since some
visitors may fear encountering a bear.
XXJ" This value is calculated in the same manner as the average visitor to the park was. An
average visitor will spend 99% of his time exclusively driving around the park, while only
1 % will do any fishing at all. Since the average visitor collected in our data spends a
positive amount of time fishing, he is averaged against a second visitor type who does not
spend any time fishing. 99% o f the average visitor comes from this second visitor type.
The value o f driving around the park is taken so the optimal amount o f time spent fishing
by the average visitor in the simulation model will equal the average amount o f time spent
by the average visitor in Yellowstone National Park - so the average visitor in the
simulation model will currently be maximizing his utility.
16,615 cutthroat trout were caught and kept, 178,490 were caught and released. Since
data was collected on fish caught and not caught and released, 16,615 was used. Using
178,490 does not significantly change the results. A wedge o f only about $2 million was
created when the value o f a catch was treated exactly the same as the value o f a catch and
260
release. This is much smaller than the wedge created by shifting the existence value and
the discount rate.
xxv The social discount rate is allowed to take values o f 3% and 1% in the comparative
statics section to determine the sensitivity o f total park value to the discount rate.
xxv' This cost is estimated from the current renovation project underway over the next 30
years. It is estimated annual maintenance costs will be a little over $4 million once roads
are restored to good condition, however, once this happens, the budget dedicated to roads
will also be reduced, allowing the same inflexibility between what it costs to maintain
roads and what is available.
5v While this budget comes from funds that are earmarked for these projects, the
available funds from entrance fees and special use fees can be shifted from one project to
another (execsummary, 2000). This gives the necessary flexibility to treat this part o f the
budget as flexible for use between road improvement and killing lake trout.
CVU1 A 1,000-year time horizon is used to give the system enough time to reach a steady
state.
Fishermen at YNP have an extremely high level o f income (Kerkvliet and Nowell,
1998). The current expenditures killing lake trout may then be subsidization o f fishermen
by visitors who drive around the park.
With a total value o f $2,262 billion.
'oou The wedge is defined as the difference between the values from the best-case and
worst-case scenarios.
In addition, allowing grizzly bear and birds of prey populations to fall in direct
proportion to the cutthroat trout population is a strong assumption. It assumes neither
grizzly bears nor birds o f prey have any option other than cutthroat trout for survival.
Relaxing this assumption would allow a positive population o f grizzly bears and birds o f
prey to exist even with no cutthroat trout. It is more likely grizzly bears and birds o f prey
populations would decline with the declining cutthroat trout population, but not nearly as
fast.
xx"a Evidence showing both grizzly bears and birds of prey have consumption options other
than lake trout, which would allow their survival even in the face o f cutthroat trout being
eradicated from Yellowstone Lake, exists (Varley and Schullery, 1995), (Ruzycki and
Beauchamp, 1996), (Davenport, 1974), (Diem and Pugesek, 1994), (Blanchard, 1980).
X!0UTThis research has shown the optimal budget allocation is to use higher funds early and
let the system reach its own equilibrium. In this instance, optimal is used to describe the
best fixed budget given a fixed budget is the only alternative.
261

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INFORMATION TO USERS

Bell & Howell Information and Learning

INTEGRATION OF ECONOMIC SYSTEMS AND ECOSYSTEMS: A DYNAMIC

UMI Number. 9993742

Bell & Howell Information and Learning Company

To The Graduate School:

Jason F. Shogren, Chairman

Departmento f Economics and Finance

Stephen E. Williams, Dean, The Graduate School

Appendix I: Internet Experiment Screen C aptures.................................................... 177

Table 8: Data Collected With Sources for Species-Human Interaction......................130

Figure 4: System Without Lake Trout (Human R esponse)....................................... 145

Figure 7: System With Constant National Park Service Effort

integrity of the greater Yellowstone ecosystem. Maintaining viable species populations

This research combines an ecosystem model and an economic model in one

4) Has research specific to Yellowstone National Park or ecological research touched

5) What does the literature have to say about exotic invaders?

H as research specific to Yellowstone N ational P ark or ecological research touched issues

allows no direct regulation o f fishermen, but instead direct regulation o f species

Chapter HI: Explanation of General Modeling Technique

Use o f Household Production Functions

hz = hz(Tz, Z) - harvest function for the predator species

hy = hy(Ty, Y) - harvest function for the prey species

Sx = SX(TX, X(mx)) - viewing function for the public good

State Variables fo r Species Populations

Equation (6) describes the change in prey population (T ), which is a function of

The two important concepts described in this chapter, household production

Chapter IV: Complete Yellowstone Lake Model

F ull M odel Specified

M axjui(ha (T/ ,C T ) A (T f ,LT),St (T/ ,TB),Sl (T/ ,T,.G).Sr(T.,X(.mJ)]e "'dt

s.t. CT = C T (C T L T , B, G,h ct)

mu = National Park Service expenditures to reduce the lake trout population

= social discount rate

A verage V isitors Role - Individual's Optimization M odel (static)

(dU/dhcXdhct/dTf) + (dU/dh,t)(dh/dTf) + (dU/dSb)(dSb/dTf)

(dU/dSx)(dSx/dTx) + (dU/dSb)(dSb/dTx) + (dU/dSg)(dSg/dTx) = X

with I indexing populations o f the various species I e (c, 1, g, b, x)

Congestion and the Choice o f Functional Forms

(dU/dhct)(dhct/dTf) + (dU/dhlt)(dh,t/dTf) + (dU/dSb)(dSb/dTf) + (dU/dSg)(dSg/dTf) =

Tf = Tx {[a(dU/dSx)Xp + abX(dU/dSb)Bp + agx(dU/dSg)Gp]1/(ct-,V [a^dU/dhcOCT3 +

Tx* = Tt / 1 + {[a^dU/dhcOCT3 + au(dU/dh)LTp + ab((dU/dSb)Bp + a^dU /dS ^G 3]'1^ ' 0/

[a^ d U /d S ^X 3 + abx(dU/dSb)Bp + agx(dU/dSg)Gp] 1/(al)}

Since Tf* = Tt - Tx*,

Tf* = Tt - Tt / 1 + {[acKdU/dMCT* + a(dU/dhu)LT(J + a(dU/dSb)Bp + a^dU/dS^G*5]

1/(a IV [axx(dU/dSx)Xp + abx(dU/dSb)Bp + agJt(dU/dSg)Gp]-1/(a-,)}

Tf* > 0, and Tx* > 0

dTf*/dCT = Tt [a^dU /dS^X * + abx(dU/dSb)Bp + ajfX(dU/dSg)Gp]1/a

As expected, as the populations o f each species in the ecosystem increase, the

dU/dTx = kx (Tx)(al) (X)2 + kb (Tx)(a'l>(B)2 + k, (Tx)(a,) (G)2

Differentiating (21) and (22) yields:

d2U/dTf2 = (a - 1) ka (Tf)(a*2) (CT)2 + ( a - l)k,t (Tf){-2) (LT)2 + ( a - 1) kb (Tf)(a*2) (B)2+ (a

Since k; > 0, Tf > 0 , 1 > 0, and ( a - 1) < 0, then

d2U /dT 2 < 0

d2U/dTx2 = ( a - 1) kx (Tf)('2) (X)2 + (a - l)kb (Tf)(a-2) (B)2 + (a - 1) kg (Tf)(a'2) (G)2

Since k; > 0, Tx > 0 , 1 > 0, and ( a - I) < 0, then

National Park Services Role - N PS Optimization M odel (dynamic)

Max\U[(ha (Tf ,CT),hl,(Xf ,LT),Sb( T , X , B ) , S s(Tf ,T G \S '(T x, X ( m M e " ' dl

mx} are control variables

H = U(hct(Tf,CT), h|t(Tf,LT), Sb(Tf,Tx,B), Sg(Tf,Tx,G), Sx(X, Tx,mx) e _,,dt +

dH/dmu = (dU/dhct)(dhct/dCT)(dCT/dLT)(dLT/dmu) e^-t- (dU/dh,t)(dh/dLT)(dLT/dm,t) e*

time, dG = 0, G = 0, dB = 0, B = 0 regardless o f time. Making these changes to equation

dH/dmit = (dU/dhct)(dhct/dCT)(dCT/dLTXdLT/dmu) e^-f- (dU/dhlt)(dhIt/dLT)(dLT/dmu) e*

A1 = [-(dU/dhctXdhc/dCT) -(dU/dhu)(dhu/dLT)(dLT/dCT) -(dU/dSb)(dSb/dB)(dB/dCT) (dU/dSg)(dSg/dG)(dG/dCT)] e^ - k x(dCT /dCT ) - U { d C T t d C T ) - U { d B ! d C T ) ^(dG ldC T)

dTf/dCT = Tt [a^dU /dS^X + abx(dU/dSb)Bp + ajfX(dU/dSg)Gp]1/a

d2U/dTf2 = (a - 1) ka (Tf)(a2) (CT)2 + ( a - l)k,t (Tf){-2) (LT)2 + ( a - 1) kb (Tf)(a2) (B)2+ (a

AS = -(dU/dS)(dS/dX) e"1 - X5(d X /d X )