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Accounting for unobserved time‐varying quality in recreation demand: An application to a Sonoran Desert wilderness

Environmental variables can be important factors in recreation demand. Analysts wishing to quantify environmental quality impacts face the difficult issue of isolating them from unobserved variables. Quality changes may occur in space, varying between sites, or in time, varying between occasions. In this zonal travel cost analysis, fixed effects are used to control for time‐varying factors at a single site, adapting a technique previously applied to control for unobserved factors across sites. Graphical analysis and a second stage regression on time‐specific constants are used as diagnostic tools to guide a demand specification directly including both environmental and access predictors. The approach is developed and applied using a multiyear panel data set for a wilderness destination in the Sonoran Desert featuring a perennial stream. Empirical estimates are also provided for the recreational value of a trip day to a Sonoran Desert site with instream flows.