that an on-site recreation values and off-site habitat preservation benefits can 

 be combined in estimating the total social benefits provided by a unique 

 lacustrine resource (Mono Lake in California). Thus direct valuation of habitat 

 is useful and valid for a variety of habitat types (actually Mono Lake has a 

 sizeable wetlands, so it is a peculiarly multi-faceted natural resource). 



Prairie pothole wetlands are a limiting factor in migratory waterfowl 

 production (Hammack and Brown 1974). They could be valued directly in much the 

 same fashion as streamflow levels if waterfowl were always hunted on prairie 

 potholes; however, only a fraction of the waterfowl are bagged on prairie 

 potholes, rendering the direct valuation approach useless for imputing habitat 

 provision values to prairie potholes. Wetlands have been valued as providers 

 of habitat for sport (migratory waterfowl) and commercial (oysters, blue crab, 

 and menhaden) target species. Normally, the same habitat should have a greater 

 marginal value product in the production of species that are harvested for sport 

 than for species that are commercially harvested. The reason is that labor is 

 usually the most important factor of production; a larger fraction of the gross 

 receipts for the gross national product accrue to labor than to any other factor 

 of production (Solow 1957). Labor is provided as part of the leisure activity 

 for a sport harvesting activity, so it is considered to be a free good when 

 estimating the marginal value product of habitat. 



Thus labor cost is not explicitly treated as a factor of production in 

 sport harvesting production function models (Hammack and Brown 1974), thereby 

 increasing the fraction of total outlays (will ingness-to-pay) that can be 

 allocated to habitat and other factors of production. However, labor must be 

 treated as a factor input in production function models of commercial harvesting 

 activity (Lynn, Conroy, and Prochaska 1981); labor's share sharply diminishes 

 the share of gross receipts that can accrue to habitat and, roughly, the 

 estimated marginal value product of habitat. Also, the value of a species is 

 generally greater when bagged for sport (Peters, Ahrenholz, and Rice 1978) than 

 when taken commercially. 



The distinction between gross and net economic activity is an important 

 issue in the estimation of an economic production function. The sport fishing 

 versus commercial harvesting example shows clearly that the appropriate treatment 

 of a factor of production is often more than a matter of the correct accounting 

 procedure. The distinction between gross and net outputs and inputs in a social 

 production process is integral to many economic analyses, and in many specific 

 instances reflects considerable imagination and creativity by the analyst. 



The distinction between net benefits conferred by the site and total 

 expenditures incurred by the community underlies the example given earlier in 

 which total travel cost expenditures for a specific site might rise, but net 

 benefits conferred might fall. The distinction between net and gross values is 

 fundamental in economic analysis, and it is often a bit more complex than 

 noneconomists suppose. In this particular (travel cost) example, there is 

 obviously only one correct distinction between gross and net benefits and gross 

 and net value. But, the definition of the good or service produced by some 

 economic activity may depend on the purpose of the analysis or on data 

 limitations. For example, travel time to-and-from the site can be treated as 

 a factor input in a household production function producing an on-site 



