The economic impact of canoeing

Seeing the path on the rocks worn by millions of passing feet on an old portage just upstream of Ottawa reminds you that what is now a short detour off a recreational walking trail was once the trans-Canada highway. Canoes once had a very large economic impact in Canada. Now they have very little.

In the 10 years I have been canoe camping, I have spent about $3,000 on two canoes, probably another $2,000 on other gear, making $5,000 over 10 years, or $500 per year. But this represents an initial investment, and most of my equipment will last another 10 years, so make that $300 per year on gear.

The variable costs are even smaller. Fees in Reserve Faunique La Verendrye are about $7.50 per person per night (not bad for usually getting your own private beach, or even own private lake, just 3 hours' drive from Ottawa). Say $100 per year. The cost of gas driving to and from the put-in is my biggest expense: say another $200.

So my total annual cost of canoeing is about $600 per year. And that's the economic impact of my canoeing. Assume I am representative, multiply by the number of canoeists in Canada, and you get a rough estimate of the economic impact of canoeing in Canada today.

If I switched to powerboating instead, I would have a much bigger economic impact.

I didn't count food and drink, since I would be eating and drinking even if I stayed home. But maybe I shouldn't count the gas and camping equipment either either, since if I didn't go canoeing I would probably go car camping instead, and spend the same on gas and tents. Perhaps I shouldn't even count the canoes, because if I didn't go canoeing, I would have spent that same $3,000 on something else, like a bigger car for car camping, or maybe airfares for foreign holidays, or maybe furniture for the house, or something.

In fact, does my canoeing have any economic impact?

By the same argument, if I switched to powerboating would that have any economic impact? I would spend maybe $1,000 per year more on my aquatic pursuits, but $1,000 per year less on non-aquatic pursuits. I do have a budegt constraint, after all.

In fact, does anything I spend my income on have any economic impact, in aggregate? How I spend my income affects where the economic impact will be felt (canoe vs powerboat manufacturers), but not in aggregate. Even if I lend my income to someone else, who spends it, that leaves aggregate economic impact the same. Unless I simply stored cash under the mattress? (Stop it Nick; you are drifting back into monetary theory; this is supposed to be about canoeing!)

Bottom line: almost anything we do, with the possible exception of hoarding media of exchange (I said "Stop it Nick"!), doesn't have any aggregate economic impact.

I would not justify the importance of canoeing, or powerboating, or anything else, in terms of its "economic impact". It's not the amount of money we spend that matters; it's the enjoyment we get out of it that matters. In fact, the true economic benefits of my activity, the consumer surplus it generates, is measured by the enjoyment I get out of it minus the amount of money I spend on it. Consumer surplus is the maximum amount of money I would be willing to pay to canoe the amount I do, minus the amount I actually pay.

(Plus you need to add producer surplus, which is the amount of money producers earn, minus the minimum amount they would need to earn to be willing to supply that quantity of the good).

Suppose I get exactly the same amount of pleasure out of canoeing as powerboating, at half the cost. Then the economic benefits of canoeing vs powerboating are exactly equivalent to an invention that produces the same computer chip at half the cost of the previous one.

Which is all to say I'm planning a short canoe trip, when the weather looks good, and may be quiet for a few days.

Comments

[David]

Interesting perspective on economic impact. I think it's often used to describe tourist events (such as the Olympics) however. So your canoeing might have a positive "economic impact" on the community around the lake you go canoeing in, because your canoeing there causes you to buy gas and food and pay the camping fee in that community, instead of elsewhere. Likewise, the Olympics in Vancouver might be taking people's tourist dollars away from Disneyland and Hawaii, so if your frame of reference is Vancouver, you'd find a positive economic impact. If your frame of referene is the whole world, then you've got a very good point and its questionable whether the Olympics, or canoeing, have a positive economic impact.

[Alex Plante]

Are you more productive the rest of the year, because of your annual canoe-camping trips?

In my case, I'd go crazy if I didn't go up north to a quiet lake a few times a year.

[Nick Rowe]

David: yes. An economic impact assessment can tell us *where* (both geographically, and in what goods) the economic impact will be, if the pattern of demand changes. But "economic impact" and "economic benefits" are different.

Alex: I think it helps keep me (relatively) sane, though don't know about productive. I'm still just amazed that it is so easy to get to quiet places in this country. Provided you have a canoe, that is. And, strange as it may sound, canoeing a lake or river in Canada is the equivalent to walking a rural footpath in England.

[pointbite]

"Suppose I get exactly the same amount of pleasure out of canoeing as powerboating, at half the cost. Then the economic benefits of canoeing vs powerboating are exactly equivalent to an invention that produces the same computer chip at half the cost of the previous one."

I almost didn't write this comment, I know this post is just some thoughts off the top of your head and I appreciate that (feel free to ignore this comment because we've had this discussion already) but a computer chip is a bad analogy, it's used not just for pleasure but to produce (making cows with cows, remember?) the same is not true of a typical conoeing trip. The economic benefit of half priced computer chips is probably exponentially higher than half priced canoeing, including pleasure. Not to mention the number of computer chips produced vs canoeing trips...

[Nick Rowe]

There's no way I can ignore that comment, pointbite! It is so absolutely fundamental and central to the whole discipline of economics.

(And the same point is perhaps half-echoed in Alex's question above, when he asked whether canoeing makes me more productive.)

I think it was Jevons who said some thing like "Consumption is the end (purpose/reason) for all economic activity". We produce so we can consume; we do not consume so we can produce. We work so we can canoe better; we don't canoe so we can work better (even if it may help, accidentally).

There is no qualitative difference between an invention that halves the cost of computing power and an invention that halves the cost of boating pleasure. The invention that halves the cost of computing power is only a good invention insofar as, directly or indirectly, it reduces the cost of the consumption activities that give us pleasure. If it weren't for the fact that more people use computers than use boats (which makes for a quantitative difference), I would actually prefer the boating invention, since the consequences for consumer pleasure are more direct, and therefore more clear and certain. There's many a slip betwixt cup and lip in the computer example.

Now, it is true that some people enjoy their work (I do). But at the margin, we don't enjoy that extra hour of work. If we did enjoy it, we wouldn't need to be paid top perform it, but would choose to work longer and longer hours, until eventually we did not enjoy the extra hour of work. The purpose of that extra hour's work, both individually and socially, is to create the extra income, or production, to make extra consumption possible. At the margin, we produce in order to consume.

(200 years ago, canoeing was work at the margin, and people paddled canoes in order to produce and consume other goods. Now people no longer get paid to canoe, but pay to canoe, and the number of hours spent canoeing has decreased, and the marginal utility of canoeing has increased, from negative, to positive.)

Whatever is the ultimate purpose of all that computing power anyway? If it doesn't directly or indirectly, give us pleasure, it is worthless.

[pointbite]

I would rather cut in half the price of a hammer than a birdhouse, because a hammer is capital that can be used to produce not only a birdhouse more cheaply but many other things. Yes those other things will ultimately be consumed too, but isn't that "ripple" effect a qualitative difference? Same thing with microchips and a canoe. Granted cutting a single input cost in half won't always cut the final cost in half, but maybe it will if the savings allow you to scale up production, and either way the benefits of half-priced microchips relative to canoes? I mean that's not even close, unless you're REALLY enjoying that canoe trip and there's more to the story we're not hearing! ;)

[reason]

"Bottom line: almost anything we do, with the possible exception of hoarding media of exchange (I said "Stop it Nick"!), doesn't have any aggregate economic impact."

Depends whether aggregate means Canada or the whole world doesn't it? And aren't you actually (surprisingly) ignoring environomental externalities?

[Nick Rowe]

Yep. "aggregate" must mean the whole world in this case. Yes, I was ignoring environmental (and all other) externalities, to concentrate on arguments about "economic" impacts.

[pointbite]

Here's another analogy, would you rather cut the cost of a video game in half, or cut the cost of the computer on which the video game is played by the same amount? Either way you get the same "pleasure dividend" in terms of video games, but a cheaper computer is much more than just a machine on which to play video games. When video games are not being played, maybe it's helping with research, or programming skills, or even other forms of entertainment like videos and music. You can get much more bang for the buck. That's a definite qualitative difference.

[reason]

Nick Rowe,
environmental externalities ARE economic impacts! It seems we disagree about scope. What is your definition of economics?

[reason]

This reminds me of a statement made in the 70s by a big wig in the RBA (Reserve Bank of Australia) that economists should worry talk about opportunity costs and environmentalists should worry about their side of things and politicians should make the dicisions - implicitly putting economists and environmentalists in opposition. I couldn't disagree more. If economists are going to make arguments based on maximising social utility, then environmental externalities belong integrally to their scope of interest. Otherwise they are just the mouthpiece of the finance industry.

[Nick Rowe]

reason: Agreed. That's why I put "scare quotes" around '"economic" impact'. In other words, I just wanted to stay out of that debate, because it was quite separate from the issue I wanted to argue.

pointbite: consumption is good only insofar as it increases utility/happiness/pleasure (or whatever you want to call whatever it is that people want); production is good only insofar as it increases consumption; investment is good only insofar as it increases future production (producer durables) or it increases future consumption (consumer durables). Sure, the size of the effect matters.

[Scott Sumner]

Nick, I can't stay away from macro, even if you can. I don't see the saving/hoarding distinction. Hoarding reduces velocity. Saving reduces interest rates, which reduces velocity. If the central bank inflation targets, neither decision affects NGDP. If the central bank targets the money supply, both reduce NGDP. Or did I miss something?

[Nick Rowe]

An increased desire to hoard IS a reduction in desired velocity. An increased desire to save may or may not CAUSE an increased desire to hoard and reduction in desired velocity.

For example, would an increased desire to save in the form of antique furniture cause an increased desire to hoard? Price of antiques rises, so the real rate of return on antiques falls, so the opportunity cost of holding zero-interest money falls? Maybe.

[Scott Sumner]

That distinction is fine. I was just worried you were making a stronger point. Some anti-Keynesians make the point that if the public tries to save more it cannot reduce AD, because more saving means more investment. As long as you allow for indirect effects I am fine with the distinction you make.

(And how could I have expected anything different, as I am probably more anti-Keynesian that you?)

[Nick Rowe]

Scott: agreed. But I am arguing against those Keynesians (including perhaps Keynes himself) who don't appreciate that savings only causes a recession via that very particular indirect channel.

The strange thing is, the whole approach that emphasises the importance of monetary exchange, the medium of exchange, monetary disequilibrium and quantity constraints lies somewhere on the (overlapping?) boundary between Monetarism and Keynesianism. That's where I find myself.

[westslope]

Nick, Are your canoes a Chestnut Prospector design?

The original Chestnut Prospector was used for geological exploration in northern rivers. You may have noticed that the canoe is much more stable when loaded with 50kg or more. Back in the day, those cedar-ribbed, canvas covered canoes were abandoned at the end of the drift because the canoes were too expensive to fly out.

Have canoed and fished several times in La Verendrye and surrounding area. Recommend that you consider paddling to the Bustard Islands in Georgian Bay sometime.

You might also be interested in canoeing the Gwaii Haanas in the southern Queen Charlotte Islands (QCI) off the coast of British Columbia. Canoed 9 days there a few years ago. We were pinned down for 6 out of 9 days because of nasty storms (with 40 to 50 knot winds). If you go, your "economic impact" and "carbon footprint" will be enormous, thanks to the huge distances that must be travelled just to get to the QCI.

BTW, Margaret Wente has a fun column about canoe-camping in a recent issue of the Globe and Mail.

[Nick Rowe]

westslope: I have paddled a classic cedar canvas 17ft prospector once. Lovely big canoe, but too heavy for me to lift (I wasn't really designed for portaging!). My normal loads (paddlers plus packs) are about 330lbs tandem and 210lbs solo, so those big expedition boats are just too big. I have a kevlar Scott Elite tandem, and a kevlar Swift Osprey solo.

La Verendrye is about my limit, with the wind and waves on the larger lakes. Nervous of getting wind-bound, or dumping and hypothermia (especially in May. I think Georgian Bay of QCI might be outside my comfort and skill zone. Being an immigrant, I came to canoeing rather later in life than most Canadian paddlers, and just hope that my slowly advancing skill can keep up with my slowly advancing age.

[westslope]

My original chestnut prospector is 16 feet long, has a keel, weighs about 75 lb. dry, and probably weighs over 90 lb. when soaking wet. I can still portage it over 1/2 km without resting but one of these days as I slowly but surely age I'll probably go "up market" and get a prospector design in a Kevlar composite material that should knock about 25 lb. off the dry weight. The prospector had at the time a unique rocker design that makes it very stable under load.

QCI would be a big project and you better know what you are doing but the Bustard Islands in Georgian Bay should be relatively easy and safe if you choose your crossing days carefully. The water is clear to about 12 to 14 feet deep. No people. A refreshing absence of motor boats. No biting flies. Blueberries. ....