Process, Regulation Requirements, and Financial Analysis for Transforming Rural Land to Recreational Sportfishing Waters

Abstract

This study illustrates the process and regulation requirements for transforming rural land in South Alabama into recreational waters. Moreover, the goal of this study is to evaluate the financial feasibility of addition of sportfishing water to an ongoing outdoor recreational facility. Also, the feasibility of 40–acre and 20–acre start-up sportfishing operations was evaluated. The data analyzed were obtained through inputs from outdoor industry contractors and consultants, recreational water owners and managers in Alabama, and state and national environmental regulatory agencies. This study is arranged from an outdoor recreational industry standpoint. The information therein and results are shown so that the general public, rural land owners, recreational water owners and outdoor industry can comprehend and benefit. Furthermore, this paper examines a specific case study of a 40–acre sportfishing water in the state of Alabama utilized under a membership criterion to generate additional income for an existing outdoor recreational facility. The analysis illustrates that an outdoor recreational facility which currently owns the land needed for lake construction and uses equity capital for initial capital costs can generate significant cash inflows relatively early in the life of the project. The specific 40–acre sportfishing project examined for an existing recreational facility obtained a net present value of $16,233.30 at an 8 percent rate, and had an internal rate of return of 10 percent, given shared overhead costs. The 40–acre and 20–acre start-up operations analyzed with owned parcels of rural land and requiring borrowed capital to satisfy initial capital requirements and early operating costs returned negative net present values at 8 and 12 percent rates. Also, only a 3 percent internal rate of return was generated for the 20–acre project and a negative internal rate of return was generated for the 40–acre start-up project.