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A Primer on Nonmarket Valuation pp 269–329 Cite as

The Travel Cost Model

  • George R. Parsons 3  

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Part of the The Economics of Non-Market Goods and Resources book series (ENGO,volume 3)

The travel cost model is used to value recreational uses of the environment. For example, it may be used to value the recreation loss associated with a beach closure due to an oil spill or to value the recreation gain associated with improved water quality on a river. The model is commonly applied in benefit-cost analyses and in natural resource damage assessments where recreation values play a role. Since the model is based on observed behavior, it is used to estimate use values only.

  • Random Utility Model
  • Recreation Site
  • Recreation Demand
  • Site Utility

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Ward, F. A., and D. Beal. 2000. Valuing Nature with Travel Cost Models: A Manuel. Cheltenham, UK: Edward Elgar.

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Parsons, G.R. (2003). The Travel Cost Model. In: Champ, P.A., Boyle, K.J., Brown, T.C. (eds) A Primer on Nonmarket Valuation. The Economics of Non-Market Goods and Resources, vol 3. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-0826-6_9

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  • location of the visitor¡¦s home ¡¦ how far they traveled to the site
  • how many times they visited the site in the past year or season
  • the length of the trip
  • the amount of time spent at the site
  • travel expenses
  • the person¡¦s income or other information on the value of their time
  • other socioeconomic characteristics of the visitor
  • other locations visited during the same trip, and amount of time spent at each
  • other reasons for the trip (is the trip only to visit the site, or for several purposes)
  • fishing success at the site (how many fish caught on each trip)
  • perceptions of environmental quality or quality of fishing at the site
  • substitute sites that the person might visit instead of this site
  • The value of improvements in water quality was only shown to increase the value of current beach use.  However, improved water quality can also be expected to increase overall beach use. 
  • Estimates ignore visitors from outside the Baltimore-Washington statistical metropolitan sampling area. 
  • The population and incomes in origin zones near the Chesapeake Bay beach areas are increasing,  which is likely to increase visitor-days and thus total willingness to pay.
  • changes in access costs for a recreational site
  • elimination of an existing recreational site
  • addition of a new recreational site
  • changes in environmental quality at a recreational site
  • number of visits from each origin zone (usually defined by zipcode)
  • demographic information about people from each zone
  • round-trip mileage from each zone
  • travel costs per mile
  • the value of time spent traveling, or the opportunity cost of travel time
  • exact distance that each individual traveled to the site
  • exact travel expenses
  • substitute sites that the person might visit instead of this site, and the travel distance to each
  • quality of the recreational experience at the site, and at other similar sites (e.g., fishing success)
  • perceptions of environmental quality at the site
  • characteristics of the site and other, substitute, sites
  • The travel cost method closely mimics the more conventional empirical techniques used by economists to estimate economic values based on market prices.
  • The method is based on actual behavior¡¦what people actually do¡¦rather than stated willingness to pay¡¦what people say they would do in a hypothetical situation.
  • The method is relatively inexpensive to apply.
  • On-site surveys provide opportunities for large sample sizes, as visitors tend to be interested in participating.
  • The results are relatively easy to interpret and explain.
  • The travel cost method assumes that people perceive and respond to changes in travel costs the same way that they would respond to changes in admission price.
  • The most simple models assume that individuals take a trip for a single purpose ¡¦ to visit a specific recreational site. Thus, if a trip has more than one purpose, the value of the site may be overestimated. It can be difficult to apportion the travel costs among the various purposes. 
  • Defining and measuring the opportunity cost of time, or the value of time spent traveling, can be problematic. Because the time spent traveling could have been used in other ways, it has an "opportunity cost." This should be added to the travel cost, or the value of the site will be underestimated. However, there is no strong consensus on the appropriate measure¡¦the person¡¦s wage rate, or some fraction of the wage rate¡¦and the value chosen can have a large effect on benefit estimates. In addition, if people enjoy the travel itself, then travel time becomes a benefit, not a cost, and the value of the site will be overestimated. 
  • The availability of substitute sites will affect values. For example, if two people travel the same distance, they are assumed to have the same value. However, if one person has several substitutes available but travels to this site because it is preferred, this person¡¦s value is actually higher. Some of the more complicated models account for the availability of substitutes.
  • Those who value certain sites may choose to live nearby. If this is the case, they will have low travel costs, but high values for the site that are not captured by the method.
  • Interviewing visitors on site can introduce sampling biases to the analysis.
  • Measuring recreational quality, and relating recreational quality to environmental quality can be difficult.
  • Standard travel cost approaches provides information about current conditions, but not about gains or losses from anticipated changes in resource conditions.
  • In order to estimate the demand function, there needs to be enough difference between distances traveled to affect travel costs and for differences in travel costs to affect the number of trips made. Thus, it is not well suited for sites near major population centers where many visitations may be from "origin zones" that are quite close to one another.
  • The travel cost method is limited in its scope of application because it requires user participation. It cannot be used to assign values to on-site environmental features and functions that users of the site do not find valuable. It cannot be used to value off-site values supported by the site. Most importantly, it cannot be used to measure nonuse values. Thus, sites that have unique qualities that are valued by non-users will be undervalued.
  • As in all statistical methods, certain statistical problems can affect the results. These include choice of the functional form used to estimate the demand curve, choice of the estimating method, and choice of variables included in the model.
  • GolfSW.com - Golf Southwest tips and reviews.
  • VivEcuador.com - Ecuador travel information.
  • TheChicagoTraveler.com - Explore Chicago.
  • FarmingtonValleyVisit.com - Discover Connecticut's Farmington Valley.

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Travel-cost method

The travel-cost method (TCM) is used for calculating economic values of environmental goods. Unlike the contingent valuation method, TCM can only estimate use value of an environmental good or service. It is mainly applied for determining economic values of sites that are used for recreation, such as national parks. For example, TCM can estimate part of economic benefits of coral reefs, beaches or wetlands stemming from their use for recreational activities (diving and snorkelling/swimming and sunbathing/bird watching). It can also serve for evaluating how an increased entrance fee a nature park would affect the number of visitors and total park revenues from the fee. However, it cannot estimate benefits of providing habitat for endemic species.

TCM is based on the assumption that travel costs represent the price of access to a recreational site. Peoples’ willingness to pay for visiting a site is thus estimated based on the number of trips that they make at different travel costs. This is called a revealed preference technique, because it ‘reveals’ willingness to pay based on consumption behaviour of visitors.

The information is collected by conducting a survey among the visitors of a site being valued. The survey should include questions on the number of visits made to the site over some period (usually during the last 12 months), distance travelled from visitor’s home to the site, mode of travel (car, plane, bus, train, etc.), time spent travelling to the site, respondents’ income, and other socio-economic characteristics (gender, age, degree of education, etc). The researcher uses the information on distance and mode of travel to calculate travel costs. Alternatively, visitors can be asked directly in a survey to state their travel costs, although this information tends to be somewhat less reliable. Time spent travelling is considered as part of the travel costs, because this time has an opportunity cost. It could have been used for doing other activities (e.g. working, spending time with friends or enjoying a hobby). The value of time is determined based on the income of each respondent. Time spent at the site is for the same reason also considered as part of travel costs. For example, if respondents visit three different sites in 10 days and spend only 1 day at the site being valued, then only fraction of their travel costs should be assigned to this site (e.g. 1/10). Depending on the fraction used, the final benefit estimates can differ considerably.

Two approaches of TCM are distinguished – individual and zonal. Individual TCM calculates travel costs separately for each individual and requires a more detailed survey of visitors. In zonal TCM, the area surrounding the site is divided into zones, which can be either concentric circles or administrative districts. In this case, the number of visits from each zone is counted. This information is sometimes available (e.g. from the site management), which makes data collection from the visitors simpler and less expensive.

The relationship between travel costs and number of trips (the higher the travel costs, the fewer trips visitors will take) shows us the demand function for the average visitor to the site, from which one can derive the average visitor’s willingness to pay. This average value is then multiplied by the total relevant population in order to estimate the total economic value of a recreational resource.

TCM is based on the behaviour of people who actually use an environmental good and therefore cannot measure non-use values. This method is thus inappropriate for sites with unique characteristics which have a large non-use economic value component (because many people would be willing to pay for its preservation just to know that it exists, although they do not plan to visit the site in the future).

The travel-cost method might also be combined with contingent valuation to estimate an economic value of a change (either enhancement or deterioration) in environmental quality of the NP by asking the same tourists how many trips they would make in the case of a certain quality change. This information could help in estimating the effects that a particular policy causing an environmental quality change would have on the number of visitors and on the economic use value of the NP.

For further reading:

Ward, F.A., Beal, D. (2000) Valuing nature with travel cost models. A manual. Edward Elgar, Cheltenham.

Ecosystem valuation [ www.ecosystemvaluation.org/travel_costs.htm ]

This glossary entry is based on a contribution by Ivana Logar 

EJOLT glossary editors:   Hali Healy, Sylvia Lorek and Beatriz Rodríguez-Labajos

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Environmental Valuation: The Travel Cost Method

Profile image of Philip Graves

In previous chapters we have discussed approaches to environmental valuation that directly construct markets (contingent valuation and other stated preference approaches) or indirectly reveal values via observed willingness to pay for related goods (e.g., sum of specific damages or hedonic methods). Travel cost is a third method that indirectly values environmental goods by observing willingness to pay for related goods. The travel cost method estimates the economic value of recreational sites or other concentrated environmental amenities (e.g. wildlife observation) by looking at the full travel costs (time, out-of-pocket, and any applicable fees) of visiting the sites. In existence since a letter written in 1949 from Harold Hotelling to the Director of the National Park Service, a very large literature, well over one hundred articles, has sprung forth to value a host of site amenities. Parsons (2003) provides a quite complete exposition of the technical details of the various...

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In this study we estimate selected visitors' demand and value for recreational trips to settings such as developed vs. undeveloped sites in U.S. national forests in the Southern United States using the travel cost method. The setting-based approach allows for valuation of multi-activity trips to particular settings. The results from an adjusted Poisson lognormal estimator corrected for truncation and endogenous stratification reveal that economic value per trip estimates are higher for wilderness compared to day-use developed settings, overnight-use developed settings, and general forest areas. Estimates of these economic values are important to resource managers because their management decisions and actions typically control recreational settings. For example, managers control developed campground capacity in a national forest, but typically not the number of campers below the capacity constraint and the number and types of activities visitors engage in during a multi-activity...

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Choong-ki Lee

African Journal of Environmental Science and Technology

Daniel Kwasi Adjei Ababio

A major problem confronting environmental economists is the difficulty in valuing environmental resources and other public goods such as recreational sites since there are no markets or markets are imperfect in situations where they exist. The Kakum National Park, officially opened in 1994, is one of the most important parks in Ghana that protects a vast rainforest including its bio-diversity, habitats and natural processes, and houses the only Canopy Walkway in Africa which allows visitors to explore a tropical rainforest canopy from suspension bridges. Since the establishment of the Kakum National Park, not much has been done to assess its value to recreationers using the appropriate economic valuation techniques. This study seeks to address these questions by adopting the simple formulation of the individual travel cost method to derive the monetary value of Kakum National Park as well as factors that influence visits to the park using a survey of 246 visitors. Our results indica...

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IMAGES

  1. 12. Travel Cost Method

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  2. (PDF) Using the Travel Cost Method (TCM) with A Mix of Real and

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  3. PPT

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  4. (PDF) Public Park Valuation Using Travel Cost Method

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  5. (PDF) TRAVEL COST METHOD FOR ENVIRONMENTAL VALUATION DISSEMINATION

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  6. PPT

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  4. Steps to estimate Travel Cost method

  5. GROUP 9 : TRAVEL COST METHOD

  6. ANALISIS TRAVEL COST METHOD

COMMENTS

  1. PDF TRAVEL COST METHOD (TCM)

    3 TCM Travel cost method (TCM) is one of the popular methods used falls under the revealed preference approach to value non-priced or non-market good The other two approaches are: market-based and stated preference approach This approach is based on the assumption that the non- marketed good or service affect preferences expressed by consumers

  2. (PDF) Chapter 15: Environmental Valuation: The Travel Cost Method

    The advantage of the CVM over some other approaches (e.g., Travel Cost Method, Hedonic Price Method, Choice Experiment) is the fact that it is more clear and comprehensible (see also Fatahi ...

  3. (PDF) ECONOMIC VALUATION USING TRAVEL COST METHOD

    The Travel Cost Method (TCM) has been employed to derive the demand model, whilst the concept of consumer surplus was used for value determination and comparison. The findings showed that the ...

  4. PDF Chapter 15. Travel Cost Method of Valuing Environmental Amenities

    There are, however, a number of caveats to bear in mind when using the travel cost method. It assumes that individuals respond to changes in explicit travel costs (e.g. $.35 per mile) as they do to implicit travel costs (time), and also just as they would to changes in admission price (indeed, the three categories are all lumped together).

  5. PDF METHOD FACTSHEET Travel cost valuation

    The travel costs method was first applied in the US in 1959 to value the recreational use of nature. There are basically two different types of travel cost methods; one based on a valuation of a single site and one based on choices between multiple sites. In this overview the use and requirements for these two methods are described separately.

  6. The Individual Travel Cost Method with Consumer-Specific Values of

    The treatment of the opportunity cost of travel time in travel cost models has been an area of research interest for many decades. Our analysis develops a methodology to combine the travel distance and travel time data with respondent-specific estimates of the value of travel time savings (VTTS). The individual VTTS are elicited with the use of discrete choice stated preference methods. The ...

  7. (PDF) The Travel Cost Model

    The travel cost method, based on welfare estimates typically from preferences revealed in survey responses, is the most well-established and commonly used method for the valuation of recreational ...

  8. PDF Chapter 6 Travel Cost Models

    tation rate on travel cost, one could predict how that rate would fall with travel cost and, in turn, infer an aggregate demand function. The zonal model ruled for the first decade oftheTCM'sexistence (Clawson andKnetsch1969;TriceandWood1958). Although the zonal method sees some use in current practice (Moeltner 2003), in

  9. PDF An examination of sources of sensitivity of consumer surplus estimates

    2. Methods 2.1. The travel cost method (TCM) When an individual makes a trip to engage in a form of recre-ation, that person is spending time and money to "produce" the trip. This creates an "implicit market" for the environmental ame-nity associated with the trip. The most obvious market purchase

  10. Valuing the Recreation Uses of Natural Resources: The Travel Cost Method

    The travel cost model (TCM) of recreation demand is a survey-based method that was developed to estimate the recreation-based use value of natural resource systems. The TCM may be used to estimate the value of. recreation services provided by natural resource systems; a new or lost recreation site; and.

  11. PDF Travel Cost Literature

    Unobservable Travel Costs: Toward a Travel Price Model." Journal-of-Environmental-Economics-and-Management ; 29(3), Part 1 Nov. 1995, pages 368-77. An important issue in the application of travel cost models is the construction of a travel cost variable. This paper develops an econometric approach that views travel costs as an

  12. The Travel Cost Model

    The travel cost model is used to value recreational uses of the environment. For example, it may be used to value the recreation loss associated with a beach closure due to an oil spill or to value the recreation gain associated with improved water quality on a river. The model is commonly applied in benefit-cost analyses and in natural ...

  13. [PDF] The travel cost method and the economic value of leisure time

    The travel cost method and the economic value of leisure time. A. J. Douglas, Richard L. Johnson. Published 1 September 2004. Economics, Environmental Science. International Journal of Tourism Research. Recent estimates of high values for tourist related recreation USA amenity values indicate that allocation of basic water and terrestrial ...

  14. Travel Cost Method

    The travel cost method is used to estimate economic use values associated with ecosystems or sites that are used for recreation. The method can be used to estimate the economic benefits or costs resulting from: changes in access costs for a recreational site. elimination of an existing recreational site. addition of a new recreational site.

  15. (PDF) The Individual Travel Cost Method with Consumer-Specific Values

    PDF | The treatment of the opportunity cost of travel time in travel cost models has been an area of research interest for many decades. ... The individual travel cost method treats trips to a ...

  16. Travel-cost method

    The travel-cost method (TCM) is used for calculating economic values of environmental goods. Unlike the contingent valuation method, TCM can only estimate use value of an environmental good or service. It is mainly applied for determining economic values of sites that are used for recreation, such as national parks. For example, TCM can ...

  17. PDF The Travel Cost Method Applied to the Valuation of the Historic and

    The travel cost method has fundamentally been developed along two lines: the zonal travel cost method and the individual travel cost method. The former was applied by Clawson and Knetsch (1966), who assumed that users would react to an admittance fee as if it were an increase in the cost of travel. In the zonal travel cost method, a

  18. [PDF] The Travel Cost Method and tl 1 . e Economic Value of Leisure

    The Travel Cost Method and tl 1 . e Economic Value of Leisure Time. A. J. Douglas. Published 2010. Environmental Science, Economics. Recent estimates of high values for tourist related recreation USA amenity values indicate that allocation of basic water and terrestrial resources to recreation activities should be given precedence over ...

  19. Environmental Valuation: The Travel Cost Method

    The design of this work is to estimate the recreational value and to establish functional relationship between travel cost and visitation of Lawachara National Park (LNP) in Bangladesh. This study employed zonal approach of the travel cost method. The work is grounded on a sample of 422 visitors of the LNP. Results showed that the total value ...

  20. (PDF) Measurement issues in the travel cost method: A geographical

    A Modied Travel Cost Method (MTCM) was applied for quantifying the recreational and other non-material values of LNP. Altogether 309 respondents were interviewed, covering both peak season and ...

  21. PDF Liam Carr and Robert Mendelsohn Valuing Coral Reefs: A Travel Cost

    The travel cost method is a well-known and developed method-ology for measuring the economic values of outdoor recreation benefits (16-18). Although the travel cost method may have its difficulties (19, 20), the method has the advantage that it infers values from people's behavior. It is the very fact that people are

  22. Travel-cost method for assessing the monetary value of recreational

    Total travel cost: The increase in total travel costs, TC i, negatively affects the log persontrips' frequency (β ̂ = − 0.006), as expected from the travel-cost method. That means, for each 1 TL increase in total travel cost per person, the expected log count of the persontrips decreases by 0.006 while holding all other variables in the ...

  23. (PDF) Measuring Recreational Value Using Travel Cost Method (TCM): A

    PDF | On Nov 4, 2018, Leh and others published Measuring Recreational Value Using Travel Cost Method (TCM): A Number of Issues and Limitations | Find, read and cite all the research you need on ...