# Travel Cost - PowerPoint PPT Presentation

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## Travel Cost

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### Travel Cost Bangkok 2013 Concept People have a demand function to travel to sites The consumer surplus under the demand function is the value of the site The consumer ... – PowerPoint PPT presentation

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Title: Travel Cost

1
Travel Cost
• Bangkok 2013

2
Concept
• People have a demand function to travel to sites
• The consumer surplus under the demand function is
the value of the site
• The consumer surplus per trip is the average
value of each trip

3
Distance
Consumer Surplus
D
Travel Cost
T
Trips
4
Application
• Most commonly used valuation method for visited
sites
• Hundreds of studies done in the United States
• Far fewer in developing countries
• Technique suitable for all tourist destinations
not just environmental sites

5
Required Data
• Origin of people visiting site
• Number of people living in origin
• Distance from origin to site

6
Limitations
• Multiple purpose trips
• People sometimes visit sites while on a trip for
• Travel cost not proportional to distance
• Driving and walking cost proportional to distance
Air travel cost is often only loosely related to
distance- need to find cost of air travel for
very long trips
• May be biased for long trips

7
Practical example
• Label Distance in A1
• Create distance categories from 0, 100, 200,3000
in Column A
• Label visits/person in B1
• Create visits/person using formula in B2
• 5-(1/300)a2
• Copy and paste from B2 through B17

8
Calculate visits
• Label c1 population
• Assume c2100000
• Copy and paste c2 into c3c17
• Label d1 Visits
• Multiply population times visit/person
• Copy and paste d2 into d3d17

9
Calculate Consumer Surplus
• Label e1 travel cost
• Multiply distance in e2 by 0.6 a2.6
• Copy and paste into e3e17
• Label f1 consumer surplus
• Place formula in f20.5(900-e2)d2
• Copy and paste into f3f17
• Label g1 CS/visit
• Place into g2 formula f2/d2
• Copy and paste into g3g17

10
Results
• Scatter plot of column D and E traces demand
function
• Sum Column F for consumer surplus from F2f17 for
total value of site
• Sum Column D for total visits
• Divide sum of F by sum of D to get consumer
surplus per visit

11
How does value change if demand doubles?
• Calculate new visits/capita
• Create new column Q with 10-(1/300)A2
• Calculate new visits in Column R
• Note that people come from further away
• Expand columns A, C and E to 32
• Create new consumer surplus in column S
• 0.5(1800-e2)r2
• Sum values from S2 S32

12
New Results
• Trips to site have more than doubled
• Value of site has increased by factor of 4