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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
    another purpose such as business
  • 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
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