How To Calculate Travel Cost – The cost of travel method is used to quantify the economic use associated with an ecosystem or recreational use site.
The basic assumption of the travel costing method is the time and travel costs people incur to visit a particular site. Represents ¡¦ price ¡¦ of access to the Site. Therefore, people’s willingness to pay to visit the Site can be gauged by the number of trips they make for different travel costs. This is comparable to estimating people’s willingness to pay for commercially available goods based on the quantity demanded at different prices.
How To Calculate Travel Cost
This section continues with an example of using the travel cost method. This is followed by a more complete technical description of the method. as well as advantages and limitations
Output Individual O/d Trip Stats In Calculate Acce…
Sites primarily used for recreational fishing are threatened by development in the surrounding areas. pollution and other effects From this development, this can destroy the fish habitat on the site. As a result, recreational fishing grounds are either significantly reduced or lost altogether. Resource agency officials want to determine the value of programs or actions to protect fish habitat at the site.
1. This site is primarily useful to people as a recreational site. There are no endangered species or other special features. This will make the site idle value significant.
2. The cost of the site protection project is relatively small, so the use of relatively cheap methods such as travel costs is the most appropriate.
In this case, potential valuation methods or contingent alternatives can also be used. Although it can provide more accurate estimates for specific site features, it can also save unused values. But these values can be much more complex and expensive to implement.
Operating Expenses (opex)
The zoning travel cost method is the simplest and most affordable way. Evaluates the value of the site’s leisure services as a whole. It cannot easily be used to assess changes in recreation quality for a site. and may not take into account certain factors that may determine a significant value.
The zonal travel costing method is used by collecting information on the number of visits to a site from different distances. Because travel costs and time will increase with distance. This information allows the researcher to calculate the number of visits ¡¦ purchases ¡¦ at different ¡¦ prices ¡¦. This information is used to establish the demand function for the site and to estimate consumer surplus. or economic benefits for the leisure services of the Site.
The first step is to define a set of zones around the Site. These may be defined by concentric circles around the Site or by appropriate geographic divisions such as metropolitan areas or contiguous counties. places at different distances
The second step is to collect the number of visitors from each area. and the number of visits made in the last year For this hypothetical example Let’s say that the site staff keeps a record of the number of visitors and zip codes. This can be used to calculate the total traffic per area over the past year.
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The third step is to calculate the traffic per 1,000 inhabitants for each area, this is just the total annual traffic in the area. Divide by the population of the area in thousands. An example is shown in the table:
The fourth step is to calculate the average round-trip distance and travel time to the site for each zone. Assume that people in zone 0 have zero travel distance and time. Each area has an increased travel time and distance. Then take the average cost per mile and hour of travel time. The researcher was able to calculate the cost of travel per trip. The standard cost per mile for car use can be obtained from AAA or other sources. Let’s say this cost per mile is $0.30, time costs are more complicated. The easiest way is to use the average hourly wage, say $9/hour or $0.15/minute for all areas, although in practice this may vary from area to area. The calculation is presented in the table:
The fifth step is estimation using regression analysis. This is an equation that relates per capita traffic to travel costs and other key variables. From this, researchers can estimate the demand function for the average visitor. In this simple model Analysis can include demographic variables such as age, income, gender and education level. using the mean for each area. to keep the model simple Let’s calculate the equation with only the cost of travel and visit/1000. Visits/1000 = 330 ¡¦ 7.755*(travel expenses)
The sixth step is to create a requirements function for site visits. using the results of the regression analysis. The first point on the demand curve is all visitors to the site with current access costs. (assuming there is no site entry fee), which in this example is 1,600 visits per year. The other points are estimated by estimating the number of visitors with different entrance fees. (assuming entry fees are treated in the same way as travel expenses)
Sg&a Expense (selling, General & Administrative)
For the purpose of our example Start by taking the entry fee of $10. Plugging this into the approximate regression equation, V = 330 ¡¦ 7.755C gives the following:
This gives a second point on the demand curve ¡¦954. Entry is similar with a $10 entry fee. The number of visits can be calculated for the additional entrance fee to obtain:
The final step is to evaluate the overall economic benefits of the site to visitors by calculating consumer surplus or the area under the demand curve. This results in an estimated economic benefit from use of the leisure site of approximately $23,000 per year or approximately $14.38 per visit ($23,000/$1,600).
Remember that the goal of agency staff is to decide whether it is worth spending money on programs and actions to protect this site. If the operation costs less than $23,000 per year, the costs are less than the benefits provided by the site. If there are more expenses Employees must decide if other factors are worth it.
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The individual trip cost approach is similar to the area approach. Instead, survey data from individual visitors is used for statistical analysis. instead of using data from individual areas This method requires more data collection and somewhat more complex analysis. but it will give more accurate results.
For a hypothetical example of a recreational fishing facility Instead of just collecting traffic and zip code information, the Researcher will conduct a visitor survey. The survey may request the following information:
When using survey data the researcher can proceed in the same way with the area model. by estimation using regression analysis. Relationship between number of visits and travel expenditure and other related variables This time the researcher uses individual data rather than area data. The regression equation gives us a demand function for the average website visitor ¡¦ and the area under this demand curve is the average consumer surplus. which is then multiplied by the total number of relevant populations. (Population of the region the visitor is from) to estimate total consumer surplus for the site.
This is because additional information is collected about visitors, replacement sites and site quality. The estimate can therefore be adjusted¡¦ by adding other factors. these in a statistical model. Including site quality data allows researchers to assess changes in site value if site quality changes. by doing this Two different demand curves are estimated. ¡¦ one for each quality level. The area between these two curves is an estimate of how consumer surplus changes as quality changes.
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For example, the researcher may realize that developments around the area are unlikely to completely destroy fish populations, however, may reduce populations enough to adversely affect catch rates. by including catch rate in the model the researchers were able to estimate the recreational benefits lost from reduced catch rates. which is described in the next section. is a more appropriate approach for this type of estimation.
The random utility method is the most complex and expensive of the travel cost approaches. It is also the ¡¦ state of the art ¡¦ approach as it allows more flexibility in calculating the benefits. It is best practice to evaluate benefits for specific features or site quality changes. rather than the site as a whole. It is also the most appropriate approach when there are many places to fill.
In this example, the agency may want to assess economic losses from declining fish stocks. Instead of estimating the total loss of fish stocks, a random utility approach seems to be the best way to go. It focuses on choosing between alternative sites with different quality characteristics.
The random utility method assumes that a person will choose