The Travel Cost Method : Background, Summary, Explanation and Discussion

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The Travel Cost Method : Background, Summary, Explanation and Discussion Leslie Karasin


What is the Travel Cost Method (TCM)?
Where does it come from ?
Who uses it ?
What are its alternatives ?


How does someone do a travel cost analysis ?
What are some particular concerns ?

Treatment of independent variables


What do the products of a travel cost analysis tell us ? Is there only one type of travel cost study ?


Is the TCM a perfect system ?
Where can I look for more information ?


What is the Travel Cost Method (TCM) ?

The TCM is a means of determining value figures for things which are generally not bought and sold, and therefore fall outside of the market’s pricing system. The non-market assets which it is most often applied to are ‘recreational resources which necessitate significant expenditure for their enjoyment.’[9, p. 93] This means that the TCM is often used to assess the value of parks, lakes, and similar public areas which host a good deal of recreational activity, and which are far enough away from many people to require users to drive or fly to the site. The basic premise of the TCM is that, although the actual value of the recreational experience does not have a price tag, the costs incurred by individuals in travelling to the site can be used as surrogate prices. The weak complementarity of the goods required for travel to the site makes it possible estimate a demand curve for the site, and from it, a measure of the sites’ consumer surplus can be found. It is important to note that the consumer surplus figure is a measure of the user value of the site only, and does not necessarily measure the site’s environmental or intrinsic value.

Where does it come from ?

The idea for the TCM is attributed to Harold Hotelling, who proposed the basic notion of the method to a park service director in a 1947 letter. It was not put into practice extensively until the late 1960’s, and has only reached a more refined state in relatively recent years. Jack Clawson and Marion Knetsch are widely regarded as two of the most important figures in the early development of the TCM.

Philosophically, the TCM falls into the general category of neo-classical welfare economics, which assumes that individuals maximize their utility subject to certain constraints. This has implications for both the technical exposition of the method and for the premises upon which it is built. Debate about the merits or demerits of alternative economic theories exceed the scope of this project, but it is important to be conscious of the model’s theoretical foundations.

Who uses it ?

Essentially, anyone interested in studying the value of recreation may have reason to apply the TCM. As noted earlier, only certain types of sites make good candidates for travel cost analysis, so its applicability is bounded. But there are legislative and public support-oriented reasons in both the United States and the EC which promote cost-benefit analysis to determine the financial merit of a project, and so the impetus to find good valuation techniques is strong. In the US, much of the TCM’s application has involved water-based recreation, partly because water resources make good subjects of travel cost analysis, and partly because federal agencies involved in the management of water-based sites like the Army Corps of Engineers have been particularly enthusiastic about the use of the TCM.

What are its alternatives ?

The search to find means of estimating the value of non-market goods has yielded two categories of approaches: direct and indirect. The TCM is one of the primary members of the indirect category, all of which utilize the complementarity of market and non-market goods, and study people’s behavior to determine their preferences. The direct methods, on the other hand,...
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