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Travel Cost

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 surplus per trip is the average value of each trip. Distance. Consumer Surplus. D. Travel Cost. T. Trips.

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Travel Cost

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  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 c2=100000 • Copy and paste c2 into c3:c17 • Label d1 “Visits” • Multiply population times visit/person • Copy and paste d2 into d3:d17

  9. Calculate Consumer Surplus • Label e1 “travel cost” • Multiply distance in e2 by 0.6: =a2*.6 • Copy and paste into e3:e17 • Label f1 “consumer surplus” • Place formula in f2:=0.5*(900-e2)*d2 • Copy and paste into f3:f17 • Label g1 “CS/visit” • Place into g2 formula =f2/d2 • Copy and paste into g3:g17

  10. Results • Scatter plot of column D and E traces demand function • Sum Column F for consumer surplus from F2:f17 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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