Specification Considerations for the Price Variable in Travel Cost Demand Models

Abstract

The travel cost method (TCM) which is used to impute a value to outdoor recreation resources has traditionally examined the statistical relationship between visit rates to a site and the observed variable travel cost per visit. Users of the TCM then typically use that statistical relationship to infer a demand relation between visit rates and a schedule of unobserved entry fees. In using data on these observed travel costs to infer a behavioral response to unobserved entry fees, the TCM will only generate an unbiased estimate of consumer surplus accruing to site visitors in certain circumstances. Specifically, assuming linearity, it is required that the estimated (linear) coefficient (Bk) explaining visits as a function of observed travel costs, r=f(R), is equal to the unobserved coefficient (Bp) which explains visits as a function of entry fees (price). Unfortunately, nothing guarantees that Bc is the same as Bp. Thus, in order to obtain an unbiased esti-