Travel cost analysis


The travel cost method of economic valuation, travel cost analysis, or Clawson method is a revealed preference method of economic valuation used in cost–benefit analysis to calculate the value of something that cannot be obtained through market prices. The aim of the method is to calculate willingness to pay for a constant price facility. The technique was first suggested by the statistician Harold Hotelling in a 1947 letter to the director of the National Park Service for a method to measure the benefit of recreation. The method was further refined by Trice and Wood and Clawson. The technique is one approach to the estimation of a shadow price.

Methodology

The general principle is that individual visitors spend varying amounts of time and money to access a particular resource. The further away an individual from the resource, the more time and money they spend and the less frequent is the visit. Individual closer to the resource tend to visit more often and spend less. By fitting the distribution of individuals within this spectrum an average of the transport and opportunity costs of the time spent travelling to a recreational site is used to determine the value of the site. Various approaches may be used in the actual collection of data and the estimation. The travel cost method of economic valuation is a revealed preference method because it looks at actual human behavior to try to define the value people place on something.
i.e.) Visit rate: The number of visitors from a given zone/The population of that zone
Visit rate from given zone = f
VR=a+b.C