21 - Travel Cost Models It sounds like a philosophical...

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“It sounds like a philosophical cousin to the age-old question of whether a tree falling in the forest makes a sound if no one is around to hear it. In this case, though, Federal officials are seeking to add an economic variable to the puzzle: just how much is it worth to you to know that a once-dammed river is running wild again even if you never plan to visit it?. ..” Forests are a good example. Trees have a market value as timber, which economists can measure directly using market prices. A forest may also have a value to people who like to visit it, which can be estimated indirectly by calculating how much they spend to do so. But simply adding these direct and indirect measures will miss a third source of the forest’s worth: people may derive pleasure from just knowing that it exists, without ever seeing it or buying its wood…. - NY Times, 10/17/99 Travel Cost Models Travel Cost Models
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Valuing a Recreational Site: Emergence of the Travel Cost Method Arose out of need to compare the value of recreational uses with other land and water uses in 1940s and 1950s. At that time, not placing a value on recreation was akin to placing a zero value on recreation. Leading economists of the day argued that a proper measure of benefits would be how much managers could collect in the form of user charges. – Disney – Mineral King Ski Resort – Hells Canyon Hydroelectric Dam In a 1947 letter to the National Park Service, Hotelling built upon Dupuit’s bridge analysis by arguing that the social value of a resource was more than the aggregate revenues collected. Social value should be the area under a relevant demand curve for the resource. The practical problem is to measure this demand curve. – Based on the notion that the cost of traveling to a resource was as much a part of
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This note was uploaded on 12/16/2009 for the course AEM 2500 taught by Professor Poe,g. during the Fall '07 term at Cornell.

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21 - Travel Cost Models It sounds like a philosophical...

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