Demand Based and Contingent Valuation: An Empirical Comparison (original) (raw)
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2004
The Daintree Rainforest is a prime attraction for Tropical North Queensland as a tourist destination. Visitation of the rainforest, specifically the Cape Tribulation section, has increased rapidly as impediments to self-drive access have been removed. This paper examines the potential for the local council to manage the volume of self-drive access to the Cape Tribulation region by price mechanisms. The assessment is based on estimates of willingness to pay from a contingent valuation survey of self-drive tourists to the region, from which estimates of consumer surplus and demand elasticity are derived. A comprehensive discussion of the social and economic implications and transaction costs of price-based mechanisms is offered.
Environmental Valuation: The Travel Cost Method
In previous chapters we have discussed approaches to environmental valuation that directly construct markets (contingent valuation and other stated preference approaches) or indirectly reveal values via observed willingness to pay for related goods (e.g., sum of specific damages or hedonic methods). Travel cost is a third method that indirectly values environmental goods by observing willingness to pay for related goods. The travel cost method estimates the economic value of recreational sites or other concentrated environmental amenities (e.g. wildlife observation) by looking at the full travel costs (time, out-of-pocket, and any applicable fees) of visiting the sites. In existence since a letter written in 1949 from Harold Hotelling to the Director of the National Park Service, a very large literature, well over one hundred articles, has sprung forth to value a host of site amenities. Parsons (2003) provides a quite complete exposition of the technical details of the various travel cost approaches, updating that paper with state-of-the-art insights in Parsons (2011). For a much more detailed treatment than is appropriate here, these two papers are excellent sources. The travel cost method is useful in certain circumstances but has flaws from both an economist's and an environmentalist's perspective. The central theoretical flaw in the travel cost method, in common with SSD and hedonics, is that it can only capture use values, shedding no light on nonuse (or passive) values, which could be much larger, at least in principle. Moreover, there are additional flaws that have the potential to result in overstatement of use value, further distorting resource allocation against nonuse outcomes. Other potential flaws, discussed in closing, would result in understatement in use value.
The Travel Cost Demand Model as an Environmental Policy Assessment Tool: A Review of Literature
1986
Estimates of the benefits of environmental improvement, usually a nonmarket commodity, can be a valuable part of the information base for economically efficient environmental decision making. The objective of this paper is to review the literature of one class of nonmarket valuation methodologies based on observed consumption behavior subsumed under the term "travel cost demand models." Relative to travel cost demand models, we examine policy issues and underlying concepts focusing on choice theory and welfare evaluation. In addition, we identify major related empirical issues including demand specification, data problems, demand estimation, and welfare measurement. Unanswered questions may contribute to a research agenda.
Journal of Leisure Research, 2006
This paper investigates the empirical magnitude of multiple destination/purpose trip bias in the Travel Cost Method (TCM), and the performance of an empirical solution for that method. For the study area, we find that ignoring the multiple destination/purpose trip distinction does result in a substantial difference in per trip values for the TCM. However, based on a comparison with Contingent Valuation Method derived values for these two trip types, an empirical correction to the Travel Cost Method appears to adequately differentiate the values of single and multiple destination trips. If the multiple destination trip distinction is ignored in estimation it substantially underestimates recreation benefits derived from the Travel Cost Method in our case study.
Using contingent valuation to estimate prices for non-market amenities provided by protected areas
University of Costa Rica, Costa Rica, 1998
This article uses a Contingent Valuation Method (CVM) in its closed-ended format in order to estimate willingness-to-pay (WTP) for an entrance fee to the Manuel Antonio National Park (MANP) in Costa Rica. MANP is one the two most visited protected areas in the country. In contrast to other articles, which estimate WTP (median) by following a single bounded approach, and which in most of cases use only one ad-hoc model, this paper shows alternative measures of WTP (mean and median) following a double bounded approach. The estimations are made using a sample of 2245 park visitors and four models: three of them consistent with indirect utility functions, and an ad-hoc model which has been widely used in the contingent valuation literature. Because the answer to the second bid is endogenous a bivariate probit model is used in the four models estimated. The econometric estimation of the compensating surplus derived by both nationals and foreigners when entering the park shows a low level of sensibility to model specification and to the estimated WTP (mean or median). WTP is estimated at approximately 12forforeignersand12 for foreigners and 12forforeignersand5 for nationals. The estimation of WTP in the four models is not sensitive to specific nationality of foreigners. The estimated correlation of answers and their significance changes with the estimated model. Furthermore, the goodness of fit tests (χ 2) are statistically significant. This paper shows that CVM can be used to design policies that improve pricing schemes for protected areas, and that such pricing schemes can lead to a more sustainable management and financial stability resulting in welfare improvement for society.
Urban Forestry & Urban Greening, 2011
This study estimated the monetary value of urban forests' non-priced benefits to tourists. Data collected by a face-to-face self-administered survey of urban tourists in Savannah, Georgia, USA were used to estimate tourists' willingness to pay (WTP) for urban forests by the contingent valuation method. Individual WTP was found higher among tourists with graduate school education. Results suggested that WTP for urban forests also increased significantly with income and destination loyalty of the tourists. Estimated mean and median WTP values were 11.25(9511.25 (95% confidence interval: 11.25(957.34, 15.16)and15.16) and 15.16)and2.10 (95% confidence interval: 1.38,1.38, 1.38,2.82), respectively. Based on the estimated mean WTP, annual value of urban forests to tourists in Savanna in 2009 ranged from a minimum of 81milliontoamaximumof81 million to a maximum of 81milliontoamaximumof167 million with a 95% confidence interval. The annual value was 11.55million(9511.55 million (95% confidence interval: 11.55million(957.59 million, $15.51 million) based on the estimated median WTP and assuming at least 50% of the tourists in Savannah would pay the median amount. As the mean was greatly influenced by extreme WTP values in the data, the annual value based on the median value was a more conservative estimate.
A note on the contribution of Valuation economics in tourism
European Journal of Tourism Research, 2021
Valuation economics is a field which promises a wide range of applications for tourism. However, the new born nature of tourism economics has not yet unveiled the vast opportunities for tourist policy information and the pricing information embedded therein. This paper aims to briefly conceptualize these opportunities with examples on the methods and relevant examples of literature and pave the way towards their accommodation in the emerging tourism economics field. Market failure occurrences in tourism drive the need for total economic value estimation for a wide array of tourist goods through the employment of stated preference techniques and revealed preference techniques. Tourism can also benefit from the benefit transfer approach initially conceptualized in environmental economics which have contributed to a great development and expansion of these methods.
Testing the Validity of WTP values from a Contingent Valuation Survey in Portugal
1998
This paper explores the statistical validity of the willingness to pay (WTP) answers from a contingent valuation (CV) survey concerning value assessment of recreation and biodiversity protection programs. Firstly, we use a non-parametric testing approach as to evaluate the whether (a) different information levels concerning the government costs with the Park and (b) different payment vehicles influence the stated WTP responses. Secondly, we use a parametric model specification as to investigate the impact of the elicitation question format on the stated WTP responses.
Expressed Preference Methods of Environmental Valuation: Non-Market Resource Valuation Tools
2019
The objective of this paper was to give an overview of the expressed preference (EP) techniques of environmental valuation. These methods offer estimation of the value of a resource not necessarily willingness to pay (WTP) or willingness to Accept (WTA) compensation rather upper and lower values. The method of measuring individuals’ willingness to pay is usually based on contingent valuation method (CVM). This research focuses on defining, categorizing, and applicability of various environmental valuation techniques that have been and can be applied in attaching value to a given resource using expressed/Revealed preference methods. The study serves as a supplementary synthesis and discussion to the board of knowledge of resource valuation methods. More specifically, selected methods to discussed herein include; contingent valuation method, hedonic pricing model, travel cost method, trade-off game method, the costless-choice method, Delphi method, Replacement Cost Method, Relocation ...