Measuring Environmental Benefits

Travel cost and the Everglades

Suppose you've been asked to determine the recreational and scenic value of the Florida Everglades. No admission fee is charged. However, a researcher has interviewed a sample of the visitors and concluded that they come from 5 geographic zones. She has collected the following information, where “Travel Cost” is the round-trip transportation cost of visiting the area: 

ZoneTravel CostPop.Initial Visitors
A $2 2,000 400
B $4 2,000 300
C $6 2,000 200
D $8 2,000 100
E $10 2,000 0

Please answer the following questions:

  1. Using the travel cost method, calculate the number of people who would visit if an admission fee of $2 were imposed.
  2. It is also known that the total number of visits to the area (including people from all zones) is given by an equation of the form: P = A – B*Q, where P is the admission fee, Q is the number of visitors, and A and B are constants. Using this fact and the information above, calculate the value of the area.
  3. Is the value from part (2) likely to overstate or understate the true value of the wilderness? What technique could you use to determine the extent of over or understatement? Please explain in detail.
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Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 04/07/2006