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Does ignoring multidestination trips in the travel cost method cause a systematic bias?

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  • Timo Kuosmanen
  • Eleonora Nillesen
  • Justus Wesseler

Abstract

The present paper demonstrates that treating multidestination trips (MDT) as single-destination trips does not involve any systematic upward or downward bias in consumer surplus (CS) estimates because the direct negative effect of a price increase (treating MDT as a single-destination trip) is offset by a shift in the estimated demand curve. Still, ignoring MDT can greatly underestimate or overestimate the CS. In addition, we demonstrate that there is a sound theoretical basis for using preference information for allocating travel costs between different sites included in the MDT package. A novel extreme value approach is proposed, which does not require any overly restrictive assumptions about consumer preferences. This approach is applied to the zonal travel cost model of the Bellenden Ker National Park, Australia. Parametric and non-parametric estimation techniques are used for calculating CS estimates, and the effects of different MDT treatments and estimation methods are compared. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2004.

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Bibliographic Info

Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 48 (2004)
Issue (Month): 4 (December)
Pages: 629-651

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Handle: RePEc:bla:ajarec:v:48:y:2004:i:4:p:629-651

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References

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  1. Cooper, Joseph C., 1999. "Nonparametric and Semi-Nonparametric Recreational Demand Analysis," MPRA Paper 24780, University Library of Munich, Germany.
  2. K. G. Willis & G. D. Garrod, 1991. "An Individual Travel-Cost Method Of Evaluating Forest Recreation," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(1), pages 33-42.
  3. Nick Hanley & Robin Ruffell, 1992. "The Valuation of Forest Characteristics," Working Papers Series 92/10, University of Stirling, Division of Economics.
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Cited by:
  1. Roberto Martinez-Espineira & Joe Amoako-Tuffour, 2008. "Multi-destination and multi-purpose trip effects in the analysis of the demand for trips to a remote recreational site," EERI Research Paper Series EERI_RP_2008_19, Economics and Econometrics Research Institute (EERI), Brussels.
  2. Tran Huu Tuan & Henrik Lindhjem, 2008. "Meta-analysis of nature conservation values in Asia & Oceania: Data heterogeneity and benefit transfer issues," EEPSEA Research Report rr2008072, Economy and Environment Program for Southeast Asia (EEPSEA), revised Jul 2008.
  3. Doshi, Amar & Pascoe, Sean, 2013. "Investigating the effects of sample heterogeneity on the travel cost model for coral diving in Southeast Asia," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152146, Australian Agricultural and Resource Economics Society.

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