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The travel cost method of economic valuation, travel cost analysis, "travel cost method" 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 (i.e. National Parks, Beaches, Ecosystems). The aim of the method is to calculate willingness to pay for a site and the total value of the site. In contrast, the "hedonic travel cost method" is similar but focuses on the separate characteristics' values of each public good and the impact created by each specific characteristic of a site.

Explanation
"The basic premise of the travel cost method is that the time and travel cost expenses that people incur to visit a site represent the “price” of access to the site. Thus, peoples’ willingness to pay to visit the site can be estimated based on the number of trips that they make at different travel costs.  This is analogous to estimating peoples’ willingness to pay for a marketed good based on the quantity demanded at different prices." The "hedonic travel cost method" focuses each individual part of the site and the benefits created by the location.

Reliability and Other Factors
The reliability of the "travel-cost method" is only reliable if the economists doing the analysis control for other potential factors that could have an effect on the people willing to travel to the location. In fully determining the "travel-cost method" rather than using actual consumer prices and money spent, researchers use researcher-assigned values which could lead to inaccurate data.

Potential Problems
The potential problems with the "travel cost analysis" arise because the worth of people's time is not included within the total consumer surplus, or the visitor rate. For example, a lawyer's time is worth more than the millionaire that does not have to work.

Methodology
Travel-Cost Analysis based on visitor rate: i.e.) Visit Rate: The Number of Visitors from a given zone/The population of that zone
 * A sample of visitors to the facility are selected
 * These visitors are split into "Zones" depending on their distance travelled to the facility.
 * The average distance to the facility and the average travel cost to the facility from each zone are calculated.
 * The Visit Rate from each zone is calculated.

The Visit Rate is regressed against Travel cost in order to create a Visit Rate Curve. Visit Rate from given zone = f(Cost from given zone)

VR=a+b+c


 * This curve can then be used to obtain estimates of Visit Rates given differing levels of total costs.
 * This enables estimates of numbers of visitors from each zone to be made given differing level of facility price.
 * The sum of the number of visitors from each zone can be plotted/regressed against these differing levels of facility price in order to create a demand curve for the facility.
 * The area under this demand curve is the willingness to pay for the facility which can be used as a valuation for CBA purposes.

Travel-Cost Analysis based on the consumer surplus:
 * Number of visitors are collected
 * Amount of money spent and to reach the location is collected.
 * The amount of money is plotted on the y-axis while the x-axis is the distance to the facility.
 * The consumer surplus for each zone is created.

Total Consumer Surplus= Area A Consumer Surplus+Area B Consumer Surplus+Area C Consumer Surplus Consumer Surplus= base*height*(1/2)+base*height The area to the left of the zonal divisions on the supply-demand curve of the travel cost


 * The curve can then be used see to the amount of money that the facility generates that is not received by the facility itself, but apart of the industry surrounding this location.
 * This curve helps to show the extra amount that the facility is worth in terms that could not be seen by just looking at the actual revenue.



Both of these equations follow the same format, however they utilize different information to come up with the travel cost. Visitor Rate focuses more on the estimates of who visits the location, and the different costs to those consumers. Consumer Surplus shows how the consumers benefit from attending the location and the benefits from people farther away coming too.
 * This graph shows that the consumer surplus is the area to the left of the line.

Category:Environmental economics