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The travel-cost technique

The concept

A rational individual will weigh up the costs of a recreational visit against the benefits of the visit and then display the answer in actual behaviour. In this way, the willingness to pay for use of an environment is inferred from travel expenditures of those who visit it. Data on actual travel costs (including food costs, accommodation costs and any forgone income) can be collected by a survey and willingness to pay to visit the site can be derived from them. The benefits to a given individual are the cost savings relative to the other individuals who visit the same recreational environment.

When to use it

How does the value of recreation change when the environment changes?
Do increases in recreation benefits from improvements in environmental quality exceed the cost of the improvements?
Does the increase in recreation benefits from conserving an area exceed the loss in development benefits from conservation?

To resolve these questions, the monetary values need to be estimated for the benefits of recreation and environmental quality and the costs of deterioration in environmental quality and recreational amenity.

The technique was applied to help planning in the Colo Shire, located on the northwest outskirts of Sydney. In the early 1970s, recreational conflicts had arisen due to the combination of the attractive natural environment and the large adjacent population. The conflicts included:

Should untouched areas of the shire be opened up?
What types of recreation should be promoted? Should they meet local or visitor demand
Should the developments meet the needs of specific groups and which groups?

To address these conflicts, a study was conducted by Planning Workshop Ltd (Sydney) to provide a profile of the main recreation uses and users, to provide information on factors shifting demand and to evaluate the benefits from each of the main activities (Sinden 1978). Benefits were estimated by the travel-cost technique for each of the major recreation activities (water-skiing, water picnicking, picnicking on land, driving for pleasure, visiting the Australiana village and visiting the butterfly farm). The most beneficial activities were driving for pleasure and picnicking, while water-skiers derived the least net benefit per day.

Box 4.1: Applications of the travel-cost technique

The technique has been applied to value the benefits of recreation in:

the Grampians forests of Victoria (Ferguson and Greig 1973)

the Warrumbungles National Park of New South Wales (Ulph and Reynolds 1978)
the Great Barrier Reef (Hundloe et al. 1987)
Kakadu National Park in the Northern Territory (Knapman and Stanley 1991)
the state forests of southeastern New South Wales and East Gippsland in Victoria (Resource Assessment Commission 1992b).

Strengths and weaknesses

The travel-cost method has been applied in many studies in Australia and has provided plausible estimates of monetary values for recreation in natural environments. The strengths of the technique are its use of:
- actual behaviour of visitors as they adjust to changes in the actual costs they incur
- actual data on the costs of the visit.
The method relies on a number of assumptions which, if violated, complicate its use. For example:
- travel must be undertaken solely for the purpose of visiting the site
- travel costs must be a proxy for entrance fees.
If these assumptions hold, travel-cost values are comparable with those obtained in actual markets. If they do not hold, the technique must be applied differently. For example, the cost data from multi-purpose trips may have to be arbitrarily apportioned to each destination and this can affect the accuracy of the results.