The Necessity for Substitute Prices Recreation Demand Analyses

Abstract

Omitting substitute prices from a travel cost model is shown to cause a significant bias in consumer surplus estimates. Three sets of travel cost models are developed from a common data base representing 60,000 day‐users of U.S. Army Corps of Engineer reservoirs in Kansas and Missouri. The firct set of models omitted substitute prices; the latter two sets included them. An analysis of variance test showed that consumer surplus estimates from the first set of models were significantly higher than the other two (F = 26.2 with 2, 20 degrees of freedom). The theoretical and practical implications of these findings are discussed.

A travel cost study to estimate recreational value for a bird refuge at Lake Manyas, Turkey

“…Kling (1987), Bockstael et al (1991) and Bateman (1993) state that there is no single method for specifying quality and price of the environmental goods that account for substitute effects. Rosenthal (1987) notes that even substitute prices are reflected by the statistical analysis; this will cause a multi-collinearity problem with the price of the related recreational site. Hence, some researchers such as Ribaudo and Epp (1984) did not include the substitute prices in their analysis because of the same problems.…”

The Total Economic Value of Sport Tourism in Belt and Road Development—An Environmental Perspective

“…Excluding the opportunity cost underestimates the travel cost and recreational benefits [44]. The estimation function overestimates the recreational benefits of omitting the variable of substitute site cost [45].…”

Estimating the Total Economic Value of Cultivated Flower Land in Taiwan

“…The second issue is the opportunity cost of substitute sites. The recreation demand model must include the costs of visiting alternative sites, since omitting such information overstates the estimated consumer surplus [37]. Based on most responses to the pre-test, the substitute site in this study is Taichung Lavender Forest.…”