Combining Hedonic Pricing And Travel Cost Method For

COMBINING HEDONIC PRICING AND TRAVEL COST METHOD FOR BY ARCHIBONG UBONG

OVERVIEW • The Hedonic pricing and contingent evaluation are both use value approaches in valuing the environment.Furthermore they are revealed preference approaches in valuing the environment. • The only fundamental difference is that travel cost is based on the amount of time you use to get to the environmental good while hedonic pricing is not necessarily so. • Hedonic pricing is mostly used in the

CHALLENGES • The travel cost assumes people are the same regardless of where they reside,that is it values time at 0 • Since hedonic pricing method mainly deals with the housing market ,in some parts of the world there is pausity of housing market data.

THE HEDONIC TRAVEL COST MODEL BY BROWN G AND R

EXPLANATION OF MODEL • The various values are derived assuming 10% per mile travel cost and an opportunity cost of time at 30% wage rate.

CONTINUATION •

This study develops a hedonic travel cost model which reveals how much users are willing to pay for individual characteristics, or qualities of a recreational site, such as scenery, lack of congestion and fish density. For the study, a sample of 5,500 randomly selected licensed fishermen in Washington were analyzed. A series of inverse demand functions modeled the hedonic price of these qualities as a function of the average level of fish density, scenery, congestion as well as income, experience and the predicted number of trips. Overall, the researchers concluded that anglers travel further distances to obtain higher qualities of characteristics studied. The most valuable characteristic, however, appears to be fish density. Density has an average value of $4.80 per trip, or $110 per season. Further, a 20 percent

LIMITATIONS OF THE STUDY • The authors did not indicate the year of data or the year of the estimate values . • If to be used for policy advice,it will be controversial and difficult to accept.

SUMMARY • The Hedonic Travel Cost model is easy to use anywhere. • It gives estimates in that it uses the market to infer how people value things in the market that are not necessarily in the market place hence it is called the revealed preference method.

CONCLUSION • This study has made a bold attempt to illustrate the Hedonic Travel Cost model,its merits and demerits.

RECOMMENDATION • This model is often criticised like other economic models .In order to tackle this problem I would advocate you do not outrightly discard your model because of contrary views but do a sensitivity analysis.

REFERENCES • EVRI WEBSITE • INTRODUCTION TO ENVIRONMENTAL ECONOMICS,NICK HANLEY,JASON F.SHOGREN,2001