Hello, While going through a couple of literature I found that the consumer surplus estimate in a TCM study, at times becomes very sensitive. What could be those factors causing the sensitivity and how to tackle the issue? Can anybody help?
Hi Daisy,
To build on the previous answers I would say that TCM may be sensitive to three main effects. First, the time spent covering the distance to a recreational destination should be perceived as a cost (scarcity value) but may also be enjoyed as part of the recreational trip (commodity value) (see for instance McConnell, 1992).
Second, people who like to travel to a certain type of destination may decide to live near such destination, which contradicts the travel cost proxy. It's an endogeneity effect called "spatial sorting effect" (see for instance Baerenklau, 2010).
Third, the spatial context should ideally be controlled for as every location is different. Eligible substitutes to the primary site under valuation may exist at different distances and in different proportions (see for instance Jones et al., 2010). I have also studied substitutability in the case of outdoor recreation (see De Valck et al., 2016).
Hope this helps. Good luck!
References:
- Baerenklau, K.A., Conzález-Cabán, A., Paez, C., Chavez, E., 2010. Spatial allocation of forest recreation value. Journal of Forest Economics 16(2), 113–126.
- De Valck, J., Broekx, S., Liekens, I., De Nocker, L., Van Orshoven, J. & Vranken, L. 2016. Contrasting collective preferences for outdoor recreation and substitutability of nature areas using hot spot mapping. Landscape and Urban Planning, 151, 64-78.
- Jones, A., Wright, J., Bateman, I., Schaafsma, M., 2010. Estimating Arrival Numbers for Informal Recreation: A Geographical Approach and Case Study of British Woodlands. Sustainability 2, 684–701.
- McConnell, K.E., 1992. On-Site Time in the Demand for Recreation. American Journal of Agricultural Economics 74(4), 918–925.
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