Modelling recreation demand: An empirical analysis using a NMNL travel cost model of fishing site choice

Models of recreation demand provide a powerful analytical tool for estimating the value people place on environmental resources. Currently, the start of the art modelling technique for recreation site choice is the nested multinomial logit (NMNL) travel cost model.;This dissertation extends the use of the NMNL travel cost model in two important ways. The first extension concerns the valuation of travel time. The most common convention is to value travel time at 30 percent of the wage rate and calculate an implicit trip price to reflect the cost of a trip. This method is difficult to justify on theoretical grounds. In this dissertation, a NMNL travel cost model is estimated using minutes travelled to a site as a measure of travel cost without scaling the travel time by the wage rate. Given a fixed trip length, the cost of travelling is reflected in reduced on-site time and hence reduced expected fish catch.;The most important result of this travel time specification is that it emphasizes the importance of travel time in the site choice decision. When travel cost is measured as minutes travelled, the result is a high estimated elasticity of the probability of visiting a site with respect to travel time. This elasticity is much higher than the elasticity obtained with the conventional implicit trip price. Since the demand curve is more elastic, changes in consumer surplus resulting from changes in the quality of site attributes will be smaller. If the travel time specification reflects the true decision making process, then specifications using the implicit trip price will overestimate the benefits of a site improvement.;The second extension of the NMNL travel cost model is the incorporation of congestion costs into the model. For those very averse to congestion, crowd levels at fishing sites are shown to be a negative and significant determinant of site choice. Furthermore, the benefits of a site improvement will be offset by an increase in congestion costs resulting from the improvement. If congestion costs are not taken into account, then estimated benefits will overstate the true benefit of a site improvement policy.