Methodology
- A sample of visitors to the facility are surveyed.
- These visitors are split into "Zones" depending on their distance travelled to the facility.
- The average distance to the facility and the average travel cost to the facility from each zone are calculated.
- The Visit Rate from each zone is calculated.
i.e.) Visit Rate: The Number of Visitors from a given zone/The population of that zone
- The Visit Rate is regressed against Travel cost in order to create a Visit Rate Curve.
Visit Rate from given zone = f(Cost from given zone)
VR=a+b.C
- This curve can then be used to obtain estimates of Visit Rates given differing levels of total costs.
- This enables estimates of numbers of visitors from each zone to be made given differing level of facility price.
- The sum of the number of visitors from each zone can be plotted/regressed against these differing levels of facility price in order to create a demand curve for the facility.
- The area under this demand curve is the willingness to pay for the facility which can be used as a valuation for CBA purposes.
Read more about this topic: Travel Cost Analysis
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