Measuring the opportunity cost of time in recreation demand modelling: an application to a random utility model of whitewater kayaking in Ireland

Abstract

The treatment of the opportunity cost of travel time and the measurement of travel costs in recreational demand modelling has been a contentious issue for many decades. This paper demonstrates how a potential wage rate can be used in the measurement of the opportunity cost of travel (leisure) time in order to calculate the travel costs associated with a recreational activity. Most recreation demand studies use a fraction of the wage rate extracted from the gross income variable for the sample population, in calculating the opportunity cost of travel time and each individuals overall travel cost. However, we use each individuals potential hourly wage, as predicted by an earnings model from a secondary dataset, based upon that persons actual socio-economic characteristics. These travel cost estimates are then used in a multi-nomial logit random utility site choice model to calculate the demand for whitewater kayaking in Ireland. We also use the whitewater site choice models to estimate the welfare impacts of a number of different management scenarios.