International Journal of Marine Science 2016, Vol.6, No.36, 1-8
3
a. Electricity-0- No and 1-yes
b. Sanitation- 0- No and 1-yes
c. Fuel for cooking- 0- Fuel wood and 1-LPG
0
– Regression constant;
1
to
7
– Regression coefficients and µ
1
- Error term
2.2 Valuation of positive externality
- travel cost model
This method is used for valuation of environmental amenities. This method determines demand for a site based on
variables like consumer, income, price and socio-economic characteristics. Price is the sum of observed cost
elements like entry price to site, cost of traveling to site and foregone earrings or opportunity cost of time spent.
Consumer surplus associated with demand curve provides measure of value of recreational site. Travel cost models
are based on an extension of the theory of consumer demand in which special attention is paid to the value of time.
That time is valuable is self-evident.
In this study, TCM model was estimated using a count data model which assumes a semi-log function which has the
simple and attractive property of allowing the estimation of consumer surplus per trip as the inverse of the travel
cost coefficient. The demand for recreational fishing takes the semi-log form, where Vr is the expected number of
trips, tc is the travel costs per trip, and Xn represent other individual characteristics (independent variables) that
might affect demand for recreational fishing trips.
Vr= β
0
+ β
1
tc+ β
2
X
2
+ β
3
X
3
+ β
4
X
4
+……………..β
n
X
n
The consumer surplus (CS) per trip is simply the inverse of the coefficient of the travel cost variable given below
(Creel and Loomis 1990; Englin and Shonkwiler 1995a; Eiswerth et al. 2000; Betz et al. 2003).
CS= -1/βTc
Visit =
0
+
1
X
1
+
2
X
2
+
3
X
3
+
4
X
4+
µ
1
Y=Number of visit per year
X
1
-Travel cost (in Rs. /family) which included
i.
Entry fee (in Rs, / family)
ii.
Expenditure (in Rs. /family)
iii.
Loss of pay on the day of tourism (in Rs. / family)
X2-Size of group
X3-Distance from native (meter)
X4-Annual income of tourists (in Rs)
3. Result and Discussion
3.1 Hedonic model
The hedonic model is one of the household production function models which uses the indirect valuation
technique. This model involved decomposition of the price of land or of the house into the price of attributes,
which could be done by using hedonic price function. The hedonic price function links the land or house price
with their attributes. The marginal price for an attribute computed from the hedonic price function gives a measure
of willingness to pay for that attribute. Before employing the hedonic regression, the house features of the sample
households were studied and presented in Table 1.
