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The Opportunity Cost of Travel Time in Recreation Demand Models

Author(s): V. Kerry Smith, William H. Desvousges and Matthew P. McGivney
Source: Land Economics, Vol. 59, No. 3 (Aug., 1983), pp. 259-278
Published by: University of Wisconsin Press
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 The Opportunity
in Recreation
V. Kerry Smith, William H. Desvousges, and Matthew P. McGivney
I. INTRODUCTION
The purpose of this paper is to evaluate
current proposals for valuing travel time in
the specification of recreation demand
models. Based on a household production
framework, our analysis examines the im-
plications of the treatment of travel and on-
site times in recreation models. The empiri-
cal results are based on demand functions
estimated for 43 water-based recreation
sites with the Federal Estate component of
the 1977 National Recreation Survey.
Overall, our findings suggest that the
treatment of the cost of on-site time has im-
portant implications for any evaluation of
the opportunity cost of travel time in recre-
ation models. Approximately half the esti-
mated site demand models were influenced
by the treatment of the costs of on-site time
in the specification of the site demand func-
tions. For sites that were not affected by the
cost of on-site time, our evaluation indi-
cated that we could not discriminate be-
tween the two possible measures of the op-
portunity cost of travel time. Both the wage
rate-in 15 of 22 sites-and the Cesario
(1976) proposal-in 14 of 22 sites-could
not be rejected as appropriate measures of
this opportunity cost. For those sites where
the costs of on-site time were important de-
terminants of site demand, the majority re-
jected both hypotheses. Thus, these find-
ings reconfirm the importance of the
selection of measures for the opportunity
cost of time involved in outdoor recreation.
Moreover, they suggest that simple approx-
imations, such as treating the opportunity
cost as a fixed multiple of an individual's
LandEconomics,Vol. 59, No. 3, August 1983
0023-7639/83/003-0259$1.50/0
? 1983 by the Boardof Regents
of the Universityof Wisconsin System
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Cost of Travel Time
Demand Models
wage rate,are not likely to resolve the prob-
lems associated with defining a measure of
these costs that is both theoretically con-
sistent and practically feasible with exist-
ing datasources.
There are two reasons for evaluating the
appropriate treatment of the opportunity
cost of travel time with informationon the
usage of a large number of recreationsites.
First, our theoretical analysis suggests that
the appropriatevaluation of time devoted
to recreationtrips depends on the natureof
the time constraintsfacing each individual.
It implies that the measure of the opportu-
nity cost of time will depend on the types of
trips undertaken-e.g., long vacations ver-
sus weekend excursions-and on the indi-
vidual's available leisure time. Second,
several recent studies have identified the
key role played by the opportunity cost of
travel time in recreation demand analysis.
Forexample, in their application of the tra-
vel cost methodology, Bishop and Heber-
lein (1979) found that the estimated con-
sumer surpluses were very sensitive to the
treatmentof the opportunity cost of travel
time. Nichols, Bowes, and Dwyer (1978)
concluded their review of the availableevi-
dence on the valuation of travel time, not-
ing the important role of opportunity cost
Centennial professor of economics, Vanderbilt
University, senior economist and economist, Re-
search TriangleInstitute, respectively. This research
was supported under a U.S. EnvironmentalProtec-
tion Agency ContractNo. 68-01-5835. Thanks are
due to Ann Fisher for comments throughout the re-
search, to the participants in Resources for the Fu-
ture's QE Seminar Program for most constructive
comments on several aspects of this research,and to
Suzanne Holt and an anonymous refereefor detailed
and constructive comments on an earlier draftof the
paper.The views expressed in the paper are those of
the authorsand not of either their institutions or the
funding institution.
260
measures. They observed that there was
.... a severe lack of empirical information
aboutthe value of travel time to recreation
sites." Wilman (1980) echoed these conclu-
sions in a recent theoretical analysis of the
alternative conceptual frameworks for
treatingtravel and on-site time. Moreover,
she noted that empirical work was needed
to clarify the appropriateassumptions and
values required to specify a role for time
costs in travel cost demand models.
On the whole there have been some ef-
forts to respond to these suggestions, but
the information available on this problem
remains quite limited. For example, Mc-
Connell and Strand (1981) argued that the
opportunity cost of travel time should be
treated as a fraction of the wage rate that
may vary across recreation sites. Conse-
quently, they suggested estimating this
fractionby entering out-of-pocketcosts per
trip and the time costs valued at averagein-
come per hour separately in each site-
specific demand model. While McConnell
and Strand acknowledged a number of
problems with their approach (which in-
volves estimating this fraction as the ratio
of randomvariables),they were optimistic
about its potential in recreation demand
analysis.'
Our research extends past analyses of
the opportunity cost of travel time in three
ways:
(a) We propose an alternative method
for estimating the wage rates used in ap-
praisingan individual's opportunitycost of
time. This approach uses a hedonic wage
model to predict, for each individual, a
wage rate based on the individual's per-
sonal, job, and residential site characteris-
tics.2
(b) We specify the travel cost demand
models so thatthe treatmentof the opportu-
nity cost of traveltime is a testablehypothe-
sis. This allows the theoretical arguments
for valuing time at "scarcity"or "commod-
ity" values (see Cesario 1976 and Wilman
1980) to be evaluated statistically.
(c) We explicitly examine the potential
role for the costs of on-site time in recrea-
tion site demand functions.
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Land Economics
Section IIreviews the past theoreticalar-
guments that have attempted to define the
opportunity cost of travel time. Section III
develops a general formulation of the de-
mand for a recreationsite's services using a
household production framework de-
signed to consider these opportunity costs.
Section IV describes the data used in our
analysis and the basic structureof the esti-
mating model. Section V reports our esti-
mates of the demand functions for each site
and results from hypothesis tests. The final
section summarizesthe implications of the
analysis.
II. MODELINGTHEROLEOF TRAVEL
TIME:A REVIEWOF THEISSUES
All of the economic models that describe
the recreation decisions of a household as-
sume an individual seeks to maximize util-
ity subjectto time and budget constraints.3
'Their specific application required a number of
restrictive assumptions to treat average family in-
come as a measureof the opportunitycost of time, in-
cluding: zero tax rate, constant marginal earnings,
and zero nonwork income. Moreover,family income
must be synonymous with the individual's income,
and the individual cannot acquire utility from work.
Theirspecificationsomitted income as a determinant
of site demand. While the use of average income to
measure the opportunity cost of time does not pre-
clude inclusion of the total income measurein the de-
mand function, it can induce high collinearity and
thereby impede precise estimates of both price and
income parameters.
The specific nature of the effect will also depend
on how the traveltime is derived. In many cases, it is
estimatedfromround trip distance (d) as d/s, where s
= velocity. In these cases, a demandmodel includes,
expressedin termsof travelcost, the opportunitycost
of travel time, and income would include variables
with similar arguments, (i.e., cd (I/H), (d/s), and I,
where c = travelcost per mile, I = family income, H
= numberof hours of work per year).Since these var-
iables include several constants (i.e., c, H, and s), the
degree of collinearity between them would depend
on the extent of independent variation in the other
variablesin these expressions.
2Theuse of a projectedwage ratefor each individ-
ual that attempts to incorporatethe attributesof the
job (as leading to compensating differentials)seems
to be consistent with McConnelland Strand's(1981)
suggestionsfor furtherresearch.
3Inwhat follows we use the terms "household"
and "individual"as synonyms. See Becker(1974) for
theoreticaljustification.
Smith, Desvousges, and McGivney:Travel Time
These models are distinguished by the
level of detail used to describethe interrela-
tionships between the numberof recreation
trips, the time spent at recreationsites, the
activities undertakenon site, and the other
goods and services consumed by the indi-
vidual. For the most part, earlier studies
have adopted one of two simple formula-
tions of the consumer choice process. In the
first, a composite market good and recrea-
tion trips (McConnell1975;McConnelland
Strand1981) provide utility. In the second,
income and the amounts of work and lei-
sure time (Cesario 1976) enter the utility
function directly. With the first model, all
recreationtrips are homogeneous in length
with the time requirements fixed per trip.
Time allocated to recreation must be di-
verted from other uses if the recreationtrip
is to be taken. While time has occasionally
been separated into components-travel
time and on-site time-the distinction is
unimportant,because neither one is treated
as a choice variable.
The second approach for modeling the
role of time in recreation decisions con-
siders the general problem of allocating
time between work and leisure activities. It
assumes that the decision to visit a recrea-
tion site is equivalent to any other leisure
time decision. Unfortunately, this frame-
work does not provide direct guidance as to
how observable market prices-whether
explicit or implicit-influence these
choices.
Wilman's (1980) conceptual analysis
can be interpreted as an attempt to bridge
the gap between these two types of models
and provide a rationale for defining im-
plicit prices for the differentuses of leisure
time. The Wilman model specifies utility to
be a function of goods and services requir-
ing time, those not requiringtime, and two
measures of use of a recreation site-the
number of visits of a given length to a site
and the number of round trips to that site.
The latteris intended to reflectany satisfac-
tion derived from traveling to the recrea-
tion site. By assuming that the time and
budget requirementsare fixed multiples of
each of these decision variables, Wilman
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261
links the choice variables to the house-
hold's time and income constraints.
The basis for her derivationof a different
implicit valuation of travel and on-site
times is an assumption that the number of
trips and visits to a site are equal. The re-
sulting firstorderconditions requireequal-
ity between the sum of the marginal utili-
ties of trips and visits, and the
correspondinggoods and time costs of each
(weighted by the appropriate lagrangian
multipliers). Equation [1] below repro-
duces a simple version of the relevant first-
ordercondition.
MUV+ MUT= h(Pvbv+ PTbr)+ k(aT + av)
[1]
where:
MUv = marginal utility of a visit (v);
MUT = marginalutility of a trip (T);
bv,bT= goods requirements for visits and
trips, respectively;
PV,PT = prices of goods required for visits
and trips;
aV,aT= time requirements for visits and
trips, respectively;
h, k = lagrangianmultipliers.
The lagrangianmultiplier, k, can be inter-
pretedas the scarcityvalue of time. Wilman
rearrangesequation [1] as equation [2] in an
attempt to distinguish the values used for
on-site and travel times.
MUv = h(Pvbv + PTbT) + kav
+ aT(k - MUT/aT) [2]
In this formit is arguedthat there is a dis-
tinction between the appropriate implicit
valuation of on-site time (ar) and travel
time (aT).That is, the on-site time seems to
be valued at the scarcityvalue (k)while tra-
vel time is valued by the scarcity value less
the "commodity value of time" (MUT/aT)
(see De Serpa 1971 and Cesario 1976). How-
ever, this distinction is an artificial one,
since it is only one of an infinite number of
cost allocations. To establish this conclu-
sion let c1 be a positive constant between
zero and one. A completely equiva-
262
lent description of the necessary condition
given in [1] using c1 is then:
MU, = h(P.b~ +PTbT) + a,(k - clMUT/av)
+ aT(k - (1 - cl)MUT/aT)
In this case neither type of time is valued at
the scarcity value of time (k). Rather,each \[wtw + R- PrXr - PoXo-c(di VI + d2V2)]
sharesin the loss of the commodity value of
time depending upon the value of c1.
Wilman's formulation is simply a special
case of [3] with c1 = 0.
While Wilman proposed this rearrange-
ment in the allocation condition for visits
and trips in an attempt to take account of
the potential utility derived from travel where:
time, it is importantto note that trips and
visits are delivered jointly on a one-to-one
basis in this version of her model. They
must be treatedas a single commodity and
any cost allocation between them is arbi-
trary.4Indeed, once the equality assump-
tion between trips and visits is dropped,
Wilman'smodel implies that both types of
time should be valued at their scarcity
value (k) (see Wilman 1980, equation [24]).
Thus,the existing recreationliteraturedoes
not provide an unambiguous theoretical
justification for distinguishing the valua-
tion assigned to the travel and on-site time
components of a recreationalexperience.
PRODUCTION
III. A HOUSEHOLD
MODEL
FORRECREATION DECISIONS
To recognize Cesario'sconcerns over the
types of time constraints,we propose an ex-
tension to the household productionframe-
workfor modeling outdoorrecreationdeci-
sions.5 Assume for simplicity that the
household produces and consumes two
final service flows-recreational activities,
Zr,and a nonrecreation composite service
flow, Zo. These activities are selected to
maximize utility subject to the constraints
of: (a) the household production technolo-
gies for Zrand Zo;(b) the budget constraint
for purchasedinputs; and (c) two time con-
straints.
Equation [4] presents the household's
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Land Economics
constrained objective function with
U(Zr,Zo) the utility function and f4(.) and
fo(.)the household productionfunctions for
recreationand nonrecreationservice flows,
respectively.
[3]
G U(Zr,Zo)+ =
+ 0I[Z,- fr(Xr, VI, V2,tvi, tv2)]
+ 02[Zo - fo(Xo, ta)] + (pi(1i - tw- t,)
+P2[ t2
-
VI(tv + t) - V2(tv2 +
t2)] [4]
tw= worktime;
w = wagerate;
R = nonearnedincome;
Xi = marketgood(i = r,o);
Pi = priceof Xi(i = r,o);
c = vehicle-related travel cost per
mile;
V1= numberof trips to ith recreation
site (i = 1,2)6;
di = round trip distance to ith recrea-
tion site (i = 1,2);
tj,tvi = travel time and time spent on site
per trip to ith recreation site (i =
4Burt and Brewer (1971) anticipated this conclu-
sion in a discussion of the appropriate unit of mea-
sure for outdoor recreation consumption in an appen-
dix to their paper. They observed that:
The literature on outdoor recreation economics
abounds with discussions of the cost in time and in-
convenience of traveling to the source of recreation
services. Since these costs are extremely nebulous to
quantify, there is considerable advantage in defining
the recreation unit in a way that avoids this indirect
cost.... Travel time can be a pleasure or a cost, de-
pending on the scenery, road, traffic congestion, etc.;
but it is an inseparable part of the recreation trip. In
other words, travel time and the recreation experi-
ence itself are a package of commodities in the usual
economic sense, and the consumer has no alternative
to the particular package presented to him by his spa-
tial location (Burt and Brewer 1971, p. 826).
5This framework was originally proposed by
Becker (1965) and has been developed for recreation
modeling by Deyak and Smith (1978) and Bockstael
and McConnell (1981).
8Separate terms for the visits to each of two sites
are included in this specification of the production
function to reflect the prospects for site substitution.
Smith, Desvousges, and McGivney:Travel Time 263

1,2); assumed constant for all available,but when it is free may not coin-
trips; cide with the requirements of the desired
ta = time allocated to the production activities.
of nonrecreational service flows; The use of multiple time constraints is
t, = total time available for work and an attemptto reflectall of the dimensions of
nonrecreational activities; time availability within a comparative
t< = total time available for recrea- static framework.The two constraints can
tional activities. be considered to reflect time at different
X,O9,02,0p1,4p2,are lagrangian multipliers. periods during the time horizon of the
model. For example, t2 might be inter-
The specification of two time constraints
preted as the total time available between
requires additional clarification. In de- twelve noon and five p.m.
scribing the rationale for his analysis of the To consider the implications of this for-
opportunity cost of travel time to recreation mulation of the consumer choice problem,
sites, Cesario (1976) observed that: we have solved the first-orderconditions
... it seems farfetched to assume that the for a maximum of equation [4]. This yields
recreation tripmaker is trading off time for a relationship that is comparable to the
travel with time for work. It seems much marginal conditions in a conventional
more likely that the tradeoff is between model of consumer choice, as given in
time for travel and time for leisure activi- equation [5].
ties, which we loosely define to be activi-
ties conducted during nonwork hours, MUzOMP a MUZoMPx?o MUzrMPr
whether they be in the form of rest, sleep, [51
w PO PI
gardening, outdoor sport, etc. (Cesario
1976, p. 34).
MUzr MPv
Cesario has expressed one of the reasons 2
for dissatisfaction with conventional treat- cdl + w(tvl + tl)
q9,
ments of the consumer's decisions on allo-
cating his (or her) time. Comparative static MUzr. MPr
models do not reflect the importance of 2
"the timing of the time" in allocation deci- d2 + w(tv2 + t2)
sions related to the use of an individual's
time. For example, it may be difficult for MUzr 'MPt, MUzrMPtr
some individuals to have discretion over
P2 2
the use of their time at all times of day (or -wVWV V2
week or month). These constraints may cpl
arise from occupations that limit flexibility, where
from the availability of daylight hours
which may be required for particular recre-
MUzi = marginalutility of ith final service
flow (i = r, 0);
ational activities, or from a number of other MPf = marginal product of jth input in
constraints influencing households' behav-
production of Zr (j = Xr, Vi, V2, tvl,
ioral choices. Unlike the constraints im-
42);
posed by the total amount of time available MPO= marginal product of sth input in
for leisure activities, these constraints
reflect the limits of the timing of free time. production of Zo (s = Xo,ta).
An individual working the night shift has The important elements for consider-
discretion to use his (or her) free time for an ation of the role of differenttypes of time in
afternoon baseball game, but cannot allo- equation [5] are the expressions involving
cate time for "prime time" television pro- the "marginal utility products" of visits
grams or for an evening performance of a and time on site for each of the two types of
play. The total amount of time may well be sites (i.e., the last four ratios in the equality

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264
given in [5]).The denominatorof each ratio
can be interpretedas an "implicit" price of
each choice variable.Thus, this framework
clearly illustrates that, assuming no entry
fees, there are are three components of the
cost of a visit to a site: vehicle-relatedtravel
costs (cdi),the cost of travel time,
( -2W ti)
and, because the model restrictsall trips to
the same amount of time on site, the on-site
time cost of one more trip
( 2wtvj)
(Pi
In general,the relevant opportunity cost of
travel time will differ from the wage rate
(except where (92 = (pi). Since (p and
lagrangianmultipliers and can be expected
to be functions of all the parametersto the
consumer's optimization problem, includ-
ing the wage rate, the most appropriatein-
terpretationof [5] implies that the opportu-
nity cost of time is best treated as a
nonlinear function of wages. Moreover,for
our particularformulation of the decision
process, the opportunity cost is the same
function of the wage for both the time on
site and the travel time per trip.
Based on this model, the Cesario (1976)
and McConnell-Strand(1981) approaches
to valuing travel time can be interpretedas
practical attempts to approximate this
more complex-and theoretically appro-
priate-expression for the opportunity
costs. Unfortunately, our model does not
suggest an empirically feasible approach
for treatingthese time costs, because more
detailed information on the time con-
straints facing recreationists would be re-
quiredthan is available.
Inaddition, our model implies that some
consideration should also be given to the
role of on-site time. On-site time is both a
component of the cost of a trip and a choice
variable.In the absence of specific informa-
tion on these time constraints, we can ex-
pect their effects will be reflectedin the per-
formanceof the methods for approximating
opportunitycost. They may also influence
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Land Economics
the perceived importanceof on-site time in
recreation demand models. For example,
most recreationists' trips to areas that at-
tract national attention involve different
types of time constraintsthan trips to local
areas.Generally,the time availablefor trips
to national sites is constrained by the indi-
vidual's annual vacation. In contrast, the
demands for recreational areas attracting
users within its immediate vicinity are
more likely to reflect weekend or short-trip
visits. Our frameworkimplies that no one
approachfor estimating the costs of travel
time will suit all types of recreationequally
well. Thus, there is theoretical support for
assessing the performance of the current
proposals for measuring the opportunity
costs of time with informationon a number
92 are of recreationsites.
IV. DATAAND MODELSPECIFICATION
The Federal Estate component of the
Heritage Conservation and Recreation
Service's 1977 National Outdoor Recrea-
tion Survey provided the visitor informa-
tion to estimate our travel cost demand
functions. Although 13,729 recreationists
were interviewed at 155 sites, our analysis
was confined to 43 U.S. Army Corps of En-
gineers sites with consistent visitor infor-
mation. These sites were selected because
they provide a fairly comparable range of
water-basedrecreationalactivities. Table 1
identifies the sites we selected and pro-
vides informationon some featuresof each
site and of the survey respondents.
The Federal Estate survey includes de-
tailed socioeconomic information on each
respondent, the travel time incurred to
reach the site, a variety of variables indica-
ting the respondents' attitudes toward out-
door recreation, and the length of the trip
during which they were surveyed. Round
trip distances were not included. However,
it was possible to measure these distances
because the zip codes for surveyed individ-
uals' residences were reported. The dis-
tance measurements assumed that respon-
dents used interstateand primaryroads to
reacheach site. The travel costs per mile (c)
Smith, Desvousges, and McGivney:Travel Time
were assumed to be 8?, based on the 1976
estimate of the averagecost of operatingan
automobile (source: U.S. Statistical Ab-
stract1978).
As in most recreation surveys, the ques-
tionnairedid not ask the respondent's wage
rate. Since this variable plays an essential
role in any evaluation of the opportunity
costs of travel time, it is important to de-
scribe how these wage rates are estimated
in our empirical results. Past studies have
either assumed a constant wage rate for all
individuals (see Cicchetti, Fisher, and
Smith 1976) or used an averageincome rate
per hour based on reported family income
(see McConnell and Strand 1981). Both of
these practices have been acknowledged to
provide very crude proxy estimates for
wage rates. Our alternative approach uses
the predictions from hedonic wage models
estimatedseparatelyfor males and females.
These models were estimated with the
1978 CurrentPopulation Survey (the sur-
vey was actually undertakenin 1977), spec-
ifying the nominal wage rate to be a semi-
log function of a local cost of living index
and variables measuring:(a) the character-
istics of each surveyed individual, includ-
ing age, education, job experience, sex,
race, occupation, and other indicators of
family status;7(b) the attributes of the re-
spondent's job and industry; and (c) the
characteristicsof the individual's residen-
tial location, such as climatic conditions,
crime rates, air quality, etc.8
The Federal Estate survey provided suf-
ficient information (i.e., on individual, job,
and residential site characteristics)to use
these wage models to predict wage ratesfor
each individual. When data for variablesin
these wage equations were not available,
the sample means from the 1978 CPS sur-
vey were used. Of course, our estimates
should be regardedas proxy measures for
the actualwage rates.Since the wage model
is a semi-log, we can expect the predictions
to understatethe estimated conditional ex-
pectation for a wage rate. While Gold-
berger's(1968) proposed unbiased estima-
tor for this conditional expectation would
be superior, for large degrees of freedom
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265
(ourCPSsample contained 9,077 for males
and 7,067 for females) and a small errorvar-
iance for the estimated model, the bias in
our estimates will be small. A 10%discrep-
ancy would be a generous outer bound on
the magnitude of the percentagedifference
between our direct predictions of these
wage ratesand the estimates based on Gold-
berger'smethod. Indeed, in most largesam-
ple applications (see the examples in Gold-
berger 1968 and Giles 1982), the actual
differences are under 5%. Thus, despite
this limitation, we feel these estimates pro-
vide a betterset of proxy measuresfor wage
rates than the available alternatives in that
they takeexplicit account of individual and
job characteristics. To consider the pro-
spective differences,we have comparedav-
erage income rates (using family income)
by income class and by occupation with the
average wage predictions for these same
categories.Table 2 indicates that while the
two types of estimates generally move in
the same direction over occupation classes,
there are substantial differences for the
upper-income classes, where family in-
come may reflect the effects of substantial
non-wage income and the impact of dual
earnerhouseholds.9
Equation[6] specifies the generalformof
the travel cost demand model used to eval-
uate the alternative methods for treating
travel time. Based on its performancewith
site demand models and on the growing
support for this form from earlier findings
(see Smith 1975; Ziemer et al. 1980,,,and
7In practice, these data sets do not have a direct
measure of experience and utilize a proxy-age mi-
nus education and minus sex. Thus, both the proxy
for experience and age are not included as separate
determinants of individual wage rates.
8Formore details on the model and the wage equa-
tions using the real wage as the dependent variable,
see Smith (1983). The estimated wage models with
the nominal wage are available on request from the
first author.
9The CPS survey also limits the reported usual
weekly earnings to $999. Hence, there is some censor-
ing in the wages reported for individuals likely to
have these higher annual incomes. This may also par-
tially account for these findings.
 TABLE 1
THE CHARACTERISTICS OF THE SITES AND THE SURVEY RESPONDENTS SELECTED FROM THE FEDERAL

Characteristics of Survey Respondents

Site Characteristics Predicted

Wage Rate Household Income Visits (T + M
Property Recreation Shore Area
Project name code days miles acres X c X Ca X o- X

Allegheny River 300 - - - 5.45 1.65 15,667 8,625 2.6 2.5 45.19
System, PA
Arkabutla Lake, MS 301 2,011,700 134 52,549 5.23 1.45 13,184 8,974 5.4 2.7 20.04
Lock &Dam No. 2
(Arkansas River
Navigation
System), AR 302 343,700 96 32,415 5.24 1.03 10,409 3.991 6.8 2.0 3.04
Beaver Lake, AR 303 4,882,600 449 40,463 5.59 1.70 18,150 9,946 3.5 3.0 94.55
Belton Lake, TX 304 2,507,000 136 30,789 5.52 1.51 17,279 11,913 6.0 2.8 33.18
Benbrook Lake,
TX 305 1,978,000 37 11,295 5.00 1.21 19,135 10,065 2.3 1.2 30.23
Berlin Reservoir, OH 306 1,179,000 70 7,990 5.44 1.24 16,459 10,161 5.2 2.9 21.15
Blakely Mt. Dam,
LakeOuachita, AR 307 2,104,300 690 82,373 5.24 1.53 17,144 9,524 4.3 2.8 45.39
Canton Lake, OK 308 3,416,500 45 19,797 5.09 1.54 17,392 10,553 4.6 3.2 32.30
Clearwater Lake, MO 309 888,000 27 18,715 5.43 1.38 17,943 8,456 4.0 2.7 50.51
Cordell Hull Dam
&Reservoir, TX 310 2,167,900 381 32,822 5.43 1.58 15,491 9,215 5.7 2.9 29.65
DeGray Lake, AR 311 1,659,700 207 31,800 5.17 1.58 19,235 10,612 4.8 2.7 42.04
Dewey Lake, KY 312 1,116,800 52 13,602 5.83 2.10 18,021 9,559 2.4 2.0 90.75
Fort Randall, Lake
Francis Case, SD 313 4,756,000 540 133,047 5.43 1.69 20,696 11,705 3.3 3.1 100.29
Grapevine Lake, TX 314 5,139,100 60 17,828 5.20 1.58 19,309 10,992 6.3 2.6 38.45
Greers Ferry
Lake, AR 315 4,407,000 276 45,548 5.15 1.45 15,890 8,562 4.7 3.0 54.16
Grenada Lake, MS 316 2,553,900 148 86,826 5.13 1.56 9,199 4,833 6.4 2.6 24.57
Hords Creek Lake,
TX 317 359,500 11 3,027 5.26 1.42 16,263 9,699 4.4 3.0 39.46
Isabella Lake, CA 318 1,489,200 38 15,977 5.64 1.48 15,938 11,445 3.3 2.5 55.59
Lake Okeechobee
and Waterway, FL 319 2,894,584 402 451,000 5.38 1.20 13,849 9,541 4.1 3.0 24.91

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Lake Washington
Ship Canal, WA 320 712,900 80 169 6.26 2.07 16,686 5,815 3.3 3.0 98.63
Leech Lake, MN 321 950,600 316 162,100 5.90 1.40 18,886 10,986 2.5 1.8 104.08
Melvern Lake, KS 322 2,034,600 101 24,543 5.69 1.65 18,087 9,015 4.3 3.0 31.48
Millwood Lake, AR 323 2,042,300 65 142,100 5.49 1.87 18,630 1,319 5.6 3.0 37.62
Mississippi
River Pool
No. 3, MN 324 1,323,700 37 20,350 6.36 2.23 29,571 10,895 3.0 2.4 99.20
Mississippi
River Pool
No.6, MN 325 645,500 55 11,292 5.79 1.42 19,589 10,693 4.8 3.0 52.23
Navarro Mills
Lake, TX 327 1,111,500 38 14,286 5.16 1.41 13,739 4,652 4.6 2.8 27.68
New Hogan
Lake, CA 328 335,200 44 6,162 5.57 1.28 18,954 11,270 4.0 3.1 34.10
New Savannah
Bluff
Lock &Dam, GA 329 207,600 32 2,030 5.28 1.13 12,609 9,414 5.8 2.7 18.65
Norfork Lake, AR 330 3,066,500 380 54,193 5.65 1.61 17,667 8,889 3.2 2.5 94.89
Ozark Lake, AR 331 1,102,000 173 39,251 5.02 1.22 12,654 7,568 4.9 3.0 58.71
Perry Lake, KS 332 3,388,000 160 41,769 5.52 1.48 16,565 6,925 4.7 2.7 28.79
Philpott Lake, VA 333 1,454,900 100 9,600 5.33 1.55 14,268 6,668 5.8 2.6 26.09
Pine River, MN 334 1,615,100 119 22,177 5.95 1.80 20,097 9,370 2.1 1.4 69.80
Pokegama Lake, MN 335 948,300 53 66,542 5.70 1.46 18,816 9,476 3.3 2.7 100.63
Pomona Lake, KS 336 1,460,400 52 12,301 5.42 1.36 17,265 7,330 5.4 2.8 25.38
Proctor Lake, TX 337 975,200 27 15,956 5.49 1.63 17,510 11,167 5.4 2.9 46.08
Rathbun
Reservoir, TX 338 2,332,200 156 36,072 5.74 1.56 20,543 7,473 4.3 2.9 41.78
Sam Rayburn Dam &
Reservoir, TX 339 2,728,700 560 176,869 5.32 1.35 19,515 11,331 4.1 2.7 40.23
Sardis Lake, MS 340 2,488,900 110 98,590 5.41 1.31 13,141 7,223 6.5 2.3 36.08
Waco Lake, TX 343 3,371,600 60 21,342 5.46 1.25 16,396 12,454 6.9 2.2 33.02
Whitney Lake, TX 344 1,976,400 170 53,230 5.25 1.29 18,688 11,651 5.0 2.8 35.40
Youghiogheny River 345 1,122,600 38 4,035 5.56 1.59 16,682 11,051 5.4 2.9 24.67
Lake, PA

aOne-way distance to the site.

bNumber of observations are based on the final models estimated for site.
NOTES:Xis the arithmeticmean.
cais the standard deviation.
(T + M) cost is the sum of vehicle and time-related costs of a visit.

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268 Land Economics

TABLE 2
A COMPARATIVEANALYSIS OF PREDICTEDWAGE RATES

PredictedWageRate
Featureof Averageincome
Sample per hour (a) Male Female
A. Annual Household Income
Under5,999 1.50 5.79 4.06
6,000 to 9,999 4.00 5.49 4.10
10,000to 14,999 6.25 6.01 4.38
15,000to 24,999 10.00 6.70 4.39
25,000 to 49,999 18.75 7.17 4.65
50,000 or more 25.00 6.53 4.65
B. Occupation
Professional,technical 10.17 7.89 5.65
&kindredworkers
Farmers 8.34 5.71 2.75
Manager,officials 10.92 7.74 4.94
&proprietors
Clerical&kindredworkers 9.13 5.94 4.10
Sales workers 9.30 6.24 3.29
Craftsmen,foremen 8.17 6.05 4.31
Operatives 7.99 5.15 3.56
Serviceworkers 7.38 4.71 3.18
Laborers,except
farm&mine 7.13 4.74 3.11
aThese estimatesare derived using the midpoint of the rangeof incomes and an assumption of 2,000 hours of
worktime per year.

Vaughan et al. 1982), a semi-log specifica-
tion was selected.
In V., = ao + aljMC,, + a2jTCen
+ a3 Y, + a4SC'n + EbsjXsn+ E,,
where:
number of trips to site j by indi-
Vin =
vidual n;
jMCjn= vehicle-related travel cost of a trip
to site j by individual n (i.e., c d, in
terms of our earlier theoretical
model);
TCjn= travel time costs of a trip to site j
by individual n;
Yn = family income of individual n;
SCjn = on-site time costs of a trip to site j
by individual n;
Xsn = sth socioeconomic feature of indi-
vidual n;
Ejn = stochastic error for jth demand
function and associated with nth
observation.
The variable for the cost of on-site time
includes endogenous and exogenous com-
ponents. It is the product of the wage rate
and the time-on-site during the trip when
each respondent was interviewed. Thus,
when it is included in the model, a simulta-
[6]
neous equation estimator is required for [6].
We have used nonlinear two stage least
squares (N2SLS) (Kelejian 1971). Models
including and deleting on-site time in this
format have been considered for each site.
In addition, a wide variety of socioeco-
nomic variables were considered for inclu-
sion in the site demands (see Desvousges,
Smith, and McGivney 1982 for details). Ap-
proximately half of the "best" specifica-
tions for the sites' estimated demand mod-
els excluded on-site time costs (i.e., 22 of
the 43 sites). The balance favored a model
that included the cost of on-site time. These
"best" specifications were selected based
on the size of each equation's standard er-
ror of estimate and on the agreement of the
signs of the estimated parameters with a
priori expectations.

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Smith, Desvousges, and McGivney:Travel Time 269

The demand model in the form given in the survey respondents from a particular
[6] also permits each of the most popular site have the same demand equations. RE-
approaches for estimating the opportunity CIMPcan be interpretedas one measure of
cost of travel time to be represented. TCin individual's taste for water-based recrea-
can be described in either of two forms:the tion. It is a role analogous to age, sex, or
product of the predicted wage and travel other demographicvariables in that it pro-
time, or one-third this quantity (based on vides some basis for relaxing this assump-
Cesario's(1976) proposal). Since our theo- tion of identical demand functions by in-
reticalmodel suggested thattreatingoppor- corporatingproxy variables assumed to be
tunity costs as a multiple of the wage is sim-associated with individual tastes as deter-
ply an approximation,the relevant issue is minants of demand.
finding the specification most consistent While the results for income are not sur-
with the empirical data. prising, given past empirical evidence on
site demands for these types of recreational
V. MODELESTIMATESAND experiences, they nonetheless deserve
TESTRESULTS some comment. Our theoretical model
treats income as full income-including
Our results are divided into two sets both earned income and the monetary
based on whether the demand model value of time that could be "sold" in the
judged to be "best" included the costs of marketfor the wage. Thus, under ideal con-
on-site time. We present the site demand ditions we would like to include measures
estimatesfor each groupseparately.Table 3 of the nonwage income, the wage rate,
reportsthe estimates for the 22 sites whose workingtime (to the extent it is not subject
demand functions were judged to be unim- to individual choice), or the total time
proved by our measure of the costs of on- available for working (if working time is a
site time. They are ordinary least squares choice variable).
(OLS)estimates of each model and main- One significant advantage of the house-
tain that the wage rate is the relevant mea- hold production frameworkis that it high-
sure of the opportunity cost. These final lights the importanceof the institutional ar-
models include, in addition to the travel rangements governing the time and
cost variables and family income, the re- monetary constraints facing individuals.
spondent's age (in years), sex (male = 1), The variables we have identified as supe-
and a measure of the individual's attitude rior to family income would be preferable
toward outdoor recreation, RECIMP(with because they provide some limited insight
one designating individuals who regarded into the natureof these arrangements.Until
outdoor recreation as very important in this type of detailed information is availa-
comparison to their other interests, and ble, we can expect that conventional in-
zero otherwise). However, as the equations come variablesmay not be judged to be sta-
in Table 3 indicate, not all site demands in- tistically significant determinants of the
cluded all of these variables. demandfor goods, such as the use of recrea-
The travel cost variable (including both tion sites, where nonmonetary constraints
vehicle and time costs) is the most consist-
ent determinant of the demand for each l?These estimates imply fairly large site values-
site's services.10 As a rule, income and as measured by the Marshallian consumer surplus
(integrating from the average travel costs to the maxi-
other socioeconomic variables were not mum observed among site's respondents). While
consistently significant determinantsof the these may indicate the possibility of a specification
demands for these sites. Of the remaining error or the presence of an additive rather than a mul-
variables,the attitudinalvariable,RECIMP, tiplicative stochastic error, thereby leading to biased
parameter estimates, it is difficult with existing infor-
appears to influence the demands for a mation to an unambiguous explanation. We
numberof sites. This should not be surpris- are gratefulprovide
to an anonymous referee for bringing
ing. Our model implicitly assumes that all these possibilities to our attention.

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 TABLE 3
TRAVEL COST DEMAND MODELS: ORDINARY LEAST SQUARES
Dependent Variable is Ln (Visits)

T&Mb Income
Site Intercept Cost Income Squared Sex R

Allegheny River 0.53 -0.001 8.2 x 10-6

System, PA' (2.04) (-0.13) (0.74)
Arkabutla Lake, MS 1.58 -0.009 6.2 x 10-6
(9.99) (-3.09) (0.67)
Lock &Dam No. 2 1.94 -0.013 -1.5x10-5 0
(Arkansas River (6.02) (-2.46) (-0.88) (1
Navigation System), AR
Belton Lake, TX 1.69 -0.005 2.6x10-6
(9.38) (-2.47) (0.29)
Berlin Reservoir, OH 1.40 0.001 -4.1 x 10-7
(8.47) (0.43) (-0.05)
Clearwater Lake, MO 1.51 -0.003 -1.Ox 10-5
(5.97) (-1.42) (-1.21)
DeweyLake, KY 0.08 -0.003 2.5x10-5 0.498
(0.36) (-3.67) (2.74) (2.89)
Isabella Lake, CA 1.26 -0.007 7.9x 10-6
(5.55) (-3.15) (0.81)
Lake Okeechobee 1.68 -0.027 1.9X10-7
and Waterway, FL (3.68) (-1.72) (0.01)
Melvern Lake, KS 1.87 -0.008 -6.7x10-5 1.6X10-9
(3.93) (-1.60) (-1.36) (1.50)
Mississippi River 2.12 -0.005 -7.2 x 10-5 1.4X10-9
Pool No. 3, MN (3.90) (-4.22) (-1.63) (1.78)
Navarro Mills Lake, TX 1.66 -0.006 -1.4x 10-5
(6.40) (-1.39) (-1.14)
New Hogan Lake, CA 1.04 -0.004 7.1 x 10-6
(2.58) (-0.41) (0.60)
New Savannah Bluff 1.88 -0.007 -9.8X10-6
Lock &Dam, GA (8.39) 1.44) (0.70)
Ozark Lake, AR 1.42 -0.005 -7.1 x 10-6 0
(5.11) (-4.58) (-0.53) (1
Perry Lake, KS 1.50 -0.004 -1.0x 10-5
(4.17) (-0.74) (-0.68)

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Smith, Desvousges, and McGivney:Travel Time 271

N in e Go
can be as importantas the monetary in ex-
r-4 CfO eC eC o)co
plaining behavior.
r-4
o CO Before turning to our evaluation of the
rs
N
CO
co
CM
CO
co
CM 00
co co
approaches for measuring the opportunity
costs of time and to the associated test
co
O
C17
r-
CM
0r0
CO
-
O
0
c
r
results, it should be acknowledged that this
o 6 66 6d formulation of the site demand model is
basedon a numberof implicit assumptions.
Space limitations prevent a detailed de-
o scription of the analyses conducted to
c,
gauge the implications of each, but we can
u
summarize the results of our appraisal of
u,U,
one of the most importantof these assump-
U, tions. Travel cost demand models assume
CO
that the trips to each site are single-
.4-4
o
purpose. When these trips are not single-
, ." 2 purpose,the travelcost cannot be treatedas
O .0 the implicit price of one "unit" of the site's
services (i.e., a visit). Rather,it is the cost of
·" 0
all the objectives of the trip. Haspel and
Johnson (1982) have considered this issue
CO for a survey of users of the Bryce Canyon
National Park and found that for this site,
the assumption of single-purpose trips for
0 visitors was inappropriateand would lead
oo
to substantial differences in the estimated
, c. , travel cost demand functions. They pro-
O0 0 0 0 0
pose that distance averaged over the sites
x
CM r
CrvX Cs X C4 X O X e` x e visited in a single trip be used as the dis-
(CD R :" C n e
cO O CO
tance component of the travel cost. These
findingsconfirmresults by Smith and Kopp
(1980) which indicated that estimates of
1a
the travelcost model become unstable with
increases in the distances traveled by visi-
<U
v -r.0au
i -t§ §
Co.- tors."
COcD
OclOOT O OOCDMCM
dCO dco dddc oddd r
The Federal Estate survey does not pro-
I I ^I I I I I 0 ° vide trip itineraries, and therefore it was
CO O0
not feasible to consider the Haspel-Johnson
proposal. However, it was possible to in-
-rC _COh C7O r_ H_O CCD vestigate the implications of distance for
> cc H o c r;o o C' o D
_ d
the stability of the estimated parametersin
ED-cS
these site demand models. The single ob-
(DI >C ·
OCd9 servationregressiondiagnostics developed
by Belsley, Kuh, and Welsch (BKW)(1980)
were calculated for each estimated parame-
P4t
ter in all site demand models. Using the
BKW interval scaling and their DFBETA

"Smith and Kopp(1980)arguedthatthe prospects

X X formultiple destination were an importantreason for
this instabilityof travel cost demand models.

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272 Land Economics

statistics for each site demand model, our
results indicated that single observations
had little influence on the models' esti-
mates and did not seem to be related to the
distance individuals traveled to the sites.
These findings should not be surprising,
because the Corps of Engineers recreation
sites involved would not be considered
unique. As Haspel and Johnson acknowl-
edge, the multiple destination problem is
especially crucial for recreationalsites that
attractvisits from aroundthe nation.12
The first two columns in Table 4 report
the results for our tests of two hypotheses:
(a) the treatmentof the opportunity cost as
the wage rate;and (b) the Cesariohypothe-
sis thatthe opportunitycost is one-thirdthe
wage rate. Following the McConnell-
Strand(1981) interpretationof the opportu-
nity cost as an approximatelyconstantmul-
tiple of the wage rate, it is possible to
formulate these hypotheses as parameter
restrictions. The full-cost hypothesis ((a)
above) implies that aij and a2jfrom equa-
tion [6] are equal. The Cesario hypothesis
implies that a2j = (1/3)alj. Table 4
reportsthe significance level at which each
hypothesis can be rejectedusing an F statis-
tic. Seven of the twenty-two sites rejectthe
full-cost hypothesis at a 10% significance
level. The Cesario hypothesis is rejected
with approximately the same frequency
(i.e., in nine of the twenty-two site de-
mands' estimates.)13Thus, neither method
12Based on the trip itineraries of the users in their
sample, Haspel and Johnson (1982) report that 71% of
the Bryce Canyon visitors also visited the Zion Na-
tional Park, 42% visited the Grand Canyon's North
Rim, and 16% the Grand Canyon's South Rim.
"3These results do not include two cases (one for
each hypothesis) where the test statistic equals the
critical value.

TABLE 4
TEST RESULTSFORALTERNATIVETREATMENTSOF OPPORTUNITYCOST OF TIME: OLS ESTIMATES

Site Test Significance Level McConnell-

Full-cost Cesario- Strand
hypothesis hypothesis estimates

Allegheny River System, PA .53 .53 -.528

Arkabutla Lake, MS .14 .50 + .046
Lock & Dam No. 2 (Arkansas
River Navigation System), AR .03 .01 -1.465
Belton Lake, TX .04 .04 -.401
Berlin Reservoir, OH .43 .56 -.568
Clearwater Lake, MO .40 .64 -.189
Dewey Lake, KY .16 .03 + 4.385
Isabella Lake, CA .61 .99 +.369
Lake Okeechobee &
Waterway, FL .59 .26 + 1.831
Melvern Lake, KS .41 .87 +.189
Mississippi River Pool
No.3, MN .99 .10 +1.059
Navarro Mills Lake, TX .64 .50 -2.585
New Hogan Lake, CA .72 .66 -.785
New Savannah Bluff
Lock & Dam, GA .49 .51 -.273
Ozark Lake, AR .03 .01 + 80.000
Perry Lake, KS .73 .89 +.213
Pine River, MN .02 .01 -2.000
Pokegama Lake, MN .35 .11 + 2.542
Pomona Lake, KS .13 .18 -1.818
Rathbun Reservoir, TX .01 .03 -.039
Sardis Lake, MS .01 .01 + 28.833
Waco Lake, TX .01 .01 -9.417
Youghiogheny Lake, PA .10 .04 + 4.322

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Smith, Desvousges, and McGivney:Travel Time
is unambiguously superior to the other as
an approach for approximatingthe oppor-
tunity cost.14
We can also use the estimates derived for
our test of the full-cost hypothesis to esti-
mate the multiple relating the opportunity
to the wage rate. Following McConnell and
Strand, this is given by (a2j/a1j).The last
column in Table 4 reports these estimates.
Our results contrast with the McConnell-
Strandestimates for one site as well as with
their experimental findings. Twelve of the
twenty-two estimated values for this multi-
ple were negative. Moreover,of the remain-
ing estimates, a majoritywere greaterthan
unity. In some cases, the estimates would
seem completely implausible (e.g., the
Ozark Lake and Sardis Lake sites). These
results may well be due to the high degree
of collinearity between our estimates of
vehicle-relatedtravel costs and the costs of
traveltime. Indeed, as a rule, it was not pos-
sible to obtain precise estimates of the ef-
fects of these individual components of the
travelcost-often the sign of one of the esti-
mated parameters(i.e., a1jand a2i) contra-
dicted theoretical expectations.
Table 5 reports the nonlinear two-stage
estimates of the remaining twenty-one site
demands models, where the inclusion of
the costs of on-site time was judged to im-
prove the models.15These results are based
on the use of the wage rate as the opportu-
nity cost of time. The estimated coefficient
for travel costs (TC + MC)is quite compa-
rableto the OLSestimates of a model with-
out the variable reflecting on-site time
costs. As indicated in Table 5, the mea-
sured demand responsiveness to changes
in travel costs is quite stable. The coef-
ficient for the costs of on-site time may
reflect two opposing effects. On-site time
serves as a substitute for visits to a site in
producingrecreationalservices. Thus, this
effect would imply a positive influence,
since increases in the costs of on-site time
should lead, ceteris paribus,to the substitu-
tion of more visits for on-site time per visit.
However, our model also maintains that
on-site time is constant for all visits and
thus is a component of the price of each ad-
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273
ditional visit. This relationship would im-
ply a negative association. Finally, we
should acknowledge that our model is an
approximation,and the assumption of con-
stant on-site time for all visits may well be
inconsistent with the actual behavior of
many respondents. In view of these quali-
fications, the sign of the parameterfor the
costs of on-site time cannot be determineda
priori.Ourresults are consistent with these
possibilities and exhibit both positive and
negative associations, with all of the statis-
tically significantestimates implying a neg-
ative relationship.
Testingthe full cost and Cesariohypoth-
esis within a simultaneous equations for-
mat is not a direct application of the con-
ventional F-statistic. These hypotheses
have been evaluated using a test statistic
thatfollows on asymptotic F distribution.It
is derived from the generalized least
14There is an additional problem with the use of
the conventional travel cost methodology with these
data. Since the survey describes the behavior of a
sample of users of each site, we do not observe indi-
viduals with less than one visit. This implies that our
semi-log dependent variable is truncated at zero and
that OLS estimates of the site demand models will be
biased (see Heckman 1976). However, the magnitude
of the bias will depend upon the distribution of the
visits to the site. If the average number of trips to the
site is large and the variance fairly small, we can ex-
pect the truncation at one to have little impact on the
estimates.
To gauge the importance of this problem, we used
Olsen's (1980) scaling coefficient for converting OLS
estimates to approximate maximum likelihood esti-
mates. Several of the sites where truncation effects
were judged to be serious also appeared to be better
modeled with the simultaneous framework recogniz-
ing the role of the costs of on-site time. For the bal-
ance, the mix of support for the full cost and Cesario
proposals was approximately equal. Thus, this quali-
fication would not affect the overall character of our
conclusions. For more details on the nature of these
findings see Desvousges, Smith, and McGivney
(1982), chapter 7.
"The first stage instruments were composed of the
included predetermined variables along with sex and
a qualitative variable to reflect whether the recrea-
tional activities included camping. Several sets of
first stage regressors were considered (see chapter 7 of
Desvousges, Smith, and McGivney (1982) for further
details). The results reported here are for the form that
provided the best results in terms of the sign and sta-
tistical significance of the estimated parameters.
274 Land Economics

TABLE 5
TRAVELCOSTDEMANDMODELS:Two STAGELEASTSQUARES
EndogenousVariablesare On-SiteTime and Ln (Visits)a

Site
Site Name Intercept T+ M Cost Costb Income Age R2 DF

Beaver Lake, AR 1.71 -0.006 -0.0003 -3.0x10-6 -0.010 0.42 221

(11.45) {-8.12) (-2.21) (-0.61) (-0.27)
Benbrook Lake, TX 2.00 -0.005 -0.0001 3.0x 10-6 -0.002 0.31 41
(6.05) (-3.84) (-0.55) (0.34) (-0.29)
Blakely Mt. Dam, 1.72 -0.008 -0.0002 -9.0X10-6 0.005 0.21 86
Lake Ouachita, AR (3.08) (-4.57) (-0.40) (-0.81) (0.78)
Canton Lake, OK 1.79 -0.017 -0.0008 5.0 x 10-6 0.004 0.26 69
(5.83) (-2.83) (-0.80) (0.47) (0.58)
Cordell Hull Dam &
Reservoir, TX 1.60 -0.014 -0.0002 3.0x10-6 0.007 0.35 99
(7.58) (-4.53) (-0.48) (0.35) (1.71)
DeGray Lake, KY 1.59 -0.008 -0.0004 -2.0x10-6 0.010 0.21 44
(4.51) (-3.24) (-1.38) (-0.21) (1.44)
Ft. Randall, Lake
Francis Case, SD 1.78 -0.004 -0.0021 9.0X10-6 -0.009 0.38 45
(4.74) (-2.43) (-2.28) (0.79) (-0.94)
Grapevine Lake, TX 2.15 -0.005 -0.0001 9.0X10-6 -0.013 0.50 87
(12.73) (-5.06) (-2.31) (1.72) (-2.91)
Greers Ferry Lake, AR 1.61 -0.007 2.0X10-5 9.0x 10-6 -0.005 0.28 212
(10.60) (-7.70) (0.08) (1.48) (-1.09)
Granada Lake, MS 1.55 -0.007 -0.0016 1.0x10o-5 0.010 0.26 70
(5.06) (-2.86) (-2.64) (0.71) (1.99)
Hords Creek Lake, TX 1.94 -0.005 -0.0001 -2.0x10-5 -0.003 0.20 49
(5.81) (-2.06) (-0.19) (-1.77) (-0.36)
Lake Washington
Ship Canal, WA 0.51 -0.004 0.0465 2.0x10-5 -0.002) 0.21 32
(0.66) (-2.40) (1.07) (0.78) (-0.15)
Leech Lake, MN .29 -0.003 0.0004 1.1x 10-5 0.007 0.17 43
(0.79) (-2.33) (1.26) (0.95) (0.93)
Millwood Lake, AR 0.83 -0.009 9.0X 10-5 2.0x10-5 0.013 0.30 48
(2.33) (-3.88) (0.02) (2.54) (1.88)
Mississippi River Pool,
No. 6, MN 1.20 -0.006 -0.0006 2.0 x10-5 0.007 0.24 65
(3.81) (-3.24) (-1.66) (1.95) (0.97)
Norfork Lake, AR 0.67 -0.006 -0.0008 1.0x10-5 0.015 0.20 37
(1.65) (-2.85) (-0.28) (0.91) (1.55)
Philpott Lake, MN 2.21 -0.007 -0.0007 2.0X10-6 -0.008 0.47 33
(7.21) (-3.75) (-1.49) (0.18) (-1.07)
Pokegama Lake, MN 1.34 -0.003 -0.0004 -9.0x10-6 0.002 0.24 63
(3.62) (-3.54) (-1.32) (-0.86) (0.34)
Proctor Lake, TX 1.78 -0.015 0.0003 2.0x 10-6 0.005 0.56 47
(6.47) (-5.99) (0.84) (0.33) (1.01)
Sam Rayburn Dam &
Reservoir, TX 1.16 -0.010 -0.0001 2.0x10-6 0.010 0.17 62
(3.38) (-2.92) (-0.29) (0.19) (2.00)
Whitney Lake, TX 1.53 -0.003 -0.0009 6.0X10-6 0.007 0.10 196
(8.30) (-1.44) (-4.15) (1.11) (1.88)

aThe numbers in parentheses below the estimated coefficients are asymptotic t-ratios for the null hypothesis
of no association.
bSite cost is the product of time spent on site and the hedonic wage rate.

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Smith, Desvousges, and McGivney:Travel Time 275

squares interpretation of two-stage least
squares for linear simultaneous equation
models.16 Since we are applying it for the
case of nonlinear two-stage least squares,
we have conjectured that the statistic is also
valid in this case. As a consequence, we
have used generous significance levels in
interpreting the test results to allow for dis-
crepancies between the small sample and
asymptotic distributions of the test statis-
tic. Nonetheless, the results in Table 6 are
quite clearcut at either the 10% or the more
restrictive 5% levels. The majority of the
sites' results imply that both hypotheses
should be rejected.
Taken as a whole, these results imply
that the time constraints facing individual
recreationistsare complex and that simple
approximations to relate the opportunity
cost of time to the wage ratewill not be able
to accommodate all applications. While
our theoretical analysis provides formal
supportfor Cesario'sconcerns for the valu-
ation of travel time, the empirical findings
indicate that where the costs of on-site time
can be omitted fromsite demand functions,
Cesario's proposal is not unambiguously
superior to using the wage rate as the op-
portunity cost. Indeed, until better infor-
mation on the natureof the time constraints
facing individuals in their recreation deci-
sions is available,the wage rateprovides an

"6Thetest statistic used for these results is derived

TABLE 6 from the GLS interpretation of two-stage least
TESTRESULTSFORALTERNATIVE
TREATMENTS squares.For example, if an equation from a linear si-
multaneousmodel is given as:
OF OPPORTUNITY
COST OF TIME: N2SLS ESTIMATESa y= YA+ZiB+e
with y a Txl vector and Y,A, Zl, B, and e conformably
Test SignificanceLevels dimensionedmatricesand vectors of included endog-
enous variablesand their parameters,included exog-
Full-Cost Cesario enous variables and their parametersand stochastic
Site error.
Hypothesis Hypothesis
Premultiplyingby the matrixof all predetermined
BeaverLake,AR .90 .01 variables,Z leads to
BenbrookLake,TX .01 .01 ZTy = ZTyA + ZTZiB + ZTe
BlakelyMt. Dam, .01 .01
LakeOuachita,AR The covariance matrix for ZTewill be r2(ZTZ)(if the
CantonLake,OK .02 .01 covariance matrix for e is r2I)and two-stage least
CordellHull Dam .01 .85 squaresis the Aitken GLSestimatorof this model.
&Reservoir,TX Using this formatthe test statistic is given as fol-
De GrayLake,AR .06 .04 lows:
Ft. Randall,Lake .71 .01
FrancisCase,SD df eZTZ (_ - TZ ZTZ) Z
lZ
GrapevineLake,TX .01 .01
GreersFerryLake,AR .01 .01 d\ e TZ(ZTZ) IZTU
GranadaLake,MS .01 .01
HordsCreekLake,TX .01 .01 where
LakeWashington .01 .01 e, = vector of 2SLS residuals estimated sub-
Ship Canal,WA ject to restriction;
LeechLake,MN .01 .01 &e= vector of 2SLS residuals estimated with-
Millwood Lake,AR .08 out the restriction;
.79
df, = degreesof freedom parameter(takento be
Mississippi RiverPool the number of observations less the esti-
No. 6, MN .01 .01
NorforkLake,AR .01 mated parametersin the second stage);
.01
PhilpottLake,VA .10 .01 df2 = numberof parameterrestrictions.
ProctorLake,TN .01 .01 The test statisticand degreesof freedomselection (es-
SamRayburnDam .01 .65 pecially df,) were selected based on Basmann's(1960)
&Reservoir,TX proposals for alternatives to the identifiability test
WhitneyLake,TX .01 .01 statistic. His findings suggested that an F-statistic
similarto this test provided a more appropriatetest of
aThesesignificance levels are for the asymptotic over-identifyingparameterrestrictions than the con-
distribution. ventional asymptotic Chi-squarestatistic.

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276
equallyplausible approximationforthe op-
portunitycost of travel time.
VI. IMPLICATIONS
This paperhas considered both the theo-
retical basis and empirical support for the
principal methods proposed for measuring
the opportunitycost of travel time in mod-
els of the demand for recreation sites. Our
results indicate that a redirection in the re-
search on modeling the demand for out-
door recreation sites is warranted. More
specifically, the theoretical analysis im-
plies that the definition of the natureof and
the interrelationshipbetween an individu-
al's time constraints plays a central role in
the determination of the individual's cor-
respondingopportunitycost of travel time.
This result was clear from our simple
model, which distinguished two types of
time constraints in order to reflect the im-
plications of flexibility in the availability
(by time-of-day or whatever the relevant
time horizon) of that time. In making their
actual recreation decisions, different indi-
viduals will experience differentdegreesof
flexibility in the use of their free time. The
relevant time constraints for recreation
choices may well depend upon the type of
site used and the recreationalactivities un-
dertaken.For "local" sites, serving the rec-
reationdemands of individuals within a re-
gion surrounding the site, the time
constraints and associated opportunity
cost of time may well be differentfrom that
of sites serving national markets. Often at
greatdistances from a substantial subset of
theirvisitors, these "national"sites require
the allocation of different "types of time"
(i.e., annual vacation or leaves). The rele-
vant measure of the opportunity costs of
time can be expected to be different for
these sites.
To deal adequately with the problems
posed by a theoreticallyappropriatedefini-
tion of the opportunity cost of time-both
traveland on-site-will requiredetailed in-
formation on the nature of the time con-
straints facing each individual recreation-
ist. Present surveys, such as the one used
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All use subject to JSTOR Terms and Conditions
Land Economics
for our analysis, simply do not provide this
information. Indeed, the Federal Estate
component of the 1977 Nationwide survey
is amongthe most detailed data sets availa-
ble for estimatingtravel cost recreationde-
mand models.
The empirical findings of our analysis of
forty-three site demand models suggests
that:(1) the treatmentof the costs of on-site
time is importantto the empirical analysis
of the opportunity cost of travel time; (2)
the differences between the full-cost and
Cesarioproposals for measuring these op-
portunity costs are not sufficient to prefer
the latterto the former;and (3) the estima-
tion of the multiple relatingthese opportu-
nity costs to the wage is not a trivial task.
Ourfindings suggest that moving beyond a
judgmentalguess for this multiple will be
difficult within the constraints of existing
data.
Based on our findings, two areas of re-
search offer promise. The firstentails addi-
tional empirical appraisal of these ap-
proaches for estimating the opportunity
cost of time with different types of recrea-
tional sites, especially those appealing to
national markets.The second involves im-
proving the projections of wage rates as-
signed to individuals to reflect explicitly
the amount of flexibility and discretion
availablein the use of nonworktime and its
effectas a compensatingdifferentialto mar-
ket wage rates.This approachmay offerthe
most direct means of improving the availa-
ble measures of the opportunity cost of
time.
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