(iii) The project site is typically only one of sever- 

 al destinations visited on a single trip. 



(2) Construction of a TC/\4 demand curve. The 

 area under a demand curve based on travel costs 

 to a site approximates the willingness to pay for 

 access to the recreation opportunities there. This 

 estimate involves the following calculations: 



(i) Convert round-trip distance from each origin 

 into monetary values by using the most recent U.S. 

 Department of Transportation average variable 

 costs in cents per mile to operate an automobile, 

 plus the opportunity cost of leisure time spent in 

 travel and on the site. Time costs vary according to 

 the alternative uses of time available to visitors and 

 are correlated with income, age, education, occupa- 

 tion, time of year, and day of week. Explain values 

 assigned to time and any simplifying assumptions. 



(ii) Construct a demand curve that relates 

 "prices" to total visits. Given a relationship be- 

 tween travel costs and annual visitation from a use 

 estimating model or a per capita use curve, con- 

 struct a demand curve by gradually increasing 

 travel cost and calculating the total visitation asso- 

 ciated with each increase, until visitation falls to 

 zero for all origins. 



(iii) Compute the area under the demand curve 

 plus any user charges or entrance fees. This value 

 measures the annual total willingness to pay for 

 recreation activities available at the site. 



(iv) Discussion of travel cost method can be 

 found in Appendix 1 of this section. Appendix 1 is 

 provided for background information. Development 

 and use of techniques more refined than those pre- 

 sented in this Appendix are encouraged. 



(b) Contingent valuation (sun/ey) estimate of will- 

 ingness to pay — (1) Use of contingent valuation 

 method for daily or annual values. CVM may obtain 

 either daily or annual estimates of willingness to 

 pay. Multiply daily estimates by annual use obtained 

 previously. Annual estimates do not require use es- 

 timation except to demonstrate the net increase in 

 recreation use in the market area. 



(2) Designing and using simulated markets to 

 identify the value of recreational resources as if 

 actual markets existed. Five steps are involved: 



(i) Establish a market to the respondent. 



(ii) Permit the respondent to use the market to 

 make trades and establish prices or values reflect- 

 ing the respondent's individual evaluation of the 

 recreation opportunities bought or sold. 



(iii) Treat the values reported by the respondent 

 of individual values for recreation, contingent upon 

 the existence of the market. 



(iv) Given willingness to pay bids from an unbi- 

 ased sample of users in the market area, the socio- 

 economic characteristics of respondents, distance 

 to the site, and available alternative recreation op- 

 portunities for each origin, obtain multiple regres- 

 sion estimates of average household value for the 

 proposed change in recreation opportunities for 

 households in each group. 



(v) Multiply this value by the number of house- 

 holds in the group and sum the group values to es- 

 timate the aggregate willingness to pay if the aver- 

 age values are annual; multiply this value by esti- 

 mated annual use if average values are daily. 



(3) Obtaining individual bids from personal inter- 

 views or mail surveys. The preferred format is one 

 in which the respondent is required to answer 

 "yes" or "no" to questions if he or she is willing to 

 pay a stated amount of money to obtain a stated 

 increment in annual recreation opportunities. The 

 value is increased gradually until the highest 

 amount that the respondent is willing to pay is iden- 

 tified. Examples of question formats and further dis- 

 cussion of survey techniques can be found in Ap- 

 pendix 2 of this section. Appendix 2 is provided for 

 background information. Development and use of 

 techniques more refined than those presented in 

 this Appendix are encouraged. 



(4) Developing regional contingent valuation 

 models. Regional models may be developed with 

 CVM as well as use estimating models. All survey 

 forms are subject to the clearance procedures of 

 the Office of Management and Budget. 



(c) Unit day value approximation of willingness to 

 pay— (1) Application of unit day values. See 

 2.8.2(c)(3). 



(2) Selection of value, (i) If the UDV method is 

 used for economic evaluations, select a specific 

 value from the range of values agreed to by Feder- 

 al water resource agencies. The product of the se- 

 lected value times the difference in estimated 

 annual use over the project life relative to the with- 

 out-project condition provides the estimate of recre- 

 ation benefits. 



(A) If evidence indicates that a value outside the 

 agreed-to range is more accurate, a regional model 

 or site-specific study should be conducted. Explain 

 the selection of any particular value within the pub- 

 lished range. 



(B) To explain the selection of a specific value, a 

 point rating method may be used to reflect quality, 

 relative scarcity, ease of access, and esthetic fea- 

 tures. Appropriate use should be made of studies 

 of preferences, user satisfaction, and willingness to 

 pay for different characteristics; particular efforts 

 should be made to use estimates derived else- 



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