Travel Cost Method

Economists have developed a number of concepts or methods to evaluate the market and non-market value of natural resources. These include, among others, travel cost models, random models of utility, pricing, contingent valuation and amount of damages to resources method. These methods were discussed as follows;

The benefits to cots method

This method of benefits to costs is a logical way of matching incremental social benefits with the opportunity costs. The comparison of economic advantages with disadvantages of the resource. This matching is based on the construction of the structures to prevent floods with the costs of cleaning them. In the case where the floods will not occur often, the costs incurred in building dams may outweigh the

The Travel Cost method aims at measuring travel costs in relation to visits to for example natural habits. As it measures the actual travel expenditures of individuals (as a function of distance) in relation to for example the visit to a natural habitat, the recreational value of the natural habitat can be measured. The basic assumption behind this valuation method is that someone who has low expenditures to make a visit to the natural habitat, has a higher “consumer surplus” than the visitor of the habitat that pays a lot to get there (due to longer distance). The measurement is achieved by collecting a lot of information of visitors of the site for example, number of trips per year, travel costs, distance to the site. The demand curve could be derived to explain the method. It basically shows the relationship between number of trips per household per year (x-axis) and the travel cost per trip (y-axis). It can be seen easily that increasing travel costs lead to less annual trips (Jantzen, 2006: 33-34).

Random Utility Models

This method is comparable to the travel method only that, it what it covers the number of trips taken to differing sites. The worth individuals place on the resource is estimated. The value is made comparing three rivers on differing sites in the area. Taking into account that all sites have differing features. The worth is reached by using the travel cots

This method uses questionnaires where users are asked direct questions to answer. The method aims to find out the willingness to pay, accept benefits brought about by the natural resource or accept compensation for the benefit forgone. The weakening of a resource and degrading ecosystem were often included in measures for national accounting. Which showed that, the natural resources were never valued under capital assets. The resource use either going to be beneficial for long or not, it can be shown in the country’s gross domestic product (GDP) pointers. The decline in assets are not reflected by the said measures of economic wellbeing. Which are regarded as suitable methods to measure future economic growth of a nation. The ecosystem services in most countries are offered free of charge; such as water. This makes their filth not to be included in standard economic measures. There will be significant changes to the balance sheet of a country when the real worth of the natural resources is included in the losses connected to natural resource depletion (Chevallier,