טכניון מכון טכנולוגי לישראל
הטכניון מכון טכנולוגי לישראל - בית הספר ללימודי מוסמכים  
M.Sc Thesis
M.Sc StudentLivshits Irina
SubjectPublic Park Valuation by Travel Cost Method (TCM)
DepartmentDepartment of Industrial Engineering and Management
Supervisor Dr. Mira Baron
Full Thesis textFull thesis text - English Version


Abstract

This research is dedicated to economic evaluation of the public urban open spaces, specifically public parks. Public parks are typical examples of local public goods. As playgrounds are considered to be a public good, we had to use appropriate methodology to investigate them. Different methods appear in economic and environmental literature, among them - travel cost method (TCM) that we used for our research.

In our research we examine factors that influence people’s willingness-to-pay for the public park usage based on their travel expenses. As public park usage does not have direct price, travel costs including value of time spent at the public park and at the way to and from it ideally reflect the person’s willingness-to-pay for this public good. In addition we examine different public parks characteristics and individual socioeconomic characteristics that also influence willingness-to-pay. The other purpose of our research was estimation of consumer surplus for each playground.

We’ve interviewed people at 12 playgrounds in Haifa. At each playground around 20 people were interviewed. We’ve obtained 244 observations. We interviewed only relatives of children, and didn’t interview baby-sitters.

After data processing, we’ve run several econometric analyses. The following methods were used: OLS, Standard Tobit and Ordered Probit. Results obtained using these three models are strictly consistent and show the same set of significant variables. Average number of visits to a single playground is 42 times a month. Average consumer surplus is 53,313 NIS per playground per month (639,760 NIS per playground per year) using OLS method and 54,70 7 NIS per playground per month (656,48 3 NIS per playground per year) using Tobit method. Comparing yearly consumer surplus obtained using OLS method with results of Standard Tobit, we can see that in average results differ by 16,723 NIS or 2.55% (639,761 NIS using OLS vs 656,483 NIS using Standard Tobit), so we conclude that two methods generate similar results. Average consumer surplus obtained using Ordered Probit is much higher and is 65.167 NIS per playground per month (781,998 NIS per playground per year).