I had meant to cover the nuts and bolts of the travel cost method but we ended up doing the benefit-cost analyses of recreation fees. Here is the picture I drew for a recreation facility facing congestion (it was awesome, the best teaching days are when you get totally absorbed in something relevant that you hadn't planned on).
Q is the number of recreation trips, the vertical axis is dollars (TC is travel costs). D is the recreation demand. Negative congestion externalities begin at the horizontal red line and then rise along the red/black line. The marginal cost of recreation is TC + fee + congestion cost.
At the initial fee Q' trips are taken and the recreation benefits are areas (a + b + c). We discussed how these fees are efficient if the lost consumer surplus avoided by facility maintenance exceeds the deadweight loss of the fee.
With congestion the basic fee is not high enough as there is an additional cost of (f + c + e) in congestion externality cost. With the efficient fee (fee* in the picture) we avoid the congestion externality cost (a benefit of the higher fee) with an additional cost of c.
Conclusion: Just saying.
Alternative conclusion: since I was winging it (I tossed out my 2 day lecture prep) I could have gotten something wrong or done congestion differently. Any suggestions?
