Specification of Driving Costs in Models of Recreation Demand

Danielle Hagerty and Klaus Moeltner


Existing recreation demand models have paid much attention to the heterogeneous nature of the opportunity cost of time, but generally stipulate constant per mile costs in access price specifications. This study proposes two alternative approaches to introduce user-specific driving costs into recreation demand models. The first approach is based on a refined measurement of driving costs based on engineering considerations. The second strategy estimates perceived per mile cost as a function of vehicle attributes in an empirical framework. We find strong evidence that driving costs are a visitor-specific concept, and that prescribed and perceived costs differ substantially. However, welfare measures generated by these alternative specifications are not statistically different from those produced by the standard model in our application of jet skiing in the Lake Tahoe region. (JEL Q26)