Spatial Limits of the TCM revisited: Island Effects

The purpose of this paper is to address a problem that may arise with the assumption of a continuous spatial market in the TCM model. We find that this assumption can be challenged by geographical limitations that an area of study might have. Particularly for islands (or isolated island-like areas) that have a valuable non-market resource or good, the spatial market characteristic of the TCM model might be limited or truncated. The geographical truncation limits the observed maximum travel cost of the demand curve falsely implying a lower WTP than otherwise. The study uses a dichotomous choice CVM to confirm that the resulting demand schedules from the TCM underestimates WTP for day trips to the Caribbean National Forest in Puerto Rico. This results in a considerably smaller TCM WTP for the value of recreation sites at $17 to $29 versus $109 per day trip from the dichotomous choice CVM.