Measuring the welfare effects of forests: an application of the travel cost model

Abstract

AbstractIn this paper, a travel cost model was applied to the case of firewood collection to assess how the inclusion of household fixed effects and how assumptions regarding conditions in the local labor market impacted resulting welfare estimates. To assess these impacts, a unique household panel data set from Kagera, Tanzania was used. It was estimated that, under the assumption of constrained labor markets, households in the Kagera region of Tanzania are willing-to-pay, on average, $120 per year (2016 USD) for access to local forests. These estimated figures were nearly 50 per cent higher when household fixed effects were excluded and nearly 10 per cent higher under the assumption of perfect labor markets. In addition, these results support previous research showing that, in many developing countries, households' demand for firewood is inelastic and that households would be willing to spend a significant amount of their resources on forest access.