2948

USING TRAVEL COST AND CONTINGENT VALUATIONMETHODOLOGIES IN VALUING EXTERNALITIES OF URBAN
ROAD DEVELOPMENT: AN APPLICATION IN VALUING DAMAGESTO CULTURAL HERITAGE
Michelle G. PARUMOG
Research Student
Department of Civil and Environmental
Engineering, Kumamoto University
Kumamoto, 860-0862 Japan
Phone: +81-96-342-3541
Fax: +81-96-342-3541/3507
E-mail: mic_par2k@yahoo.com

Primitivo C. CALProfessor
School of Urban and Regional Planning
University of the Philippines,
Diliman, 1101 Quezon City, Philippines
Telefax: +63-2-920-9501
E-mail: primcal@up-ncts.org.ph

Shoshi MIZOKAMI,
Professor
Department of Civil and Environmental
Engineering, Kumamoto University
Kumamoto, 860-0862 Japan
Phone: +81-96-342-3541
Fax: +81-96-342-3541/3507
E-mail: smizo@gpo.kumamoto-u.ac.jp
Abstract: One of the challenges of developing sustainable urban environment and transport
policies is estimating the social costs of transport infrastructure projects. Damage to cultural
heritage resources is one of the irreversible environmental impacts of road development. This
paper aims to determine indication of total economic value (TEV) of cultural heritage
preservation as road cost externalities using Travel Cost (TC) and Contingent Valuation (CV)methodologies. The TC methodology used revealed preference (RP) data while the CV
methodology used stated-preference (SP) data which is the willingness-to-pay (WTP) for the
posed hypothetical scenarios describing degree of cultural heritage preservation. The resultsof the survey showed that WTP values vary in terms of: scenario specifications, valuation
methodology, income, and elicitation method. The derived estimates of aggregated benefits
show significant values as compared with the measurable implementation costs of alternative
scenarios.
Key words: TCM, CVM, environmental amenity valuation, cultural heritage preservation
1. INTRODUCTION
Road development is commonly associated with economic growth. In this light, economic
programmes of developing countries like the Philippines have seen motivations in roadinfrastructure investments. However, among the consequences of this development direction
are increasing impacts on natural and social environments. In some cases, these impacts gobeyond the benefits due to the infrastructure. The failure to internalise intangible externalities
in cost-benefit analysis of road projects commonly resulted in unsustainable development.
Among the irreversible impacts of road development is damage to cultural heritage sites. This
impact is likely to be experienced in urban cores where most historic sites are located. The
United Nations Educational, Scientific and Cultural Organization (UNESCO) is responsible
for the international legal protection of cultural heritage. In 1972, UNESCO sponsored theConvention Concerning the Protection of the World Cultural and Natural Heritage. The
convention defines ‘cultural heritage’ as monuments, group of buildings or sites that are ofoutstanding universal value from the point of view of history, art or science. Cultural heritageis further defined as works of man or the combined works of nature and man, and areas
including archaeological sites. Cultural heritage sites can be generally considered as public
Journal of the Eastern Asia Society for Transportation Studies, Vol.5, October, 2003

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good. Public goods can be regarded as a special case of externality. Externality occurs whenmarket transaction affects third parties who are not involved in the goods exchange. Public
goods are goods or services which can be used by one person without affecting the amountavailable to others. Since public goods are available to all, individuals cannot be excluded
from their benefits. These goods inherently hold non-use values (Krutilla, 1967; NCSE,
2000).
Cost benefits analysis (CBA) is one of the most important tools of informed decision-making.
This method is very useful in environmental assessment where costs and benefits due to adevelopment are accounted for to determine feasibility of the project. In terms of roadinfrastructure development, conventional analysis mainly focuses on measurable items
associated with existing technical and transport economic costs and benefits. Other benefits
such as natural and social environmental amenities are commonly disregarded or treatedqualitatively not because of non-recognition but due to lack of appropriate valuation tool.
Benefits assessment, which is an intrinsic component of CBA method, has produced
emerging interest in ways of valuing preferences for public goods.
This paper aims to present a framework for estimating the total economic value (TEV) of
cultural heritage preservation as road cost externalities using travel cost method (TCM) andcontingent valuation method (CVM). Methodological issues shall be identified, andplanning policies on the context of the valuation framework, derived cultural heritage
perceptions and estimation results shall be presented.
2. VALUE OF CULTURAL HERITAGE SITE
Different categorization of the value of cultural heritage can be found in different literature.
One definition entails disaggregation of the value of cultural heritage according to TEV
components as shown in Table 1. On the other hand, Tabororoff offered the concept ofcultural significance in the estimation of the value of a site.
Table 1. Value of Cultural Heritage Site
Categories of Value*
Use

extractive,
consumptive
recreational

Components ofValue**
Aesthetic, historic,
scientific or
research, social or
economic

aesthetic value
Non-useexistence, option
and bequest*Based on Pagiola’s definition (1996)**Based on Tabororoff ’s definition (1994)

Indicators
Archeological treasures,historical exhibits, structures(tangible resources)
Transportation cost, opportunity
cost, access fee
Transportation cost, opportunity
cost, access fee
Willingness-to-pay avoid
damages to cultural resources

Valuation
Methodology
market pricing
methods
TCM, Hedonic
Pricing, CVM
CVM

The TEV of a public good is comprised of use and non-use values (Dixon, 1999). Direct- andindirect-use values are subsumed into use value. Direct use value, also called extractive,
consumptive, or structural use value, are derived from goods which can be extracted,
consumed, or directly enjoyed. On the other hand, indirect use value, also known as
non-extractive use value or functional value, can be obtained from the services the good
provides. To illustrate these values on the context of cultural heritage sites, direct use value
for cultural heritage goods are the existing monuments, exhibits, landscape, structures etc.
within the site, while the indirect use are the recreational services that can be derived fromthe site. Direct use value is actualised using existing markets. On the other hand, indirect use
value (i.e. value of recreation) is often derived using surrogate markets that are often valued
using TEV. The value related to keeping an option to use a certain good at a later date iscalled option value (Dixon, 2000; Morey, 2000). This value is comparable to an insurance
Journal of the Eastern Asia Society for Transportation Studies, Vol.5, October, 2003

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premium to ensure the supply of something of which availability is uncertain in the future(Pearce, 1990).
Non-use value, in contrast with use-value, is value associated with the benefits theenvironment provides without having to use it directly or indirectly. It can be further broken
down into existence and bequest values. Existence values refer to the values an individual
attaches to a good just knowing that it exists with or without the intention of using it. Thisvalue can be seen in the sentiments of people to preserve cultural heritage sites even though
they still have not actually been in sites. On the contrary, bequest value is related tomaintaining a certain good for the next generation.
Since non-use values are linked toindividuals’ behaviour and are not observable, these value categories are very hard to capture(Dixon, 2000; Morey, 2000).
In some cases, the term passive use value is used toapproximate the aggregation of option, existence and bequest values.
In terms of concept of cultural significance, value can be assessed in terms of aesthetic,
historic, scientific or research, and social value. Though the recognition of these value isoften subjective, in general, evaluation of cultural significance simply implies that sites thatare likely to be more significant are those that help our understanding of the past, or enrich
the present, and that will be of value to future generation.
The valuation framework of the cultural heritage preservation as externalities used in thisstudy is done on the basis of both surrogate and experimental market. Surrogate markets
techniques entail looking for private markets to value the goods in concern. In this case,recreational benefits can be estimated by looking at the actual travel choices by the visitors toa certain recreational site. Experimental market, on the other hand, is markets withundefined characteristics where the presupposed or hypothetical scenario is posed induce its
preferences. Resulting monetary estimates of TCM and CVM are used for the purpose of thestudy.
3.

STUDY DESIGN

The study area is the segment 3 of the South Cebu Coastal Road Project located in Cebu City.
The Cebu South Coastal Road (CSCR) Project is a loaned project of the Philippines
Government from the Overseas Economic Cooperation Fund (OEDF) of Japan through theMetro Cebu Development Project III (MCDP III) Project Coordination and Monitoring
Office (PCMO). The project aims to address the significant increase of traffic volume in
Metro Cebu by providing an uninterrupted north-south traffic system. The Segment 3 under
this project, starts at the Segment 2 - Causeway section and ends at the McArthur Boulevard(S. Osmena Boulevard, Cebu City). Three (3) alternative alignments, as shown in Figure 1,
were considered for the segment alignment and C was chosen.

Alignment A
Widening of M.J. Cuenco Avenue
along Plaza Independencia site

Alignment B
Elevated highway structure across the
Plaza Independencia

Alignment C
Sub-surface alignment across the
Plaza Independencia

Figure 1. Alternative Alignments for Segment 3 of CSCR
Plaza Independencia nd Fort San Pedro (Figure 2) would be affected by the project. Fort San
Pedro is one of the oldest fortresses in the Philippines while the Plaza Independencia has
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been the center of social and cultural activities of the region. A review of the previous
rescue archeology revealed the historic and cultural significance of the port area, now known
as the downtown Cebu, where Plaza Independencia and Fort San Pedro are located.

Figure 2. Plaza Independencia (left) and Fort San Pedro (right)
As decision-makers decided in favor of sub-surface alignment, it is clear that visual amenity
and cultural heritage preservation were given great weight in the project evaluation.
However, in spite of the preferred alignment, the study will refer back to the alternatives todetermine what premium should be associated in the preservation of the cultural heritage site.
On the other hand, rather than adopting the on-grade alignment, which entails widening of
M.J. Cuenco along Plaza Independencia Site, the alignment posed in the hypotheticalscenario is the on-grade alignment that would cut across Plaza Independencia.
3.1

Questionnaire Design

The questionnaire is divided into four sections namely, socio-economic characteristics, travel
characteristics, cultural heritage perception and the willingness-to-pay. The cultural
perception section of the questionnaire validated the components of the cultural heritage
value as identified by literature review. A pre-test of questionnaire was employed prior to thefull-sample survey. The pre-test aims to assess the clarity of the questionnaire, and possible
interviewer effects. Since the pre-test survey employed open-ended (OE) elicitation format,
an indication of the distribution of the WTP was also derived. In the full-sample survey,
double-bounded discrete choice (DC) format using the bid range derived from the OE WTP
distributions was used. Random card drawing was used to elicit the DC responses. In thismethod, bid amounts within the bid range are assigned to draw cards and are offered to the
respondents. The initial card drawn by the respondent will be the initial bid. If the
respondents answered ‘yes’ or is willing to pay the amount, he will be asked again to draw
from the cards containing value higher than the initial bids. Conversely, if the respondents
answered ‘no’, he will be offered cards with lower values.
Face-to-face interviews were conducted to facilitate the questionnaires, as there is a need to
explain clearly the required background information and the hypothetical scenario forvaluation. For this purpose, maps are presented to help respondents identify the goods being
valued.
As CVM is very much dependent on the respondents’ understanding the good in question, thehypothetical scenarios must be clearly presented. Questions on cultural heritage perception
were given before the WTP bidding to condition the respondents of the good to be valued. It
is critical that the respondents reveal their preferences in the experimental market just as theywould in a real market. Given that alternative degrees of preservation will be presented in thealternative scenarios, indication of the actual market price of each infrastructure must bepresented as context. The hypothetical scenarios for the willingness-to pay question was
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presented as follows:
The Cebu South Coastal road is a proposed major road connecting Talisay and Cebu City.
The most feasible alignment of the northernmost portion of the road, however, would directly
pass through Plaza Independencia. There are three alignment options on how to go about
the project. The following table describes the alignment and its consequences.
ALIGNMENTS(A) putting the road on-grade claiming a
portion of the Plaza Independencia(B) putting up an elevated road which will
run over Plaza Independencia and block
the view of Fort Santiago from the plaza(C) putting up the road on a subway andnot changing the existing condition after
the project is done.

CONSEQUENCE/S
splitting of Plaza Independencia
physical obstruction in Plaza Independencia;
visual obstruction of Fort San Pedro; 36%
higher than cost of alignment A
high construction and maintenance cost; 49%
higher than cost of alignment A;18% higher
than cost of alignment B

The preferred alignment was not elicited. The respondents were asked how much they werewilling to pay the following for both alignment B and C to maintain and preserve cultural
heritage. The payment vehicles used were: (1) entrance fee to Plaza Independencia, (2)additional entrance fee to Fort san Pedro, and (3) toll fee.
3.2

Data Sampling

The two main requisites for a good sample design are its efficiency and absence of bias. In
practical terms however, cost-effectiveness is commonly considered. The efficiency of asample depends on its randomness in such a way that the behavior of the sample depicts thatof the whole population. It is common to look at the variability of the sample to design
measure to reduce bias. However, in this study, there is no indication of the variability ofthe experimental market to be able to design an unbiased sample. In this case, a pragmatic
sampling approach is done where the aim is to obtain the largest sample within existing timeand budget frame.
To gather as many respondents as possible, the survey employed convenience sampling.
Surveys were held where respondents with mixed income level could be derived. Thesepublic places include Plaza Independencia–Fort San Pedro Complex, Post Office, CBD,
churches, City Hall, shopping centers, hospitals and schools. In the pre-test survey, a more
random sample was obtained because the survey was mainly conducted within the study area
and its vicinity. To ensure that the full-sample follows the degree of randomness of the
pre-test sample, a test on the equality of populations in terms of income was performed.
Adjustment was made to minimize the sampling error of the full-sample.
4.

EMPIRICAL MODELSThe analyses of data are done using travel cost method (TCM) and contingent valuation
method (CVM). Using respondents’ socioeconomic characteristics and visitation rates,
TCM was used to derive the recreation demand curve of the site and its benefit indicatorwhich is the consumer surplus. Willingness-to-pay based on the posed hypothetical scenario,
on the other hand, served as the stated preference data which was used to estimate thecontingent value of preserving the cultural heritage amenity of the site.
4.1

Travel Cost Methodology

The travel demand model used the ordinary Marshallian demand function associated with therecreation good which is:
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2953

q i = f ( pi , y i , xi ; β ) + ε i(1)where an individual i allocates its income y i for a recreation good q i with price denoted
as p i , and x i as other factors. The element β is the vector of unknown parameters and ε iis the additive stochastic term which is assumed to follow a normal distribution. The priceof the recreational good or the generalized travel cost, q i , includes: (1) transportation cost,t i ; (2) opportunity (time) cost, oi ; and (3) access fees a i , such that:p i = t i + oi + ai

(2)

Wage rate is commonly used to estimate time cost. However, one of the factors that should beconsidered in using wage rate as value indicator is the selection bias. Selection bias can beviewed as problem of missing observation. This simply denotes that wage and hours cannot
be observed from non-working individuals who, had they chosen to work, have some
unobservable wage potential. Two-stage Heckman correction in handling selection bias was
employed for this purpose.
Moreover, the adjustment factor for the wage rate was computed by regression of therecreational demand against the decomposed travel cost (i.e. transportation, opportunity andaccess costs) which yield parameters β t , β , and β a associated with transport, time andaccess costs, respectively (Earnhart, 1999). If transport and time cost are appropriately valued,
the relationship β = β = β should follow which also mean that the ratios between theparameters are equal to one. The ratio of the parameters is used to adjust the wage rate to be
used.
o

t

4.2

o

a

Contingent Valuation Methodology

The interpretation of the WTP gathered in the full-sample survey employ double-boundeddiscrete choice analysis. This method proposed by Hanneman (1985) and Carson (1985)
involves an initial ‘yes’-‘no’ specific peso random bid C question followed-up by a ‘yes’-‘no’question. In the second question, if the respondent answered ‘yes’ she will be given random
bid CL where C>CL while if she answered ‘no’ she will be given random bid CU where
C<CU.
In theory, an individual’s WTP is bounded by her income y. Thus, an individual’s willingness
to pay C for a public good q with quality changing from q 0 to q1 an is given by:
C = f ( q 0 , q1 , y , ε ) ≤ y(3)

In terms of random utility maximization (RUM) specifications direct utility U(·) is equal toindirect utility V(·) plus some stochastic components representing the concept of preference
that is random. In discrete conditions, this could be explained by the following equation:
U (δ , Y ) = V (δ , Y ) + ε(4)whereby, δ if respondent agrees with payment C for environment preservation measure, 1
otherwise 0, and Y which is the income level. In this case, the probability that the
respondent will answer yes in a DC WTP question is given by:Pr( Yes ) = Pr (V ( 1, Y − C ) + ε 1 > V ( 0 , Y ) + ε 0 )(5)In case of the double bounded discrete response CV with WTP distribution GC (•) , theprobabilities of the different response combinations are given by the following equations:
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2954

(1) Pyy = Pr(Yes for C , Yes for CU ) = 1 − G C (CU )(2) Pyn = Pr(Yes for C , No for CU ) = G C (CU ) − G C (C )(3) Pny = Pr( No for C , Yes for CL) = G C (C ) − G C (CL)
(4) Pnn = Pr( No for C , No for CL) = G C (CL)

(6)

Assuming that the this distribution follows a standard logistic cummulative density function(cdf), Equation 8 could be further interpreted as follows (Bishop and Heberlein,1979):
Pr( Yes ) =exp [V ( 1 , Y − C ) ]exp [V ( 1 , Y − C ) ] + exp [V ( 0 , Y ) ]1
1 + exp {− [V ( 1 , Y − C ) − V ( 0 , Y ) ]}=(7)

In the same manner, the probabilities of the different answer combinations in a doublebounded CV are derived as follows:1
1 + exp{− [V ( 1,Y − CU ) − V ( 0 ,Y )]}1
1−
Pyn = Pr( Yes for C , No for CU ) =1 + exp{− [V ( 1,Y − C ) − V ( 0 ,Y )]} 1 + exp{− [V ( 1,Y − CU ) − V ( 0 ,Y )]}11−
Pny = Pr( No for C ,Yes for CL ) =1 + exp{− [V ( 1,Y − C ) − V ( 0 ,Y )]} 1 + exp{− [V ( 1,Y − CU ) − V ( 0 ,Y )]}1
Pnn = Pr( No for C , No for CL ) = 1 −1 + exp{− [V ( 1,Y − CL ) − V ( 0 ,Y )]}Pyy = Pr( Yes for C ,Yes for CU ) =(8)

The corresponding maximum likelihood function for every respondent is illustrated by thefollowing equation:(iiln LSP = ∑ δ yyi ln Pyyi + δ yn
ln Pyni + δ nyi ln Pnyi + δ nn
ln Pnnii)(9)

To derive monetary values from the double –bounded dc data, identity (7) was used whereby
the entity V(1,Y-C)-V(0,Y) shall be replaced with ∆V(C) yielding a new equation:(10)∆V (C ) = α − β ln C

An indicative measure of monetary values could be facilitated by the central tendency
measure of the normal probability distribution derived from the statistical model. The mean
and the median of the estimated WTP distribution can be used for the purpose. However,Stavig and Gibbons (1997) claim that the mean is more sensitive to skewness or kurtosis than
median in terms of WTP distribution. In case of the WTP distribution with no negative
responses, a positively skewed distribution is implied (Haneman et al, 1999). In view of this,the median WTP shall be used as the measure of central tendency of the DC formatted WTP
responses. The median (C) can be computed directly from the empirical response
probability function (Equation 4) corresponding to 50% response probability of saying ‘yes’.
The following equation shows the functional derivation of the median.
0 .5 =

1
1 + exp (− α + β ln C )C = exp( aˆ / βˆ )(11)Journal of the Eastern Asia Society for Transportation Studies, Vol.5, October, 2003

2955

5. RESULTS

The pre-test and full-sample survey yielded 116 and 348 samples, respectively. In the fullsample survey, majority of the respondents belongs to the age group 20-29 (42.81%), and are
married (54.89%). About 143 (41%) of the respondents have bachelor’s degree while 68(19.54%) took vocational or technical courses. Most of the respondents are private
employees (36.21%). Ninety-two percent (92%) of the respondents belong to income
bracket 10,000-14,999 and below. Some 199 respondents (57.18%) do not own a car. Most of
the respondents are non-tourists (96.26%). Only a total of 13 respondents are tourists, two of
which are foreigners.
5.1 Recreational Benefits

As derived from the disaggregated wage rate equation, the adjustment factors of 0.36 for theemployed and 0.20 for the unemployed were used to derive opportunity cost from wage rate.
An aggregated travel cost demand curve based on Marshallian demand function (Equation 1)
is estimated. Two models for each site using Ordinary Least Square (OLS) and Tobit
Models were estimated. Though tobit models show a better fit than the OLS models, the OLS
parameter estimates are used for the computation on the consumer surplus because of thelower significance of the travel cost variables in the tobit models. The demand models for
Plaza Independencia and Fort San Pedro shown and illustrated in Table 2.
Table 2. Travel Demand Models for Plaza Independenca and Fort San Pedro
Variable

B0
TC
VISAP
INCOMEAGE
EDUC
R²Description of Variables
Constant
Travel cost (i.e. transportation cost,time cost, access fee)
If Plaza Independencia – Fort San
Pedro complex is visually appealing:
1= yes, 0= no
Income: continuous variable
4
Age: continuous variable
5
Years in school: continuous variable

Plaza Independencia
11.34 (0.69)

Fort San Pedro-7.95 (-0.65)-0.03 (1.99)-0.02 (-1.84)

14.42 (2.71)-3.80E-04 (-1.07)
1.06 (4.16)-2.68 (-2.62)
0.122410.84 (2.63)-1.59E-03 (-1.28)
0.82 (4.34)-0.81 (-1.05)
0.1007For both the demand models of Plaza Independencia and Fort San Pedro, among thesignificant variables influencing the demand are how the respondent perceived the visualappeal of the site and the age of the respondent. However, the negative sign of the variable
EDUC and INCOME for all models indicating the tendency of the respondents with lower
income and education level to visit the site more is a notable behavior. The negative signof the variables travel cost (i.e. TC_PI, TC_FSP) indicate the negative slope of the demand
curve. The relative price and income elasticities of the demand curves are shown in Table 3.
Table 3. Demand Elasticities
Price
IncomeFormula(∆qi / q)η=(∆TCi / TC )

η=(∆qi / q)(∆yi / y)Plaza Independencia

Fort San Pedro-0.00187-0.01046-0.00002-0.00083

The negative price elasticities of PI and FSP demand curves indicate that the demands forthese site are inelastic meaning change in travel cost only marginally change the frequency ofvisits. On the other hand, the negative income elasticities of PI and FS demand curves showthat these public good are inferior goods meaning consumption of these goods decreases asincome increases. The following Figure 3 shows the travel cost demand curve of Plaza
Independencia and Fort San Pedro. The expected relationship of the declining number of trips
Journal of the Eastern Asia Society for Transportation Studies, Vol.5, October, 2003

2956

as the travel cost increases were depicted by the demand curves. Based on the figure, one cangather that visiting Plaza Independencia has higher utility than visiting Fort San Pedro.

600

Demand Curve for P laza
Independencia
Demand Curve for Fort San
P edroP I-mean T C

500

FS-mean T C

800

Travel Cost per Visit

700

400
300
200
100
0
0

5

10

15

Number of Visits

20

25

Figure 3. Travel Demand Curves for Plaza Independenca and Fort San Pedro
Table 4 shows the intercept, the consumer surplus and the average benefit per visit. Since
the number of visits is obtained when the travel cost is zero then the maximum number ofvisits is the intercept, then the average benefit per visit is the consumer surplus divided by theintercept.
Table 4. Demand Curves Intercept and Consumer Surplus
Destination

Intercept

Plaza Independencia
Fort San Pedro
TOTAL

5.2

Consumer Surplus(CS)
5,093.39
3,785.55
8,878.94

19.78
14.35
34.12

Average Benefit per
Visit (PhP)
257.54263.85260.19Willingness-to-pay

The estimated parameters based on the aggregated full sample were used to compute themedian WTP. Table 5 shows the parameters and median estimates by payment vehicle andscenario.
Table 5. Parameter Estimates and Median of the Double Bounded DC WTP Bids
Payment Vehicle
Entrance fee to
Plaza
Independencia
Additional
entrance fee toFort San Pedro

Asymptotic
Alignment Parameter Estimate Standard
Error
α
3.21
0.23
B
β
1.71
0.10
α
3.65
0.24
C
β
1.83
0.12
B
C
B

Toll fee
C

α
β
α
β
α
β
α
β

t-stat
14.21
17.32
15.20
15.27

2.82
1.63
3.19
1.52
3.89
2.28
3.35

0.21
0.11
0.20
0.09
0.32
0.18
0.29

13.75
15.51
15.87
16.33
12.03
12.84
11.35

1.83

0.15

11.99

MedianL ( 0)L( β )-2474.1-2271.52

0.08

6.53

-2582.8-2311.32

0.11

7.39

-2479.5-2289.34

0.08

5.64

-2601.7-2323.26

0.11

8.09

-1481.5-1353.83

0.09

5.50

-1550.1-1393.55

0.10

6.23

ρ 2 ( in PhP)C

Based on the results of the analyses of DC WTP, the study shows than an average person iswilling to pay the following: (1) entrance fee to the Plaza Independencia amounting to 6.51
and 7.39 pesos for alignment B (elevated alignment) and C (sub-surface alignment)
respectively; (2) additional entrance fee to Fort San Pedro amounting to 5.66 and 8.11 pesos
Journal of the Eastern Asia Society for Transportation Studies, Vol.5, October, 2003

2957

for alignment B and C respectively; and (3) a toll fee of 5.50 and 6.23 pesos for alignment B
and C respectively. Moreover, Figure 4 shows the derived median prices for the users andnon-users of the site.
Non-use value(f rom nonvisitors)

6.00

4.59

5.00

3.17

3.01

2.00

3.03

4.00
3.00

Use andNonuse Values(f rom actual
visitors)

6.26

7.20

7.00

8.25

8.00

8.74

9.00

PLAZA_B

PLAZA_C

FORT_B

1.00
0.00
FORT_C

Figure 4. WTP from User and Non-User of the Site
The distributions of the double-bounded DC data are shown in Figure 5. The preponderanceof the YY and the NY answer combination is evident.
40.95%

TOLL_C

8.10%

44.29%

6.67%

YY
YN

33.33%

TOLL_B

32.38%

9.52%

41.67%

FORT_C

14.08%

32.47%

FORT_B

27.01%PLAZA_C

21.84%PLAZA_B
0%10%

13.51%

10.34%

20%

33.33%

21.55%

47.13%

13.51%

39.66%

30%

40%

50%

NN

10.92%

32.47%

12.36%

NY

24.76%

28.16%

60%

70%

80%

90%

100%

Figure 5. Distribution of Answer Combination per Payment Vehicle

PROBABILITY THAT RES PONDENT ISWILLING TO PAY

Based on the parameter estimates derived from the logit analysis of WTP data, the probability
density curves of the different payment vehicles per scenario were estimated. These areshown in Figure 6.
1
0.9

P I entrance fee - A lignment B

0.8

P I entrance fee - A lignment C

0.7

FSP A dd'l entrance fee - A lignment B
FSP A dd'l entrance fee - A lignment C

0.6

Toll fee - A lignment B

0.5

Toll fee - A lignment C

0.4

P(C ) =

0.3
0.2

1
1 + exp(−α + β ln C )

0.1
0
0

5

10

15

20

25

30

35

WTP(PhP/visit)

Figure 6. Cumulative Probability of DC WTP by Alignments and Payment Vehicle

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The graph shows that among the payment vehicles used, toll for the use of road registered
lower values than entrance fee. Moreover, sub-surface alignment draw out higher values
than the elevated alignment. The difference is greater for the Fort San Pedro additional
entrance fee. For Plaza Independencia entrance fee, only minimal difference was observed.
In regards to Fort San Pedro additional entrance and toll fee, the difference is quite notable.
The unexpected small difference in WTP observed from the two alignments considering thedegree of difference can possibly be explained by the failure of the respondents to perceive
the hypothetical scenario accurately.
Observing the probability density curve of OE and DC responses with the probability of
respondent paying the fee/additional fee on the y-axis and the visitor fee per visit on thex-axis, the double bounded DC format generates a probability distribution that is shifted
significantly above the probability distribution of the WTP using OE bids (See Figure 7).

PROBABILITY THAT RESPONDENT ISWILLING TO PAY

10.9

OE PLAZA_B

0.8

OE PLAZA_C

0.7

DC PLAZA_B

0.6

DC PLAZA_C

0.5
0.4
0.3
0.2
0.1
0
0

5

10

15

20

WTP(PhP/visit)

25

30

35

Figure 7. Comparison between OE and DC WTP(Plaza Independencia Entrance Fee)
It can also be observed that the higher income groups do not always offer the highest WTP
bids. In some instances like the entrance fee to Plaza Independencia, lower income groups
offer higher values (See Figure 8).

PROBABILITY THAT RES PONDENT ISWILLING TO PAY

1.00

<3000

0.90

3001-9000

0.80

>9000

0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
0

5

10

15

20

25

30

35

WTP(PhP/visit)

Figure 8. Comparison of DC WTP by Income Level(Plaza Independencia Entrance Fee –Alignment C)
Different biases can be deduced from the listed findings. Among the notable biases observedin the analysis is the difference in the probability of the acceptance of WTP values in the
open-ended and discrete choice elicitation format which is deemed to be a combined effect of
the free-riding tendency in the open-ended elicitation and the tendency of respondents to say
yes in DC format if posed a question they do not understand thoroughly. Moreover, theobserved relationship between income and WTP in DC elicitation format is the probability
that lower income groups agree to higher offered values than the higher income groups.

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5.3

Value of the Cultural Heritage Site

The recreational values of Plaza Independencia and Fort San Pedro were estimated throughthe consumer surplus approach using recreational demand curves. Based on the visitor
count conducted from November 18 to 24, about 265,460 and 88,296 visit Plaza
Independencia and Fort San Pedro. To account for the increase in visitors of the site during
the annual Sandugo festival and during peak tourists season, the number of visitors of Plaza
Independencia and Fort San Pedro were estimated as 300,000 and 100,000 visitors,
respectively.
Evidence of non-use values could be seen by examining the stated preference WTP of the
respondents who have not been in the site. The resulting values show that the site has
inherent values that are recognized by non-users. Non-use values derived from the nonuser
are lower compared to the WTP of respondents who have actually been in the site. Derived
non-use values for the Plaza Independencia is about forty percent (40%) of the combined use
and non use values while the non-use value for Fort San Pedro Fee is about fifty (50%) of the
combined use and non use values.
Recreational values were estimated from consumer surplus estimates from TCM while
non-use values were extracted from the WTP of those who have not been in the site. The
results of the valuation shows that the Present Value computed for 20 years at a discount rateof 15 percent was higher for subway alignment than elevated alignment for only a marginal
four percent (78.1 million PhP vs. 74.6 million PhP). The result show that the values ofpreserving cultural heritage for the actual site users are about 74 and 78 percent of therespective construction cost of the elevated and subsurface alignments. Though the differencein value may not be that significant as compared with the actual consequences of the differentalignments, the difference still showed that the experimental market marginally discriminates
the goods in question. Estimates can be improved by extending computation to the actual
stakeholders of the site. The bounding population, or the extent of stakeholders, on the other
hand, is very hard to define. Further study should be done in the definition of the populationin order to derive an expansion factor for the Total Economic Value.
6. CONCLUSION AND RECOMMENDATIONSThe study was able to estimate the economic value of a cultural heritage using the TCM and
CVM. The study proves that TCM and CVM surveys can be easily implemented on the local
context. Proper consideration, on the other hand, should be done to address associated biases
that arise from the use of the methods. The ability of the methods to give monetary measuresof use and non-use values as well as its ability to distinguish value of alternative scenarios
make it very useful in project assessment and evaluation.
The resulting estimated benefits estimates make it clear that there are benefits to preserving
cultural heritage sites. The incidence of free riders can likewise be illustrated by a majority of
the respondents who are not willing to pay in the OE WTP reasoning out that the government
should pay. However, there are still some biases observed in the results, one of these is its
bias in terms of predicting values over low-income groups. Several reasons can explain thisobservation. Cultural heritage values can be more understood by a high-income person who
has reached higher level of education than a person in the low-income groups who havereached only lower level of education. Another possible factor that can explain the bias is the
weakness of the hypothetical scenarios to be clearly understood by the lower-income
population. This limitation may be common to other developing countries.
The advantage of CV studies in developing countries, particularly the Philippines, is theability to be able to conduct high quality CV studies because of high literacy rate, thus morequalified surveyors could be employed.

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In terms of policy, the Philippines has laid down the basic framework that will ensure thepreservation of cultural heritage resources. To further strengthen it, the institutional arms
assigned to the protect it, must be equipped with appropriate tools for an informed
decision-making. This research has presented a framework of valuing cultural heritage sites,
but it is still best that the protection of these resources be mandatory as the extent of non-use
value of these resources are vast and deemed underestimated. The study may prove to be
useful in cases of damage assessment and evaluation of alternative degree of cultural heritage
preservation.
As the identification of the cultural heritage sites at the local level is an essential task before
the benefits or disbenefits of a site can be listed, it is imperative that sites be identified andprotected through local ordinances such as zoning.
In view of the fact that damages to cultural heritage constitute as an irreversible
environmental impact, the protection of such cultural heritage must be supported byappropriate policies on cultural heritage protection specifically recommending tools forvaluing cultural heritage resources.
In terms of methodology, the merits and limitations of the process done in this research could
further be explored. Clearly, questionnaire development is among the critical improvement
need both for the TCM and the CVM. The limitations of the CVM due to its associated biases
particularly in posing hypothetical questions to low income groups, can be reduced bydeveloping better ways of posing presupposed situation and developing a more reliable
payment vehicle. Moreover, studies that will investigate the difference between estimates bydifferent methodologies should also be pursued.
ACKNOWLEDGEMENT

The authors would like to acknowledge the indispensable help of the Project Management
Office – Feasibility Studies of the DPWH for providing the necessary information andbackground on the project and the NCTS-IBS scholarship for providing financial assistancein the conduct of study. This paper is based on the master’s thesis of the principal author
submitted to the School of Urban and Regional Planning, University of the Philippines.
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Journal of the Eastern Asia Society for Transportation Studies, Vol.5, October, 2003