The determination of socially optimal recreation outputs and entry prices for national parks in Southwestern Queensland
Australian national parks have two prime purposes, the protection of biodiversity, or the variety of life and its processes, and the provision of areas for outdoor recreation. As visiting national parks for recreational purposes has become more popular with the growth in population, greater urbanisation of society, more leisure time for some people in the community and increases in tourism and travel, the potential for conflict between the two goals has been enhanced. Early in the history of national parks in Queensland, the government acknowledged no conflict in their management. National parks were provided for the populace to enjoy 'pure air, good scenery and country life' Over time, park managers have become increasingly aware that the goal of recreational use could conflict with sustaining the natural resource in an undamaged condition. The community has recently become far more environmentally aware. The Queensland Government has reacted to the environmental concern of the community by pursuing a goal of doubling the national park estate in the last six years and passing the Nature Conservation Act, 1992. This act reverses the thrust of the original policy and makes it clear that parks are to be managed to retain biodiversity and use is required to be ecologically sustainable. Natural processes must be sustained and the benefits of use by current generations should not diminish the potential to meet the needs of future generations. Whilst the managerial policy has been defined, comprehensive management strategies have not been implemented to achieve the policy. Microeconomics has a role to play in the development of these strategies. This study builds on the foundation that national parks provide two general classes of services: conservation of biodiversity and recreation. Conservation of biodiversity may be treated as a pure public good and, as such, is best funded through the budgetary process. The study hypothesises that recreational services, on the other hand, may be treated as private goods and are most fairly funded by the users. The study further hypothesises that, for the circumstances pertaining to any particular national park, economically appropriate entry fees for both day visitation and overnight camping are those which equate marginal social cost of recreation with average revenue or demand. At these prices, the capacity of the park to supply recreational opportunities will just equal recreational demand Charging and recovering the full social cost of recreational use of national parks will necessarily restrict output below the output which would be indicated when incomplete cost data are taken into consideration. However, such restriction will assist the achievement of the goals of conservation of biodiversity and ecologically sustainable use. Currently, the recreational outputs of national parks, measured separately in terms of numbers of day visitors and camping visitors, tend to be considered independently. This study emphasises that the two types of recreational output are not independent and that there is a cumulative effect on the natural environment and external entities. In order to facilitate the measurement of the full social cost of providing recreational opportunities in national parks and in the estimation of aggregate demand, the study develops an innovative recreational visitor unit (RVU) in which to aggregate day visit supply (and demand) with camping visit supply (and demand). The aims of the study are thus to develop a theoretical market model and estimate the relationships between its chief components, namely demand and the cost of supply of recreational opportunities, then employ that model to determine socially efficient management policies, so that implications for the management of national parks may be examined. In addition, the study investigates alternative approaches to estimation of relevant parameters to find methods which are cost effective, efficient and relatively easy to apply so that park management may conveniently adopt the evaluation framework developed here. Incorporation of the concern for the ecological sustainability required under the Nature Conservation Act, 1992 and of other external costs in the determination of equilibrium output and socially optimal prices is found to be theoretically possible, but somewhat difficult to achieve in practice. After a thorough examination of the cost structure of the Queensland National Parks and Wildlife Service (NPWS) as the management agency, the study finds that current prices do not recover the agency's marginal costs of providing recreational opportunities. The incorporation of external cost theoretically increases market-clearing prices; the items comprising these costs are also examined and their values estimated. Demand for camping visits and day visits is estimated for two Queensland National Parks, Girraween National Park in the populous south-east of the State and the more isolated Carnarvon Gorge National Park. Demand for both recreational products' (camping and day visits) is aggregated for each park in terms of the new unit of output. Demand is generally found to be highly price inelastic, except in the case of demand for day visits to Girraween National Park, a situation which demand theory suggests because day visits to this park have several substitutes. At the least, the relative price inelasticity of demand means that prices may be increased to cover a greater proportion of costs with little effect on demand. As the percentage of costs recovered increases, price elasticity will increase and there will a greater relative effect on quantity demanded. Socially-optimal prices and outputs are estimated for each of the two parks in the case study. The aggregate outputs are then disaggregated, so that socially optimal outputs of camping visits and day visits can be estimated. Fees for both types of entry (camping and day visits) are estimated with reference to the market model. The sensitivity of the model to errors in the estimation of various parameters is investigated. The study is also concerned with the practical application of the evaluation framework. An assessment is made of the effect of substituting researcher-estimated travel cost values for survey data in a travel cost analysis of demand for recreational entry to a park where the origins of visitors are known. This method is cost-effective. The analysis finds the estimated demand curve resulting from the researcher-inferred travel cost values to be comparable to the estimated demand curve resultant from survey data with respect to the most appropriate functional form and value of the slope coefficient. Finally, practical issues arising from charging socially optimal entry fees for the first time are examined. Fee collection methods and transaction costs are considered. In addition, models including a peak-use charging scheme and price discrimination are explored and found to be acceptable options to promote political acceptability of charging socially-optimal entry fees for the first time.
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