Recreation User Fees: An Australian Empirical Investigation

Abstract

It is widely acknowledged that increasing tourism and recreation usage of natural resources in Australia has placed heavy demands on those responsible for visitor management. The consequent need for more revenue has led local government and national park management to contemplate extended implementation of the ‘user pays' principle. However, user pays may be rejected on the grounds that it is not a first-best pricing policy, and/or on the grounds that public resources funded out of the public purse should be freely available. It has been suggested in the case of entry fees to national parks that they penalize the poor. This paper uses empirical estimates of demand curves for two World-Heritage-listed national parks — Kakadu and Hinchinbrook Island — to investigate the impact of entry fees on visitation and revenue, and the efficiency of fees as a revenue-raising device. An examination of visitors' socio-economic characteristics allows some comment on the equity issue. It is concluded that modest entry fees would have little impact on visitor numbers; that, provided the administrative costs of fee imposition are not prohibitive, entry fees are not only a good potential source of revenue, but also impose smaller efficiency costs than the income taxation system; and that fees may well constitute a progressive tax.