Determining Appropriate Prices for Recreation on Public Lands

Abstract

Price is regarded by some to be the most important element of a service provider’s marketing mix. In the context of leisure services, which often provide intangible experiences, price is often used by participants and visitors as an indicator of service quality. For many public leisure services, however, price has been a distant concern. In particular, the recent implementation of the Fee Demonstration Program by public land management agencies has highlighted the inexperience of these service providers in implementing pricing strategies. Confounding the issue of setting prices for public land recreation are a variety of normative issues that touch upon the holistic value of public land and social welfare concerns of visitors’ ability to pay. The purpose of this study was to demonstrate a method of formulating a pricing program for public land recreation that attempts to balance the opposing objectives of maintaining access and generating revenue.

Data were collected from the Mono Basin Scenic Area (MBSA), California, in the Summer of 1998. Following Richer and Christensen’s (1999) survey design, respondents were asked to report an estimate of both what they would be willing to pay (WTP), at maximum, and an appropriate price (AP) for an individual week-long pass to MBSA. A $2 entrance fee had been in place at two sites within MBSA since 1997. Results showed that the maximum amount visitors were willing to pay was greater than the price they considered appropriate for about two-thirds of the respondents.

The data shows that while estimated revenues would be maximized with a substantial price increase, the cost of such a change would be a substantial drop in visitation. Smaller price increases would yield nearly as much revenue with smaller impacts on rates of participation.

These results illustrate the utility of using the appropriate price criteria to determine how much to charge for public land recreation. Given the dual and often opposing objectives of generating revenue and maintaining public access, managers of public lands face a difficult pricing decision. While analyzing maximum willingness to pay enables one to model the tradeoff between revenue and access, it stops short of suggesting a specific fee level; one that would satisfy both management objectives. Broadening the focus of pricing decisions to include normative concerns improves the likelihood that the fee levels chosen for public recreation will be considered appropriate in the eyes of the recreating public, while still generating substantial revenue to support the management efforts of public recreation agencies.